Case Study
By:
Faisal . Lakshmi . Manika . Swati

Overview







Product Mix
Supply Chain
Fabindia’s Growth
Challenges
SWOT Analysis
Strategy Formulation
Implementation
A 46 year old family owned firm
Founder: Mr John L. Bissell
Revenue in 2005-06: 1.3 billion Rs
Profit in 2005-06: Rs 78 Million
43 Stores in India
Products sold in 33 countries
155,000 SKUs
Growth rate for organized retail sector:
18%.
Competition from Khadi Bhandaar,
Anokhi and Godrej & Pantaloons in the
future.
Corporate salaries growing @ 20%,
increasing consumer incomes
56 million middle class and 38.6 million
high income and ultra high households
expected by 2007.
WIDTH
D
E
P
T
H
Garments
(70%)
•Women’s wear
•Indian (30%)
•Western (20%)
•Men’s wear (28%)
•Accessories (15%)
•Infant, Kids, teens
(7%)
•Maternity wear
Home
Furnishings
(30%)
•Upholstery and
curtains (30%)
•Bed linens (30%)
•Table and bath linens,
floor coverings (20%)
•Furniture, Lighting,
Home accessories
(20%)
Body Care
(<1%)
Accessories (<1%)
Body wash
Cereal
Shampoo
Honey
Soap
Preservers
Jams
Relishes
Coffee
Predominantly rural based suppliers
Two level of suppliers
Designers worked with weavers, Artisans sometime suggest designs
No written contracts for suppliers behavior
New suppliers usually come with referrals of existing suppliers
New suppliers are first given trial orders
Bank loans are provided to weavers
No goods are returned back to suppliers, even if they were
supplied late or had any variation in terms of color and design
Suppliers flourished with Fabindia’s growth
Trust embedded in supply chain kept problems under control
(Rs. million)
Turn over
PBT
PAT
Financial year 2004-‘05
869.9
84.4
56.5
Financial year 2005-‘06
1293.9
139.2
78.1
It gradually expanded its retail presence across the Indian market
Improvement in the product range by including ready-to-wear clothes
,furniture and home furnishings contributing 30% of the revenue
Mutual growth of the rural suppliers and the Fab India firm
Funding required to source future growth plans.
• Should Fabindia venture for outside funding?
• Will the prospective investors support the social
mission of Fabindia?
• How to maintain support to its network of suppliers?
• How to maintain commitment to John Bissell’s
mission?
Strengths
• Rigor depth and breadth of
management and clarity in
planning process.
• Suppliers as key stakeholders.
• Involvement of store managers
and staff.
• Trust and bond among all supply
chain members.
• Quality control, mystery shopper
program.
• Wide product range.
Weaknesses
• Shortage of qualified personnel
to power the growth.
• Commitment to the founding
mission.
• Supply chain bottleneck
Opportunities
• Growing organic
products market (2-3
million potential
consumers)
• Growing consumer
incomes
• Flourishing suppliers
Threats
• Future competition in
organic market expected
from bigger players like
Godrej and Pantaloons.
• Financial funding
required for growth.
• Competition
• Foreign Players
• Unorganized market
• KVIC
• Social mission vs.
Company growth.
Strategy Formulation
Vision
Mission
Grow revenues
of Rs 8.6 billion
from 200 stores
by 2011
Growth of
company along
with growth of
suppliers. And
to provide more
employment
opportunities.
Type of
Stores
• Premium
• Regular
• Concept
• Online
Ownership
• Self owned & leased Stores
• Joint Venture in Rome
• Franchisee in China
Location &
Ambience
• Heritage Landmarks, Destination Stores
• Aesthetics connection to all things natural
Staff
• Uniforms conveying their ideology
• Routine Visits to supplying weavers and training programs
Entrepreneurial
Store Managers:
Mystery
Shopper
Program:
• Allotted a budget for ordering goods and operational
expenses
• Budgets: Store Location, Previous year’s Sales, other
macroeconomic indicators
• Interacts regularly with the merchandisers at the HO
• Stocking plans
• To control the quality of sales process and customer
service
Sourcing
System
• Provide a wide platform to raise the visibility of
traditional Indian textiles
• Generate Employment for craft workers and artisans
Sources
• All over India
Elements
No returning
of goods to
supplier
• At least one handmade element
• Utilizing it for other products
Alternative Vision
Collaborative with suppliers
Participatory with customers
Intrinsic value proposition of products
Employee
Involvement
Forward
Integration
Funding
Policy
• Store Managers free to decide the orders
• Artisans encouraged to suggest design
• From an export house to a retailer.
• In-house funding
Thank you