SAVITA MODAK

F

History and Background

Fabindia was founded in 1960 by the late John L Bissell. The founding shareholders were family and friends of Bissell who put in $ 38,000 as the initial share capital. The first five years were difficult because the demand for such products was low and there were hardly any importers of Indian textiles. It was a period when many of the earlier exporters concentrated on carpets and silks. At the time Fabindia’s emphasis was on hand spun and handloom cotton while the worldwide demand for these products was limited. By 1965, when Fabindia moved to its second office Delhi, business had begun to grow.

Two extraordinary partnerships cemented by Fabindia helped them grow continuously for the next two decades. These were with Habitat, a large UK-based buyer and Bharat Carpet Manufacturers, the quality manufacturers of rugs and durries. It was also during this period that the company added the retail business to its fold. The relationship with Habitat ended in 1992. Exports became increasingly competitive and retailers could now come directly to the manufacturers. By 1994, the focus had begun to shift to retail and Fabindia opened its second store in Delhi followed by Bangalore in 1996; Chennai in 1997; Mumbai in 1998 and one more in 1998; Italy in 1999; Pune and Gurgaon in 2001. Today, Fabindia has over 12 stores in nine cities in India and one in Rome as well and provides employment to 7,500 artisans with a staff of approximately 400.

The aim of Fabindia is to become the “world’s largest craft-marketing organisation”. The company believes in doing business with very little or no “fireworks display”. The board is driven by the guiding principle that return on investment (RoI) must be guaranteed in year two or three by more than 25 per cent. Fabindia also always believes in recognising the role and contribution of the weaver and giving him a fair deal in respect of payments, technical help and repeat orders. Fabindia people team: The company has formalised its induction and training processes so that all employees work on set and expected standards. It has a written manual, which is a repository of the ideas, systems, and procedures that have evolved at Fabindia. Its purpose is to codify these as standard procedures. Market segment and products: Fabindia has through its broadening of product range, expanded its market to include retail as well. It started out with hand spun and handloom cotton home linen. Then they included rugs and durries and later included ready-made garments in both silk and cotton variants.

The Fabindia clientele are largely the urban consumer who likes handloom garments because they are made from natural fibres, aesthetically beautiful and who believes it has a lot of character. There is also another lot of people who associate handloom garments with style and would like to make a statement about it.

Marketing, Sales and Distribution

Like other merchant manufacturers Fabindia sells through retail stores which are very high on “look-touch-feel” because that’s also what sets them apart from the other unorganised setting of a crowded craft mela with people falling over each other. It is an easy setting which is cool and comfortable allowing the customers the luxury of browsing around, trying out various styles and shopping at their own time.

The preference has emerged because of “convenience” becoming important in terms of accessibility, comfort and choice. This clientele is a more discerning, less price-sensitive lot who would much rather buy from a quality merchant/specialty retail stores or a small-scale set-up from back of the home where they are assured of an aesthetically good selection of fabrics and made-ups, quality and service and who would therefore, not flinch at the premium attached to the product in such a place. The success of Fabindia is also largely due to the fact that their outlets stock merchandise which is available when the customer wants it, not when the producer thinks its a good time (like diwali, wedding season, etc).

Production and Procurement Systems

Fabindia has institutionalised its production and procurement processes: Fabindia gives orders based on existing stock situation direct to the producers. They also give them the design specifications. They only look for inputs on colour from the producer groups. Fabindia normally orders in advance for the next season so that they do not have to wait for supplies in times of high demand. This is done through a fixed schedule in advance so that the suppliers also get used to a systematic time schedule and know how to plan for their raw material supplies.

Issues relating to supply from producers:

Compliance with specifications in terms of colour palette and other design inputs; fabric construction; quality standards; adherence to commitments on delivery within specified time frames; and maintaining an open dialogue on the constraints/ vagaries associated with handloom products so that the sellers do not end up making commitments that they cannot keep to their customers. Main problems faced by Fabindia: Maintenance of high quality standards on a consistent basis. Colour fastness is an issue if the fabric is piece dyed and if the yarn dyeing is not of good quality. Consistency in colour and weave – the entire production process is manual and very labour-intensive and usuallydone in small set-ups – so maintaining a consistent colour across one lot or more is a problem. Multiple looms churning out the same weave would also result in minor differences. Bad quality yarn and/or dyes would

Economic and Political Weekly August 5, 2006 result in huge rejections and cancellations of orders.

Fabindia does not believe squeezing its producers for credit (which implies that the producer is paid within 10-15 days of delivery at any location).

Product development: Fabindia feels that this could be an initiative undertaken by the weavers themselves if they have years of experience behind them and are aware of their customer’s needs and requirements. A lot of their inputs are really valuable and with very little direction could end up with a brilliant product. Their abilities and skills cannot be underestimated. In fact, most qualified product designers have not been able to provide that cutting edge that the weaver himself can provide, the best combination, of course, is for them to complement each other. What guides the designing: Fabindia’s guiding principle is that people make choices and as a retailer they have to

themselves – so the design is actually assessed from the practical production and costings point of view as well when being sampled. The samples produced are assessed by the design team/designer themselves and presented to the marketeers before being passed for production. The first production lot has also to be cleared by the design person to even out any teething problems that there might be in the production process. Generation losses over time have to be monitored very carefully by the buyer (on behalf of the marketeer) as minor variations in colour can throw the entire layout out of gear. Buyer/producer meets happen twice a year where weavers also come forth with their ideas and Fabindia also gives them a feedback on the end user requirement as well as interactions with the merchandisers. This has helped Fabindia develop product innovations in the jamdani, jaquard and bandhni styles of handlooms.

Issues Relating to Marketing

Packaging: Fabindia does not give too much importance to this aspect as they feel that the product should and does speak for itself. Packaging hence, has a negligible role to play because the product is so nonfussy and simple that it needs no frills to make it attractive or stand out. Product information: Product information is included in some manner (about what part of the country the product comes from and some highlights of the process and any significant details like done by weavers’ groups) because Fabindia’s own experience has been that a lot of customers, especially the discerning ones value this information sharing and help in eventually promoting the product through word of mouth publicity. Visual appeal: At Fabindia this is important that the visual appeal always helps sell more. Not every customer is aesthetically inclined, some need help and direction, and so visual merchandising at the point of sale definitely helps. Branding: Importance is given to branding to help their customers identify their product from the rest in a multibrand environment (not every one is able to market their brand exclusively). In shop convenience: Fabindia has recognised that this aspect is important from the point of view of providing a complete package to the customer. It would not do to say they do table covers, but not mats and napkins, or they do make kurtas, but do not offer pyjamas to match. Their showrooms reflect the fact that in this day and age customers look for a single point shopping experience.

What is important from the packaging point of view is what it sits next to on the shelf at the point of sale. It is really sad sometimes to see an exquisite handloom piece sitting next to a viscose fabric in a multiproduct store. Fabindia gives a lot of weightage to product display and does believe that product synergy in displaying handloom products is very important.

Conclusion

This case study clearly shows that the success of Fabindia as a major player in the retail handloom sector in India is due to the fact that the company has always believed in and practised “good business practices and never compromised on best quality”. The founders’ belief that Fabindia’s product quality will and should be the best has made them formalise their procurement, production, design and distribution processes. This has helped them create a brand, which speaks for innovation, quality and value for money, which in the minds of its identified target audience, has positioned Fabindia as the preferred choice among retail handloom sellers in India.

EPW

Email: savitamodak@sbsworld.com