Answer1 Answer1 F
Fab India has come a ab India has come a long way from its humble beginnings as an long way from its humble beginnings as an export shopexport shop in 1960, with its transition from an
in 1960, with its transition from an export house to a retail store the businessexport house to a retail store the business model of Fab India has been changing
model of Fab India has been changing during this period. during this period. Initially FInitially Fab Indiaab India operated as a middleman be
operated as a middleman between abitat, a !"tween abitat, a !"#based retail company and#based retail company and $harat %arpet &anufacturers. abitat became a ma'or customer, ma(ing up $harat %arpet &anufacturers. abitat became a ma'or customer, ma(ing up 60#6)* of Fab India+s r
60#6)* of Fab India+s reenue and was a ma'oeenue and was a ma'or drier of its growth for r drier of its growth for -- years. /he business model was straightforward and simple
years. /he business model was straightforward and simple as $%& wasas $%& was proiding something which was demanded by abitat. /he company only proiding something which was demanded by abitat. /he company only targeted foreign mar(et in its initial years.
targeted foreign mar(et in its initial years. oweer, in 196 FabI
oweer, in 196 FabIndia too( its rst step towards retails by setting up ndia too( its rst step towards retails by setting up aa small shop to chec( out the
small shop to chec( out the responses to the company, selling mainly the leftresponses to the company, selling mainly the left oer supplies from e
oer supplies from export orders of home furnxport orders of home furnishing. ishing. In 19 the retail modelIn 19 the retail model expanded and company started collaborations with famous designers to
expanded and company started collaborations with famous designers to ac2uire uniersity students.
ac2uire uniersity students.
3uring 19 the company decided to
3uring 19 the company decided to expand its operations by setting up aexpand its operations by setting up a collectie with leather wor(ers, printers and durries weaers which
collectie with leather wor(ers, printers and durries weaers which turned outturned out to be a setup for
to be a setup for 3A. 4ith its declining relationships with abitat the focus3A. 4ith its declining relationships with abitat the focus of the company shifted from exports to more of retail oriented.
of the company shifted from exports to more of retail oriented. /his also/his also demolished the position of
demolished the position of FFabIndia as a abIndia as a middleman.middleman. /he new idea was to car
/he new idea was to carry out business under their own bry out business under their own brand name whichrand name which would consolidate their position in the
would consolidate their position in the Indian mar(et. /his plan was bac(ed byIndian mar(et. /his plan was bac(ed by setting up stores in 3elhi,
setting up stores in 3elhi, $angalore, &adras and $ombay$angalore, &adras and $ombay. /he home . /he home mar(etmar(et sales were 5)* with a year
sales were 5)* with a year on year growth of 0* and on year growth of 0* and the home mar(etsthe home mar(ets too( oer exports 7)-.* s .*8.
too( oer exports 7)-.* s .*8. /he ision plans wer
/he ision plans were made in order to expand e made in order to expand company+s operation in thecompany+s operation in the Indian mar(et as the product was
Indian mar(et as the product was widely accepted by widely accepted by Indian consumerIndian consumer.. Highlights of vision plan 1:
Highlights of vision plan 1:
•
• Adding up a new store a yearAdding up a new store a year •
• Increase monthly sales from -0 million to 0 million in four yearsIncrease monthly sales from -0 million to 0 million in four years •
• &ore intensie use of capital 7hiring professional managers, renting stores&ore intensie use of capital 7hiring professional managers, renting stores
instead of buying them8 instead of buying them8
•
• %ustomiing garment range so to be w%ustomiing garment range so to be widely accepted by consumers inidely accepted by consumers in
other cities other cities
•
• Adding new organic products to Adding new organic products to their existing product line 7diersitytheir existing product line 7diersity
factor8 factor8
Highlights of vision plan 2: Highlights of vision plan 2:
• Increasing turnoer from 0 million to -00 million in four years • Actie problem soling to add competitie adantage
• :(ill based compensation and bonus plans to (eep employees motiated • $ecoming lifestyle retailer with strong national presence
• %onerting companies into number of hubs
Highlights of vision plan 3:
• :etting up :upplier region companies, &ar(et regions and ;lobal support
practices
• 3ecentraliing the company+s management
The success factors include:
• <roximity to the customers and supplier 7initially with abitat and $%&8 • %orporate :ocial =esponsibility
• 4elfare of the artisans • 3iersity across products
• !nderstanding of demand of the end consumer and ability to shape
product according to their needs
• %ore positioning as Indian ethnic products • <resence in international mar(ets
• "nowledge of mar(et
• 3i>erentiated mar(etplace for di>erent customers • ?uality oer 2uantity
• 3ecentralied management in later stages
• andmade products hae incredible demand, same goes for organic
products which proide high margins
• /he extensie training process of the employee • :etting and successful implementation of goals • Flexibility in production process
Answer-Strengths Weaknesses
• =igor depth and breadth of
management and clarity in planning process
• :hortage of 2ualied personnel
to power the growth.
