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Fabindia: Reinventing to Stay Relevant

CASE STUDY, STRATEGY
Prin.L.N. Welingkar Institute of Management Development and Research, 12 Pages
AUTHOR(S) : Swapna Pradhan, Professor, Prin.L.N. Welingkar Institute of Management Development and Research

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Fabindia: Reinventing to Stay Relevant

Fabindia Overseas Private Limited (hereafter referred as Fabindia) an ethnic wear Indian brand, was established in New Delhi, India in 1960. In the initial years, the focus was on exports of furnishings and the first retail store under the brand name of Fabindia was opened in the year 1976. Over the years it had carved out a niche for itself in the competitive Indian women’s wear market. However, the contours of the Indian retail and consumer market had changed rapidly over the past decade, with many new brands entering the market and the growth of the internet. The country had witnessed the emergence of newer channels of retail and the proliferation of social media had played an important role in the success of many brands. While the brand had retailed across the country for almost two decades it had never invested in a structured customer loyalty program. Fabindia had focussed only on limited print advertising and word-of-mouth publicity. Could this sustain the brand in the years to come? What strategies should it adopt to grow in a market that was becoming increasingly competitive?....................

COMPANY BACKGROUND

John Bissell set up Fabindia in 1960 to export upholstery fabrics, durries and rugs. Fifteen years later the first Fabindia retail store had opened in Greater Kailash, New Delhi. In the early 1980’s, the company added ready-to-wear garments to its range of offerings. However, its domestic retail business grew slowly as its focus remained on the export business. A significant change in the business approach and strategy of Fabindia was witnessed post the economic reforms that took place in India in the early 1990’s. Eventually when William Bissell (son of John Bissell) took over the company in 1999, the focus of Fabindia shifted from exports to the opportunities in the Indian market..........

THE INDIAN APPAREL MARKET AND KEY PLAYERS

The Indian retail market was one of the fastest growing retail markets in the world and ranked as number one in the Global Retail Development Index in the year 2017. It was estimated at INR 46,150 billion in 2017 and was expected to grow to INR 108,560 billion by 2027, growing at a CAGR of 9%. Steady economic growth, the growth in urbanization and attractive youth demographics had fuelled the retail growth over the past decade. While the food and grocery sector was the largest in the organised Indian retail market the apparel industry was the second largest contributor and could broadly be classified into menswear, womenswear and kids wear. Men’s wear held the major share of the market accounting for 41.7% share of the total market. Women’s wear contributed almost 37.5%, while kid’s wear contributed 20.8% of the market (Exhibit I(A) and Exhibit I(B)). Men’s wear and women’s wear were expected to grow at a CAGR of 7.4% and 7.6% respectively............

The Changing Indian Consumer Landscape

Significant changes in the Indian consumer landscape in terms of lifestyle preferences and buying trends have been seen since the opening up of the Indian economy in 1991. The economic reforms lead to a period of steady economic growth which in turn enabled a growth in household incomes and helped fuelling the growth in consumption. According to the Census of India 2016 data, the proportion of economically active population (15-59 years) had increased from 53.4 % to 56.3% during 1971 to 1981 and 57.7% to 64.7 % during 1991 to 2016. A large population base which was economically active typically was an indicator of enhanced consumption...............

FABINDIA: THE PRODUCT PORTFOLIO

The product portfolio offered by Fabindia could very broadly be classified into Textile-based and Non Textile-based products (Refer Exhibit III). The textile based products included ready-to-wear garments and accessories for men, women, teenagers and children and Home Products which comprised of furnishings, tableware, bed, bath, table and kitchen linen; floor coverings, upholstery fabric and curtains.............

REACHING THE CONSUMER

Fabindia operated in three segments – Fabindia retail stores, Wholesale Exports, and Institutional Sales. The full-fledged Fabindia store was often a standalone store measuring 5,000 sq.ft., located in an upmarket locality in a metropolitan city and offering almost all the product lines. On the other hand, in a concept store, specific products were retailed. Market potential determined the store location for the company and the layout of a typical store usually housed the clothes section at the back of the store and the entrance area was devoted to beauty, home and jewellery as the case may be. The Home Stores (Custom Home Design Centers) were often more than 10,000 sq.ft., as they needed to showcase the furniture as well as the home furnishings..............

