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Fabindia is an Indian company that sells furnishings, traditional apparel, personal products, and a wide variety of consumables and personal care products, all of which are sourced from Indian villages. Its products are sophisticated and fashionable, while simultaneously being traditional and ethnic. The “Fabindia style” stands out in its classic popular products like Nehru jackets and kurtas.The strength of the company is that it is recognized as a brand that sells traditional fashion with a social purpose. Its tagline, “Celebrate India”, communicates a strong India-oriented message. It has gained popularity among Indian customers and is a must-visit store for foreign tourists (Singh 2010).
Fabindia’s business model is based on the idea of “inclusive capitalism” which sets the company apart from its competition. While other companies establish supply chains to get products from the cheapest sources globally, Fabindia sells its products ensuring a “fair, equitable, and helpful relationship with our producers, and the maintenance of quality” (Fabindia 2018b). Fabindia has also moved beyond socially sustainable retail strategies to ensure that the communities that it services are fairly treated; this can be seen in the company’s setting up of a school in Rajasthan in 1992, which now has female enrolment of over 50% (Fabindia 2018b).
Fabindia was established by John Bissell, a US national who previously worked as a buyer for the retail chain Macy’s. Bissell began to work in India in 1958 as a consultant for the Ford Foundation in New Delhi. His brief was to advise Indian villagers who worked for Central Cottage Industries Corporation, a government-run company, on how to improve their products to make them ready for export. Over the two-year period that Bissell was working with Central Cottage Industries Corporation he noticed that the village artisans were producing a rich variety of quality handloom fabrics, but that they were not being paid acceptable prices for their goods. The artisans did not have access to urban markets and were often exploited by traders and middlemen – as a result, many were living in poverty. In 1960 Bissell consequently began to outsource home furnishings from these villages, ensuring that he was paying fair prices for their purchase before exporting them to the US. The first Fabindia store was opening by Bissell in 1976 in Greater Kailish, New Delhi (Fabindia 2018a).
John Bissell suffered a stroke in 1993, and his son William Bissell began to manage the company. Following his father’s death in 1998, and a period of taking care of the operations, William became managing director of Fabindia in 1999 (Vasudev 2016). Working on the principle of “inclusive capitalism,” William formed co-operatives of village weavers and craft workers in Rajasthan, who became the suppliers of Fabindia. He also gave new direction to the company: under his leadership, the company began a program of retail expansion. Whilst his father had largely focused on exports, William recognised that this was not a long-term strategy for Fabindia and that it instead needed to focus on the domestic market. Starting from from just two stores in New Delhi, Fabindia has expanded under William Bissell to become a formidable retail chain within India, with a growing international presence in export markets – today the company has over 3,000 employees in 232 stores, across 88 Indian cities and 10 international locations: in Rome, Dubai, Kuala Lumpur, Quatre Bornes (Mauritius), Singapore, Kathmandu (Nepal), and Dallas (Texas) (Vasudev 2016). The company reported consolidated revenues of Rs 1,150 crore ($180 million) for 2016 and it has bold expansion plans of doubling this turnover in the coming years. (Dhamija 2017). The Economic Times also reports that Fabindia Overseas has become the largest retail apparel brand in the country, and performs significantly ahead of giant fashion companies such as Zara and Levi’s India (Raghavan 2015).
William diversified Fabindia’s product offerings by launching Fabindia’s home products range in 2000, their organic food line in 2004, personal care products in 2006, and Fabindia’s handcraft jewelry business in 2008. A Fabindia store today stocks ready-to-wear garments and accessories, furniture, lighting, stationery, tableware, cane baskets, and a selection of handcrafted utility items. Several types of cereals, grains, pulses, spices, sugar, tea, coffee, fruit preserves, and herbs are stocked under the Fabindia Organics line. Personal care products include soaps, shampoos, hair oils, pure oils, moisturisers, body scrubs, face packs, and skin care products. All the products are sourced from the same communities with whom the company has built deep relationships. In this way, Fabindia engages not only with handloom weavers but also with farmers, processors, and woodworkers in villages, empowering them in the process.
