Fabindia Overseas Pvt Ltd Case Study Analysis For Education

Fabindia (or Fabindia Overseas Pvt. Ltd.) is an Indianchain store retailing garments, furnishings, fabrics and ethnic products handmade by craftspeople across rural India. Established in 1960 by John Bissell, an American working for the Ford Foundation, New Delhi, Fabindia started out exporting home furnishings, before stepping into domestic retail in 1976, when it opened its first retail store in Greater Kailash, New Delhi. Today it has over 250 stores across India and abroad, and is managed by his son, William Bissell.

In 2008, Fabindia had a revenue of $65 million, a 30% increase from the previous year. Fabindia sources its product from across India through 17 community-owned companies; a certain percentage of the shares of which are held by artisans and craftpersons.[1]

The products of Fabindia are mainly sourced from villages helping to provide and sustain rural employment in India. They are currently produced by over 40,000 artisans and craftspeople across India. The hand-crafted products also encourage good craftsmanship.[2]

History[edit]

1960: Foundation and early decades[edit]

Fabindia was first started as a one-man export company of home furnishings, by John Bissell in 1960, in the two small rooms adjoining his bedroom in his Golf Links flat, as "Fabindia Inc.", as it was incorporated in Canton, Connecticut. He used his recently deceased grandmother's $20,000 legacy as start-up capital.[2] Originally from Hartford, where his grandfather was the president of the Hartford Fire & Life Insurance Company,[3] Bissell, was previously working as a buyer for Macy's, New York left his position and came to India in 1958, as a consultant for the Ford Foundation to advise the Government of India run Central Cottage Industries Corporation. He was given a two-year grant to instruct Indian villagers in making goods for export. He firmly believed in the emerging Indian textile industry and was determined to showcase Indian handloom textiles with a way to provide employment to traditional artisans. In 1964, Bissel met British designer Terence Conran, whose newly established home furnishing retail company Habitat, soon became one of their biggest customers. Meanwhile, it also established a distribution network in the United States, supplying their products to mom-and-pop stores. Through early years Bissell travelled across craft-based villages and town meeting weavers and entrepreneurs, swatches who would produce flat weaves, pale colors and precise weights in handloom yardage, in the end he homed in on one supplier, A. S. Khera, a dhurrie and home furnishing manufacturer in Panipat, thus by 1965 it had a turnover of Rs. 20 lakhs, though for the first time it moved into a proper office.[2][4]

The year 1976, saw major equity restructuring within the company, as adhering to Reserve Bank of India's rules instructing foreign companies to limit their foreign equity to 40 percent, Fabindia offered its shares to close family members, associates, and suppliers like Madhukar Khera, an early supplier to the company. This was also the height of the Indian Emergency period(1975-1976), and the rule which barred commercial establishments to run from residential properties was implemented, the company were forced out of its second premises, a house on the Mathura Road. This prompted it to open the first Fabindia retail store in Greater Kailash, N-Block market in New Delhi, in 1976, which remains its register office.[2][3][5]

Now catering to the urban India as well, in the coming decade Fabindia differentiated itself from other government-owned and often subsidized players, in handloom fabrics and apparel sector, like KVIC and various state emporiums by adapting its fabrics and designs to urban taste. For this designers were accessed to modernize its line of home linens and most importantly introduced a range of ready-to-wear garments, including churidar-kurta suits for women, men's shirts etc. Even today, its team of designers provide most of the designs and colors, executed by village-based artisans. At the other end, these artisans learnt the basics of quality, consistency and finish, for instance avoiding frayed edges on handwoven shawls. The result was that traditional apparel and products became mainstream, and fashionable, fast adapted by a growing middle class and became identified as the brand for the elite and intellectual as well as affordable ethnic chic.[2][6][7]

Fabindia lost its biggest customer UK-based Habitat in 1992, when the latter was bought by Ikano group, founder of IKEA, which then decided to appoint its own buying agent in India; the following year John Bissell suffered a stroke, and his son William, gradually stepped into the helm of affairs, taking over completely after the death of father in 1998, at age 66.[3] Till then William, an undergrad from Wesleyan University, who had majored in philosophy, political science and government,[8] had spent several years in Jodhpur, since completing his education in 1988. William, working with rural artisans and crafts co-operatives across Rajasthan, was instrumental in the setting up of various weavers' cooperatives. One of the first tasks taken up by William was shifting Fabindia's focus to the domestic market, en route to becoming a retail chain, for till then it only had two stores in Delhi. In time Fabindia’s retail business overtook its exports.[6][9]

2000 onwards[edit]