PLANNING FOR GROWTH

As a part of the expansion plan the company planned to tap the tier 2 and 3 cities through a new format called micro stores which were roughly about 600-800 sq.ft., in size. To facilitate quick expansion across India the company pursued the franchisee route for pushing the next level of growth. It planned to open franchise outlets across the country. Franchisee partners would be allowed to decide the merchandise depending on the markets they were operating in. The management believed that it had worked out a profitable model for the franchise operations in a manner that each store operator would get roughly 35% return on capital employed (ROCE) - including the stocks – and would be able to recover the entire investment in a little less than three years.....................

CHARTING THE WAY FORWARD

Fabindia had indeed come a long way in the Indian retail market. It had pioneered branded womenswear and popularised products made from traditional techniques and processes and was also among the first brands to offer a premium shopping experience to the end-consumer. However, the Indian consumers are now more informed, and competition had increased. Apparel as a category was transitioning from a need-based buying category to a lifestyle category, with the consumer making purchases at will and from the locations that they choose from. To cater to the changing demands of the marketplace Fabindia had launched a new retail format – Experience Center in Mumbai. The Experience Centre was located in a prime residential locality of Mumbai and was spread over 10,000 sq.ft., and offered a unique shopping experience to its customers, and focussed on the transition from transactional retail to experiential retail.........

ASSIGNMENT QUESTIONS

I. Discuss the changing dynamics of the Indian women’s ethnic wear market.

II. What are the potential sources of competitive advantage for Fabindia in the Indian ethnic women’s wear market?

III..............

Exhibits

Exhibit I(A): The Indian Apparel Market (INR billion)

Exhibit I(B): The Indian Apparel Market Split

Exhibit II: Key Players in the Women’s Apparel Segment in India and Their Key Initiatives

Exhibit III: Fabindia Product Mix

Teaching Note Preview

Fabindia: Reinventing to Stay Relevant

Fabindia pioneered branded ethnic womens wear in the Indian market and popularized products made from traditional techniques and processes. It had achieved this feat by adopting a strategy of no discounts, no promotions and marketing indigenously made products in a competitive market full of national and international brands. While the brand had grown and had a loyal customer base, the rapidly changing Indian consumer now enjoyed many options while shopping. The Indian retail market had grown and this was driven by a large growing population, youth domination, urbanization, higher disposable incomes and changing lifestyles. While regional choices still influenced buying, the Indian consumer was changing fast, competition had increased and apparel as a category was transitioning from a need-based buying category to a lifestyle category. The consumer now made purchases at will, from the locations that they choose from. Social media played an important role for any brand and Fabindia’s brand building thus far had focused on limited print advertising and word-of-mouth publicity. Could this sustain the brand in the future? What is the strategy that the brand could adopt to grow in a market that was becoming increasingly competitive?..........................

Exhibits

Exhibit (TN)-I: PORTER’S FIVE FORCES ANALYSIS

Exhibit (TN)-II: SWOT Analysis for Fabindia

Exhibit (TN)-III: Fabindia’s Future Strategy

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Abstract

Fabindia pioneered branded ethnic womenswear in the Indian market and popularized products made from traditional techniques and processes. It had achieved this feat by adopting a strategy of no discounts, no promotions and marketing indigenously made products in a competitive market full of national and international brands. While the brand had grown and had a loyal customer base, the rapidly changing Indian consumer now enjoyed many options while shopping. The Indian retail market had grown and this was driven by a large growing population, youth domination, urbanization, higher disposable incomes and changing lifestyles. While regional choices still influenced buying, the Indian consumer was changing fast, competition had increased and apparel as a category was transitioning from a need-based buying category to a lifestyle category. The consumer now made purchases at will, from the locations that they choose from. Social media played an important role for any brand and Fabindia’s brand building thus far had focused on limited print advertising and word-of-mouth publicity. Could this sustain the brand in the future?

Pedagogical Objectives

The case study should enable the student:

  • To comprehend the complexities of the Indian women’s ethnic wear market and its competitive dynamics
  • To analyse the competitive advantage of Fabindia
  • To suggest a strategy for growth in an increasingly competitive market

Position in the Course

The case is designed for a Masters level course and an MBA audience. It can be used to enable the student understand the retail business environment and retail business strategy.



This Case Pack Includes:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
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