Fabindia Strategy management complete overview

5/23/2018 Fabindia Strategy management complete overview

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FLOW OF PRESENTATION

Introduction

Timeline

Products and CompetitionEnvironment Scan

Business Level Strategy

Corporate Level Strategy

Organizational StructureEvaluation

Recommendations


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INTRODUCTION

0 India's largest private platform for products that are made from

traditional techniques, skills and hand-based processes

0 Initially commenced as a village based industry in 1960 by John

Bissell

0 Links over 40,000 craft based rural producers to modern urban

markets0 Promotes inclusive capitalism, through its unique COC

(community owned companies) model


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PHILOSOPHY

VISION

In addition to making profits, our aim is

constant development of new hand woven products, a

fair, equitable and helpful relationship with our

producers and maintenance of quality on which our

reputation rests.

MISSION

Our endeavor is to provide customers with

hand crafted products which help support and

encourage good craftsmanship.


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OBJECTIVES

o To create an interest and a market for cottage

industries

o To continuously support Organic agriculture

o To follow the policy of Fair Trade


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FABINDIA

6

JohnBissellstarts

Fabindiaas a

wholesale

exportcompan

y

Addedready to

wear

garmentsto theretail

offering

Marketingfocus shifts

from exportsto local

Indian retail

WilliamBisselltakes

over as

MD,Fabindia

Has 6stores

inmetros

>Foodproducts

rangelaunched.

>20stores

across themetros,

and startexpanding to Tier 2

and 3

Bodycare

productrange

launched,FabindiaSana

108retailstores

acrossIndiaand 6stores

atinternational

1960Early

80s1990s 1999 2001 2004 2006 2010


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PRODUCTS


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External Environment Scan

There are three levels of External Environment

scanning

1. Remote

2. Industry

3. Competitive/Business Environment


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1. Remote PESTEL Analysis


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2. Industry Environmental

Scanning


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3. Competitive and Business Environment

Unorganizedsector

OrganizedSector

Garments Based

(Shoppers Stop,Pantaloons, Westside,

Reliance Trends,

Globus)

Government

Handloom Initiatives(Khadi Gramodyog,

Cottage Industries

Emporium, State

Government

departments)

Designer Boutiques

Ethnic wear retailers

like Khadder, W and

Good Things, and

Stand alone stores like

Shristi, Biba, Anokhi

Local tailors who

provide customised

garments to the

customers atreasonable prices

Local NGOs selling

wares,

Regional -Law

Garden Market forbuying handicraft and

Gujarati outfits


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SWOT AnalysisStrengths

Differentiable products Diverse product mix

International appeal

Eco-friendly, ethical, natural & stylish

Creates employment for craftsmen in

rural India

Different categories of stores

Constant development & innovations -

product line

Big distribution network

In-house manufacturing

Customer Loyalty

Weakness

No specific promotions strategy Limited channels of business

Sourcing strategy skewed towards

suppliers

Inconsistent quality of products

Inconsistent service in stores

Opportunities

In store merchandising,

Promoting e-business channel,

Interactive website for customizeddesigning

Organic foods market,

Customer acquisition Strategies

Threats

Time-lines and Delivery schedules

dependent on too many variables,

Monitoring and Supervision - benchmarking of traditional skills based

products,

Building Capacity - time and resource

intensive,

Not in touch with Fashion Trends,

Competition from leading Italian brands

& stores.


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RETAIL EXPANSION

Fabindia Store locations

0 108 stores in 40 major cities

of India.

0 6 stores in international

places including UAE, Dubai,

Bahrain, Italy and Rome.

0 Online Shopping & Exports to

34 countries


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BUSINESS LEVEL STRATEGY

How toGrow

How toCompete

Whereto

Compete


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BUSINESS LEVEL STRATEGY

15

A delighted Customer is our

Best Brand Ambassador

USP : quality of the fabric and the

cultivated image of Indianness

Does not follow any customeracquisition strategy: focuses on

customer retention

Key element: word of mouth

publicity ( Zero advertising except

print ads during promotions ),advertorials, mobile marketing,

in-store posters

Mystery Shopper Program: to

check the customer satisfaction

level

Repeat customers

New customers


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CORPORATE LEVEL

STRATEGY0 Value Creation

0 Demand in the West for Indian products

0

Rural Upliftment0 Elements of Corporate Strategy

0 Creating Future Direction

0 Style of Centre

0Corporate Portfolio

0 Diversification

0 Financials


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Future Direction

0

Organic Food

0 Furniture and Home

Dcor.

0 More retail stores in

India and abroad.

Store Layout

0

It has designed thestores decor and

ambience keeping in

mind different locations.

0 The layout usually keeps

clothes section at the

back of the store and the

entrance area is utilized

for home products.

0 The exclusive jewelercounter is also kept in

the fronts.


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INTEREST COVERAGE RATIO

8.41 9.27

10.75

16.54

3.274.15

5.51

2.08

0

2

4

6

8

10

12

14

16

18

Year 2005 Year 2006 Year 2007 Year 2008

FabindiaPantaloons

The interest coverage ratio of Fabindia is far higher than that of Pantaloons.