Over the next two decades Fabindia, emerged as a successful retail business in India, with 111 retail outlets within the country and 6 abroad.[9][10] Fabindia added its non-textile range in 2000, organic foods in 2004, followed by personal care products in 2006, finally it launched its range of Handcrafted jewellery in 2008.[11] Fabindia sells a variety of products ranging from textiles, garments, stationery, furniture, home accessories, ceramics, organic foods, and bodycare products, besides exporting home furnishings.[2][12] Fabindia's retail expansion plans started taking shape 2004 onwards, it opened multiple and larger stores in metros like Mumbai, Chennai and Delhi, while at the same time spreading out beyond metros. It opened stores in cities like Vadodara, Dehradun, Coimbatore and Bhubaneswar, Durgapur soon as revenues also grew from Rs 89 crore in 2004-05 to Rs 129 crore in 2005-06, reaching Rs 200 crore in 2007, in the year when it sourced its products from 22,000 artisans in 21 states.[6]

Usually, the village-based artisan gets barely 5% of the tag price of their products as the rest is taken away by the middlemen. To counter this, Fabindia introduced an artisan-shareholder system through "supply-region companies" incorporated as subsidiaries. Here the craftspeople collectively own 26% of the equity in each company, based in nationwide centres, with Artisans Micro Finance, a Fabindia arm holding 49%, and employees and other private investors holding the balance.[1] Also as part its expansion plans, 6% in Fabindia was sold in 2007, at an estimated $11 million, to Wolfensohn Capital Partners, a private equity firm founded by former World Bank president James Wolfensohn.[9] In 2009, it acquired a 25% stake in UK based £30 million ethnic womenswear retailer, EAST.[13] Today the company has retail outlets in all major cities of India—137 at last count—in addition to international stores in Dubai, UAE; 3 stores in Bahrain; Doha, State of Qatar; Rome, Italy and one in Guangzhou, China.[13][14]

In 2005, Fabindia became a founder-member of All India Artisans and Craft Workers Welfare Association (AIACA), along with Pritam Singh (Anokhi), Ritu Kumar, Madhukar Khera and Laila Tyabji (Dastkar).[15] On the occasion of its 50th anniversary in 2010, the company made all its 842 employees shareholders.[16] By 2012, the company had around 1,000 employees and 16 community-owned companies, or supplier region companies (SRCs), which were formed in 2007, and employ 86,000 artisans.[16]

In 2013, Fabindia purchased a 40% stake in the Lucknow-based organic food and supplements company, India Organic, co-founded by Hindu convert and daughter of billionaire Edgar Bronfman, Sr., Holly Bronfman Lev in 1997.[17]

Controversy[edit]

On April 3, 2015, Union Minister of Human Resource Development, Smriti Irani allegedly spotted a camera positioned to record near a changing room, at an outlet of Fabindia in Candolim, Goa. She immediately raised an alarm, alerting her husband and then called a local legislator, Micheal Lobo, who lodged an FIR or First Information Report.

A local court later came down heavily on the Calangute police saying that they exercised their power of arrest arbitrarily against four staff members of Fabindia's Candolim outlet who were held late on April 3.

Judge Dvijple Patkar observed, "It appears that the police have lightly interfered/tampered with the personal liberty of the applicants for reasons best known to them. It appears that the applicants were automatically and unnecessarily arrested by the police. In my opinion, the circumstances of the case do not warrant any arrest. The police officer exercising the power of arrest as well as the investigating officer has not stated any valid justification for the arrest." [18]

On April 8, 2015 company’s Managing Director William Bissel, its former Chief Executive Officer Subrata Dutta, regional manager Ruchira Puri, marketing chief Ramu Chandra, stores in-charge Kundan Gupta, E-commerce head Arun Naikar and category head Ashima Agarwal have sought anticipatory bail to avoid arrest in district court in Mapusa town.[19]

Philanthropy[edit]

William and John Bissell established "The Fabindia School" in 1992 in Bali, in Pali district of Rajasthan, today it is co-educational, senior secondary school with 600 students including 40% girls. The school subsidized tuition fees of the girl students and offers them scholarships, in partnership with "The John Bissell Scholars Fund", established in 2000.[20]

Awards and recognition[edit]

Fabindia was awarded “Best Retail Brand” in 2004 by The Economic Times. In 2004, Fabindia was featured as part of a CNBC special TV report on India. Fabindia brand does not advertise, and largely works through word-of-mouth publicity,[21] then in 2007 the craft-conscious enterprise concept of Fabindia became a Harvard Business Schoolcase study.[22] 2010 marked 50 years of the foundation of Fabindia, and release of the book, The Fabric of Our Lives: The Story of Fabindia, by Radhika Singh.[23]

Launch of Fables[edit]