Fabindia’s business model puts the village producer at the heart of its retail strategy. The company helps producers to make high quality designs and provides outlets for traditional weavers in its premium fashion stores. It also ensures that the village artisans who produce for the company are paid a fair price for their work. In this way Fabindia has helped to overhaul traditional working conditions for village artisans.
Formerly, village craftsmen and women had no access to the retail market or contemporary designs, and the quality of their work was inconsistent as their products were mostly made by hand with few guidelines being followed regarding how they were created. They produced whatever they could and tried to sell directly to haggling customers, but often were exploited by middlemen. Fabindia broke that chain and linked these craftsmen to contemporary designers and then to modern retail buyers, thereby providing them with a direct link to the market. Village artisans now produce high-quality products that are oriented to the contemporary fashion market and also receive fair prices for their labor. The company adopts indigenous skills and designs suitable for the market, provides inputs for production, and, through regular supervision, ensures that production standards are met. Alongside providing a way through which village artisans can enter the fashion market (both by offering their items for sale through their own retail chain and by offering advice about the market landscape), Fabindia also offers training to improve their skills, and sometimes raw material and capital.
A social business is designed to address a social problem, in which all of the costs associated with the business are recovered and the surpluses generated are reinvested, thus making it financially self-sustainable. This is distinguished from other forms of business that place social well-being at their core, such as non-profit and voluntary organisations; these businesses maximize social outcomes, but have to depend on funding from external investors as they do not recover their costs and therefore are not self-sufficient. Social businesses combine both financial and social objectives in their approach to build sustainable and profitable operations; their profits, in turn, go towards fulfilling objectives of social betterment for their producers. In this way, both the social and financial outcomes of the company are maximised. A social business is, therefore, similar to a regular business that markets products and services in order to make a profit but, unlike regular businesses, a social business re-invests these profits into projects that serve and better society. Efforts go significantly beyond meeting corporate social responsibility (CSR) goals, in which companies contribute a part of their profits for social projects; a social business has social objectives built into its DNA. The concept of a social business was first defined by Nobel Peace Prize winner by Dr. Muhammad Yunus, the founder of the Grameen Bank in Bangladesh, a company that provided micro loans to the poor—who otherwise had no access to formal bank credit—for them to start small businesses and thereby become self-sufficient. (Muhammad and Weber 2010).
Fabindia demonstrates a social business in the truest sense of the word, through its providing of much needed market access to village-level producers and strengthening its community of customers, designers, artisans, farmers, makers, and entrepreneurs. The company guides artisans to utilise indigenous techniques in order to produce contemporary designs and provides technical skills, advice, and funding to producers.
In the words of William Bissell, Managing Director of Fabindia from 1999 to today: “In addition to making profits, our aims are constant development of new hand-woven products, a fair, equitable, and helpful relationship with our producers, and the maintenance of quality on which our reputation rests” (Fabindia 2018b). The business model of Fabindia therefore combines the two opposing business objectives that are integral to any social business: profitable company growth and working for the wider community.
To ensure that its workers receive a fair wage William introduced “supply-region companies”, through which, all the workers and artisans are able become owners of the company by owning an equity share in its profits. On the company’s 50th anniversary in 2010, all of Fabindia’s employees were further converted into shareholders. Bissell has created another subsidiary company of Fabindia, the Artisans Micro Finance Private Limited (AMFPL) fund, of which a 30 percent stake is held collectively by village artisans, who comprise numbers of around 35,000. ( Economic Times 2012).
By sharing the profits of the company the workers receive significantly increased earnings. Previously these artisans would have surrended all profits to middlemen and only be permitted to keep subsistence earnings: it has been estimated that artisans traditionally received less than 5 per cent of the price that agents sell their products for (Karmali 2009). Hand-made products also face considerable pricing competition from machine-made goods. As a result, most artisans in India who do not work for social businesses live below or only slightly above the poverty line. Fabindia, on the other hand, follows a “bottom-up” pricing strategy: it estimates the costs incurred by the village producer and adds a margin to work out the price of its products and therefore supports its producers.
In order to control the quality of products that were sourced from village artisans, Fabindia developed a three-step operation process, which comprises of: buyers who can estimate demand requirements; designers who develop contemporary designs; and the producers, who were previously separated from the marketing and design process. In the early days of Fabindia, designers were being trained to work with the handlooms of particular regions, however, they were not able to do so. A team of “domain specialists” was therefore created to work alongside these designers. While the designer was responsible for the “look” of the product, the domain specialist was responsible for technical aspects of production (Ramachandran, Pant, and Pani 2012).