Hence, raising funds through debt is not a big challenge.


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INTEREST COST AS % OF

SALES

1.09 1.140.96

0.69

2.14

1.49

2.252.08

0

0.5

1

1.5

2

2.5


FabindiaPantaloons

The interest cost as a percentage of sales for Fabindia is far lesser than that of

Pantaloons. Hence, raising funds through debt is again not a big challenge.


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PROFIT MARGIN RATIO (IN

%)

The PAT as a percentage of sales of Fabindia is higher than that of Pantaloons.

Though retail industry works at low margins, Fabindias margins are quite high.

Hence, raising funds through debt is not a big challenge.

5.66 5.786.3

6.02

3.41 3.27 3.632.71

0

1

2

3

4

5

6

7


FabindiaPantaloons


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MANAGING DYNAMIC SCOPE

OF FABINDIA

GeographicalPresence

74 cities, 6countries

Supply ChainManagement

IncreasingPortfolio

Textiles:KitchenLinen,

coverings,curtains and

garments

Organic food,Body CareProducts,

HomeProducts

Online Stores

Onlinechannel,

NonExclusive

selling

Productsavailable inother online

avenues

AggressiveExpansion

Initially took18 yrs for a

secondoutlet

2006-60stores

2013-169stores

Multiplecommunity

17 supplierregion

companiesall over India

Holding:49%

FabIndia,26%

Artisans,Guide them


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CHANGE AND RENEWAL

Stake

March, 2013: Acquired 40% in Organic India

L Capital 8% which values FabIndia at Rs1400 crore

Azim Premji Invest 7% stake

Leverage

Organic India 60% revenues by exports, plans to enter herbalcosmetics and beauty products in 5 years

Leveraging the rural base (2.4 mn hectares, 200 artisan clusters)

Balance

Balancing wealth creation for PEs and social objective soul Tight rope walk needed for expansion and exploring neweravenues


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ORGANIZATIONAL STRUCTURE

0 Employee strength 1500+

0 FabIndia employees 1100

0

Contracted staff 4000 An equal opportunity employer

0 1.78-1 mix (Men-Women)

0 76% of management are women

0 Over 30% staff have been with the companyfor over 5 years

0 Ratio of HR to staff = 1:125


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Consistent standards of service

Excellent level of customer interaction

High levels of personalization Very high initiative to get feedback and give follow up

To the customer

Conformity to all processes

High productivity

Excellent customer feedback

Training ground for new employees and stores

To the organization

High investment in team member development

Stress reduction in the working environment asprocess conformation increases

Highly motivated team

To the store team

0 Shared Ownership

0 Entrepreneurial work culture

0 Performance and Development Focus0 Centers of Excellence


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How FabIndia operates?

0 Community-based business

0 Act as intermediary

0 Challenges:0 How to achieve scale?

0 Quality assurance

0 Innovative re-organization created 17 Supplier

Region Companies (SRCs)


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Typical Order Flow between Stores,

SRC and Artisans / Producers


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Evaluation

0 Clarity in visionon the part of the founder promoter

played a major role in the success of Fabindia.

0 The vision puts across the following points:

0 Recognition of hidden talent within India to make

unique textile products

0 Presence of global market for handcrafted products

0 Need to collaborate and upgrade skill sets to meet

contemporary tastes


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Financial Strategy Evaluation

0 Using ones own capital for business is a risk taken up by a

promoter; however the capital so used is interest free.

0 Fabindia funded its expansion plans by offloading equity at

select intervals.

0 The expansion plans and drive of Fabindia came when

economic liberalization was ushered in India.

0 Subsequent drive across India coincides with the growth in

the numbers of the Indian middle class.0 The concept of Community owned Companies, is another

good sustainable financialstrategy from Fabindia.


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Technology Strategy

Evaluation0 The products sold by Fabindia require the talent and

skill of the craftsmen.

0 All the products are of traditional nature, no patents

or trademarks.0 Fabindia has not invested extensively in production

facilities as its products are manufactured by theartisans themselves.

0The entire technology strategy is sustainable asnobody can claim ownership to the techniques beingmade use of to manufacture the products.


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Marketing Strategy

Evaluation0 Product products are manufactured in an eco-friendly

manner using the traditional skill sets. FabIndia hascreated a niche eco friendly product basket that is

sustainable.0 Place- Initial focus on the export market, later on the

domestic market.

0 Promotion- Fabindia does not advertise. Given the size ofthe domestic market and its appetite for ethnic products,

the market for Fabindia products are sustainable.0 Pricing - Products are priced as per the grade of the

material. Unique designs not found elsewhere normallyjustify the price charged.


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RECOMMENDATIONS0 Heavy investments in back-end of value chain

0 Supply chain development for efficiency and quality management

0 Expansion aiding strong regional presence

0 Outlets to counter regional competition

0Sourcing from local suppliers for outlet and other regions will beeasier

0 Growth through harnessing new customers

0 Cannot depend on existing customers to counter competition

0 Must create new customers in all segments


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THANK YOU

Documents

Fabindia Strategy management complete overview