In summer of 2014, with an idea to cater the modern Indian youth and also the international buyers who are fond of Indian textiles and clothing, Fabindia launched a western wear brand 'Fables'. The brand was first launched at Fabindia’s Connaught Place store in Delhi but later on, it was made available all over the country. Currently Fabindia sells through its own stores across the country, through multi-brand stores and also through its online store www.fabindia.com.[24]

Notes[edit]

[1]

  1. ^ abcManjeet Kripalani (March 12, 2009). "Fabindia Weaves in Artisan Shareholders". Bloomberg, Business Week. Retrieved February 5, 2014. 
  2. ^ abcdef"The Fabindia Story". SPAN magazine. July–August 2010. Archived from the original on 2010-12-09. 
  3. ^ abcSethi, Sunil (July–August 2010). "A Connecticut Yankee in India". SPAN magazine. Archived from the original on 2010-11-27. 
  4. ^Case study, p. 2
  5. ^Case study, p. 1
  6. ^ abc"Fabindia's Fabulous March". Business Today. October 3, 2007. 
  7. ^"Fab styles". The Hindu, Chennai. Nov 2, 2004. 
  8. ^Mitu Jayashankar, Nilofer D'Souza and Udit Misra (8 November 2011). "Fabindia's Tightrope Walk". Forbes. p. 2. 
  9. ^ abcNaazneen Karmali (February 16, 2009). "Fabindia". Forbes. Retrieved October 6, 2010. 
  10. ^Fabinida TIME
  11. ^"Fabindia launches its first-ever jewelry lineThaindian News, Aug. 12, 2008.
  12. ^"Quite simply fab". The Hindu, Coimbatore. Nov 18, 2006. 
  13. ^ ab"Fabindia acquires 25% in UK ethnic retail chain". Reuters. Jan 8, 2009. 
  14. ^"FabIndia to roll out 250 stores by 2010Thaindian News, Feb. 21, 2008.
  15. ^Radhika Singh (2010). The Fabric of Our Lives: The Story of Fabindia. Penguin Books India. p. 251. ISBN 978-0-670-08434-0. 
  16. ^ ab"How Fabindia's William Bissell is changing the rulebook of business". Economic Times. Nov 2, 2012. Retrieved 2015-02-05. 
  17. ^"Fabindia acquires a 40% stake in Organic India" by Rasul Bailay & Chaitali Chakravarty Economic Times of India, March 6, 2013
  18. ^"Court slams Calangute cops for 'arbitrary' arrest". The Times of India. 
  19. ^PTI. "Peeping cam row: Fabindia's senior officials seek anticipatory bail". The Hindu. 
  20. ^"About us". Fabindia Schools. 
  21. ^Majumdar, . (2010). "1.13 Success of Fabindia Stores". Consumer Behaviour: Insights From Indian Market. PHI Learning. p. 14. ISBN 81-203-3963-0. 
  22. ^"Fabindia is now a Harvard case study". Business Line. Apr 15, 2007. 
  23. ^"The Fabric of Our Lives: The Story of Fabindia". Penguin India. 
  24. ^Somya Lakhani (April 25, 2014). "West Turn". The Indian Express. Retrieved 2015-10-06. 

Bibliography[edit]

External links[edit]

Interior FabIndia store, Delhi.

In 1958, well before American companies were sourcing from India, John Bissell left his position as a buyer for Macy’s New York to work as a consultant for the Ford Foundation in order to develop India’s export potential in its emerging textile industry. What Bissell discovered was a village-based industry with a profusion of skills hidden from the world.

Determined to showcase Indian handloom textiles while providing equitable employment to traditional artisans, Bissell established Fabindia in 1960 in order to fuse the best aspects of East/West collaboration.
Fifteen years later the first Fabindia retail store was opened in Greater Kailash, New Delhi with a range of upholstery fabrics, durries and home linens. By the early eighties, they started producing garments made from hand woven and hand block printed fabrics.

Over the years the focus of Fabindia’s marketing shifted from exports to the local Indian retail market. What started as an export house has today become a successful retail business presenting Indian textiles in a variety of natural fibers, and home products including furniture, lights and lamps, stationery, home accessories, pottery and cutlery. Extending this partnership to the farmers in rural areas, Fabindia launched its organic food products range in 2004. Fabindia Sana, the company’s authentic bodycare products range is also being launched at all Fabindia outlets.

Fabindia sources its products from over 15000 craft persons and artisans across India. They support the craft traditions of India by providing a market and thereby encourage and sustain rural employment. Today they have retail outlets in all major cities of India – 85 at last count – in addition to international stores in Rome, Italy; Dubai, UAE and Guangzhou, China.

Philosophy

Fabindia was founded with the strong belief that there was a need for a vehicle for marketing the vast and diverse craft traditions of India and thereby help fulfill the need to provide and sustain rural employment. They blended indigenous craft techniques with contemporary designs to bring aesthetic and affordable products to today’s consumers.

