Case Study

By: Faisal . Lakshmi . Manika . Swati

Overview

Product Mix Supply Chain Fabindias Growth Challenges

SWOT Analysis Strategy Formulation Implementation

A 46 year old family owned firm

Founder: Mr John L. Bissell

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.

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

WIDTH
Garments (70%)
Womens wear

D E P T H

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%)

Body wash

Accessories (<1%)

Cereal

Indian (30%)
Western (20%) Mens wear (28%) Accessories (15%) Infant, Kids, teens (7%) Maternity wear

Shampoo
Soap

Honey
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 Fabindias 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 Bissells 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
Grow revenues of Rs 8.6 billion from 200 stores by 2011

Mission
Growth of company along with growth of suppliers. And to provide more employment opportunities.

Type of Stores
Ownership Location & Ambience Staff

Premium Regular Concept Online

Self owned & leased Stores Joint Venture in Rome Franchisee in China

Heritage Landmarks, Destination Stores Aesthetics connection to all things natural

Uniforms conveying their ideology Routine Visits to supplying weavers and training programs

Entrepreneurial Store Managers:

Allotted a budget for ordering goods and operational expenses Budgets: Store Location, Previous years Sales, other macroeconomic indicators Interacts regularly with the merchandisers at the HO Stocking plans

Mystery Shopper Program:

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

At least one handmade element

No returning of goods to supplier

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