Academic Year: PGP 2012- 2014

Project on: - INTEGRATED LEADERSHIP PERSPECTIVE

Fabindia
Faculty :- Ms. SAPNA POPLI and Mr. SHARAD GUPTA
BY: Charu Rana
Apurva Singh

PG20125312
PG20121122

Roopali Aggarwal

PG20121358

Rishabh Madan

PG20121629

Shruti Bhatia

PG20121174

Fabindia
Case Facts:

46 yr old company, founded in 1960 had grown exponentially in the last decade.
Earned profits worth 1.3 billion rupees with PBT of 130 billion rupees and PAT of 78
million rupees in March 2006.
The dawn of the new era came when vision plan 1 was formulated with the expectation of
that the company will grow from 360 million rupees to 1 billion rupees in the next 4 yrs.
Had 3 kinds of stores- premium, regular and concept stores, wherein premium stores
stocked wide range of products and significant proportion of high-end items, regular
stores were similar to the premium stores but didnt carry high-end items and the concept
stores were small and test stores which were opened in new markets with fewer stock
keeping units.
They did not use the external market research agencies for the research but instead used
internal analysis which consisted of estimating the sales, demographics, sales of other
brands and sales in other Fab India stores.
Was recognized with several industry awards including two consecutive Best Indian
Retail Brand awards in 2005 and 2006 which was mainly due to its merchandising
capabilities.
Fab India had managed to convey a sense of youth and was perceived as being trendy
even though it used traditional fabric and was always on the lookout for unique handwoven textiles and long-forgotten block prints.
The product mix of Fab India along with their share of total revenue are as follows: Garments (70%)
Home Furnishings (30%)
Body Care (<1%)
Organics (<1%)
Fab India entered garment segmentation in 1981 by making mens shirts and in 2004, it
introduced a premium line which was a huge success and was expected to generate 30%
of the firms revenue.
Fab India was one of the first retailers which offered a complete home solution giving
its customers a one-stop shopping experience for their home needs and adopted a western
model of standardized off-the-shelf home furnishings.
Fab India believed that the existing retail network and brand had helped sell the organic
products and that the brand made the customers comfortable about the genuineness of the
organic food range.

Key Issues:

Fabindias main customer Habitat was acquired by a larger firm which

ended their relationship with Fabindia.
Opportunities in India are low as it grows at only 3%.

Q1. What are the reasons behind Fabindias growth? What role does Fabindias Social
mission play in the strategy and performance of the firm?
Ans. GROWTH STRATEGY

Since Fabindia had nurtured hundreds of weavers and artisans, they

are dependent for their livelihood on Fabindia. So the employees
working consider that their interest is connected with the firm and
hence are motivated to deliver their best. The store managers were
allowed to be entrepreneurial.
Fabindia cater to need of their customer in best possible manner. they
believed that the customers understood the nature of the fabric
therefore the firm aimed at delivering the best.
Distinct Fabindia Look was served to customers by making garments
with hand-woven fabrics in bright colours with traditional prints and
pattern.
They believed in innovation as with the changing needs of their
customer they came up with different designs such as calligraphy
based home collection.
Their internal rigor, depth and breadth of management, clarity in
planning process all contributed to their growth.
The company designed some plans to manage their growth in a
disciplined way. These plans were:In 2003 Vision Plan I was formulated according to which the
company would grow from 360 million to 1 billion in 4 yrs.
In 2005 Vision Plan II was formulated according to which the
company would grow from 1 billion to 2 billion in 4 yrs.
Fabindia stores had a distinct ambience to attract customers. They
selected unique locations and buildings to create a unique consumer
experience. Eg In Bangalore they opened a store in the home of the
famous architect Charles Correa.
They did not use external market research agencies for the research
that led to decisions regarding opening a new store. They believed in
internal analysis.
The products offered by Fabindia have an intrinsic value due to which
they never felt the need to advertise. This also created an impression
of world class brand in the mind-sets of the customers.

Designers worked closely with the weavers and specified the fabric
weave, color, and print, combining their knowledge of urban trends
and tastes, aesthetics, and the capability of the individual weavers.
They adopted a strategy in choosing their new suppliers as they
worked on trust and understanding. They choose suppliers who came
with referrals from existing suppliers.

ROLE OF SOCIAL MISSION

They believed in raising the visibility of the traditional Indian textiles and to
generate employment for craft workers and artisans, thus also reviving dying
skills and crafts. Their growth strategy directly generated employment for
artisans. William Bissell believed that the only way to alleviate rural poverty
is to generate sustainable employment which can be done by running the
business in profitable manner. So they pursue both a social goal and profit.
They emphasized more on the product rather than social mission as only
fresh product will bring the customers in the store. Village Industries
Commission set up by Indian government failed to attract customers as they
could not capture the imagination of modern consumers, they were
associated with poor shopping experience, badly lit stores, unenthusiastic
salespeople and unfashionable merchandise. On the other hand Fabindia
managed to convey a sense of youth and was perceived trendy even though
they offered similar traditional fabric. This was all due to sourcing from all
over India such as block prints from western states, kalamkari prints from
south, and embroidered products from the north. Along with unique handwoven textiles they brought informative and eager sales personnel and
varied product mix. Hence along with the social mission focus on needs of
customers was also important. With their creativity they were successful in
earning profits via contributing to welfare of the society.
Q2. Can Fabindia grow further? How? What will be the effects of growth?
Ans.
Merchandising within stores is still in a rudimentary stage. The shopper navigation can be
greatly enhanced by focusing on the stores layout and appropriate merchandising
techniques which succinctly create individual product areas. Out of the total customer
base for Fabindia, a high percentage comprises repeat customers. This leads to an
inference that Fabindia can focus on customer acquisition strategies.

 Absence of promotions strategy is believed to be resulting in sales below its potential

levels. The sourcing strategy followed for accepting raw materials is heavily supplier
centric. In the past there have been incidences when due to delay in sending supplies for
winter garments manufacture, inventory was carried over to the next year and suppliers
were not made to share the damage. It operates through its own stores and that too fed by
a centralized hub model of supply chain management.
Since the number of stores has more than doubled in the last four years, it needs to
consolidate its position and make sure that the supply chain problems are overcome.
In order to increase awareness about the location of the stores and about Fabindia, it
needs to market itself more aggressively which should also include virtual media (TV
advertisements) and other sources all well which most of them they are already using it.
Beside this Fabindia should also look forward towards the Tier 2 and 3 cities especially
Tier 2 as the modern India taste is in era of change and people specially the youth is
looking forward towards the ethic designer wears and outlook of their homes.
Q3. What should their priorities be?
Ans. The priority of Fabindia is to make the customers aware of tis social mission. Fabindia
should start to invest in advertising and brand building around its social commitment. To increase
the customer base, it has to create awareness about its products. It should create a brand image
that finds resonance with the upwardly mobile middle class youth, who are fashionable and will
appreciate the social cause directing Fabindias ideology.
Up till now, Fabindia has been a small company that could do with-of-mouth publicity. As a
result, Fabindia has never advertised its products. This is also proved by its organization chart as
it does not have any marketing department. It is able to differentiate itself from other similar
government funded Khadi outlets by giving the customers a different buying experience.
Nevertheless, majority of the public have dealt with the government funded khadi outlets and
may wrongly associate Fabindia as another such khadi outlets. Fabindia is looking forward to
increasing its revenue by around seven times in the next six years. Therefore it has to create
awareness about the different buying experience at its outlets. For this it needs to advertise its
product and the different buying experience it offers.

Thank you