• :uppliers as (ey sta(eholders • %ommitment to the founding
mission.
• Inolement of store managers
and sta>
• :upply chain bottlenec(
• /rust and bond among all
supply chain members.
• /he brand is losing out on
attracting new customers as it hugely depends on repeat purchases
• ?uality control, mystery
shopper program
• @ot enough experienced
personnel to push FA$I@3IA towards growth in the retail sector
• 4ide product range • imited global penetration
despite huge potential in @=I mar(et
• /he autonomy gien to
employees has helped induce accountability among them
• /he brand has maintained its
Indian#ness with the
authenticity of hand#woen fabric for oer years
• /he fact that the brand strongly
beliees in word of mouth mar(eting which has proed ery e>ectie as the brand does not adertise
Opportunities Threats
• ;rowing organic products
mar(et 7-#5 million potential consumers8
• Future competition in organic
mar(et expected from bigger players li(e :hoppers :top and <antaloons.
• ;rowing consumer incomes • Financial funding re2uired for
growth
• Flourishing suppliers • %ompetition
• Foreign <layers
• !norganied mar(et • "BI%
• /he brand needs to tap the
potential of organic foods by creating awareness about their merits
• :ocial mission s. %ompany
growth
• 3isplay of FA$I@3IA products in
&$C+s and collaborating with arious construction groups would gie greater isibility to the brand
• ;eographic expansion in !:
and !" with huge Indian population
In my opinion there is a change re2uired at the micro leel as they lac( professional managers in the company which plays a crucial part in decision ma(ing processes. At the macro leel they hae done extremely well by establishing themseles as an ethnic Indian wear brand. /heir products are
widely accepted by the end consumer, although the bottlenec( in the supply chain management could be wor(ed upon to ma(e FabIndia a more e>ectie organisations.
In my opinion FabIndia should remain in niche mar(et and rather than broadening their position they should focus on consolidating their position in the niche mar(et, the reason behind this would be as followsD
• /hey hae ast experience which adds up to their expertise in this eld
and in the long term they will be able to outperform competition
• <roximity to artisans, suppliers and consumers hae allowed them to hae
good relations with them
• 4ith the purchasing power of the consumer increasing, in the long run
2uality products will be high in demand
• Expansion may result in brand dilution
Answer5
• /he rst step that I would recommend would be to sort out their supply
chain bottlenec( due to which they are unable to proide large number of products to their existing customers.
• /hey can start with the customer loyalty program whereby the fre2uent
isitors will get certain percentage of discount, this will help the company to retain their existing customers and attract the new ones
• If the company is targeting only the niche mar(et they can come up with
personalied products for their customers whereby the customers can get what they desire
• Barieties of store outlets can be opened to cater the specic needs of the
customers 7for exampleD wedding wears, festie wear and so on8 Answwer
In my opinion if they broad base their positioning, then in that case they should be broadening in terms of both the type of customer and the type of product. 4hy should they broaden the type of product
• /hey are selling premium products and to ac2uire the mass mar(et they
should be able to produce products which hae less retail prices
• In the mass mar(et the number of players would be more and hence the
competition would be higher, in order to oercome that they need to compete with their competitors at a price at which they are currently selling products
• Adding more types of products would help them diersify their portfolio
which will eentually spread the ris(
• arge portfolio of product would gie them more isibility in the mar(et • Crganic mar(et is already growing rapidly and to cater the increasing
demand the company can come up with few additions in their already existing organic product range
4hy should they broaden the type of customer
• /hey hae targeted people aboe certain income leel as they are selling
premium products. In order to tap the mass mar(et, they should be able to fulll the demands of customers below those income leel at desired prices
• Foreign mar(ets with higher population of Indians is an area to explore for
companies li(e FabIndia
aing products for di>erent classes of customers will create a brand awareness among the consumers