Their endeavor is to provide customers with hand crafted products which help support and encourage good craftsmanship.

Their products are sourced from villages all over India. Fabindia works closely with artisans by providing various inputs including design, quality control, access to raw materials and production coordination. The vision continues to be to maximize the hand made element in their products, whether it is handwoven textiles, hand block printing, hand embroidery or handcrafting home products.

An Overview

Ethnic weaves: In the tiny village of Chanderi in the Ashoknagar district of Madhya Pradesh, there is little respite from the scorching summer heat as the mercury touches 42 and 43 degrees celcius. There is a preponderance of dry dust on the barren land, which has not seen rain in months.

There is shortage of water, with daily tankers meeting the local people’s meagre needs. The local population, which includes 1,000-odd weavers, could still have coped, but the mortal blow is looming in the form of disappearing demand for their cherished fabric, chanderi.

Yet, in the face of impending doom, there is an air of hope, anticipation and excitement in this sleepy little village, as 455 weaver families are poised to become owners of shares in a community-owned company, a concept totally alien to all except the few educated youths here.

Mohammed Zuber Ansari, 28, has a master’s degree. After failing to find a job, he found himself in front of a loom and is still trying to come to terms with the developments. “We bought shares for Rs 1,000 and all I know is that this could change our lives in some way.”

That way has been paved by Fabindia, a retail outfit that has grown from one store in the mid 1990s to 85. Dabbling in fabric, apparel, handicraft and other products, it began an experiment with community-owned companies nine years ago in an attempt to include artisans in the wealth creation process.

The Fabindia Head Office is located in New Delhi at :

Fabindia Overseas Pvt. Ltd.
Head Office: B-26, Okhla Industrial Area, Phase -1, New Delhi -110020, India
Tel: +91-11-26811047 / 8 / 9 / 50 / 51, Fax: +91-11-26811053,

Registered Address: N-14 Greater Kailash – I, New Delhi – 110048, India
Tel: +91-11-29232183 / 84 / 85

Fabindia Products

The major portion of Fabindia’s product range is textile based. Non- textile introductions to this range are Home Products (introduced in October 2000), Organic Food Products (introduced in July 2004) & Fabindia Sana – Fabindia’s range of authentic bodycare products (introduced in March 2006).

The textile-based product range includes ready-to-wear garments and accessories for men, women, teenagers and children; bed, bath, table and kitchen linen; floor coverings, upholstery fabric and curtains. Cotton, silk, wool, grass, linen and jute are the basic fibres used.

The Home Products range carries furniture, lighting, stationery, tableware, cane baskets and a selection of handcrafted utility items.

Fabindia Organics carries several types of cereals, grains, pulses, spices, sugar, tea, coffee, honey, fruit preserves and herbs.

Fabindia Sana, Fabindia’s range of authentic bodycare products includes soaps, shampoos, hair oils, pure oils, moisturisers, body scrubs, face packs, hair conditioners & special skin care products.

Holding these major product lines together is the company’s commitment to the rural and crafts sectors of India.

Harvard case study

Fabindia is a brand that does not advertise. It, in fact, celebrates the success of its copycats. And now Fabindia, the craft-conscious enterprise, is a Harvard Business School (HBS) case study.

“It is like playing a tennis match at centre court, Wimbledon in front of a packed stadium. It’s a great honour,” says Mr. Sunil Chainani, Director, who has shared the Fabindia story at IIM-A, and has presented it at HBS.

According to Dr. Mukti Khaire, Assistant Professor, HBS, who has put together the case, students of the Ivy League school are being trained to perform in a globally competitive world, and thus the increasing focus on unique success stories from outside the US. Founded in 1960, Fabindia makes the cut for being an example of a corporation that does not just aim to do well, but does good too. “A strong mission can be both an opportunity and a constraint on the growth of a firm,” points out Dr Khaire. However, the private retailer’s unique value proposition has not come in the way of it being recognised as big brand today. And this in spite of the fact that Fabindia has never advertised, points out Dr Khaire.

“Our constant endeavour is to resist the temptation of going `mainstream’ which is more of a commodities game, and develop and widen the niche markets in which we are the dominant player,” says Mr William Bissell, Managing Director, Fabindia.

With 85 stores in the country currently, and one each in Rome, Dubai and Guangzhou, the company is to add close to 200 stores in the next four-five years. And it is also believed to be on a look out for private equity investment.

And, true to its founding mission of creating sustainable employment, it is taking its craftsmen along. From providing jobs for close to 15,000 artisans today, it is hopeful of supporting another 1,00,000 in the next few years.

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