To further ensure products are of a high quality, in 2006 Fabindia created a certification for genuine hand-crafted Indian products known as ‘Craftmark’. The Craftmark seal is licensed to retailers of handmade products to denote their product as a genuine Indian handloom product. In this way Fabindia established itself as the curator of integral, quality, cutting edge Indian handmade designs. It has become recognised as the creator of distinctive and authentic crafts – two very important elements in the fashion business.
Fabindia may be called an iconic brand. It is distinctly Indian and has the halo of being a social business. With its famous tagline “Celebrate India,” it has built a strong identity based on Indian crafts and its purpose-driven outlook. Its unique supply chain sets it apart from other companies and the brand derives meaning from the fabrics and styles that it sells. The Fabindia khadi kurtas are immediately recognizable and have been worn by public figures such as artists, writers, feminists, and politicians. Fabindia has also succeeded in transforming handspun Khadi from its downmarket image to an upscale, elite product. In many ways, Fabindia has rekindled interest in Indian handicrafts. The company has been instrumental in introducing a mix-and-match dressing culture among Indians that combines traditional wear like kurtas and Nehru jackets with Western wear such as jeans and trendy tops. Its customers exhibit an almost cult-like following, with consumers wearing Fabindia’s clothing not only out of an appreciation of their clothes, but also in order to truly ‘Celebrate India’. This has been dubbed one of the company’s defining facets of success (Dhamija 2017). The company has so far managed to withstand competition from global brands, which are becoming increasingly popular in the country. However, young consumers are influenced by global trends; while Fabindia remains the store to turn to for traditional looks and formal occasions, it remains to be seen whether this younger generation will turn to the company for its less formal wear.
Figure 2. The display at a Fabindia store shows its distinctly traditional product line. Photo: Ramesh Sharma/India Today Group/Getty Images.
Moving forward the company therefore faces increased competition, changing tastes, and a younger population for whom the brand may not have the same connotations as its loyal customers. It has to stand out in the clutter of not only multinational brands but also traders that offer similar ethnic products, often at a lower cost. The challenge ahead of the company is to ensure it remains relevant to new customers in the face of increasing competition while simultaneously maintaining its relationship with older ones.
First, a number of small and big brands, such as Wills Lifestyle, Biba, Lakshita, Libas, and Peter England, have started to sell Indian ethnic wear. Both the high and low ends of the market are being serviced by other companies, who provide either an increased sense of luxury or a reduced price to consumers. Formal wear for marriages, for example, is being supplied by luxury up-market stores such as Manyavar, and several high-profile designers. The lower end of the market is served by small designers and tailors who create ethnic wear in their workshops at much lower costs. Second, online stores such as Myntra, Jabong, and Amazon, have begun to offer traditional Indian designs and dresses and have been taking over sales that traditionally went to Fabindia. Other online portals for selling Indian handicrafts have also been created, with traditonally bricks-and-mortar stores such as Landmark and Shoppers Stop now having online buying options. Third, with the gradual opening up of the economy, global brands have begun to open large, high-profile stores in premium markets. These brands attract the brand-conscious young shopper. Increasingly, Fabindia has to compete with these global brands and the global retail experience.
Fabindia is generally more expensive as compared to small-town tailors and fabricators. It is also more expensive than the government run khadi shops which sell similar goods sourced from villages. However, the prices are more or less equal with national brands and chains, with Fabindia’s wedding and apparel market representing a must cheaper option than those offered by global brands and designers. Fabindia therefore need to re-consider their place within this ever adapting market space and whether their pricing strategies are as effective as they could be.
The advantage for the company is that while competition is undoubtedly heating up, Fabindia has a unique supply chain and retail stores that are spread across the country. It also has a unique position that no other Indian or global brand has: its social purpose. Although providing employment to thousands of rural artisans and ensuring fair wages to them has been a formidable effort, it has afforded them a fantastic reputation. Moreover, by providing formal sector employment specifically to village women, the company stands out in the area of women’s empowerment. The company is credited with the revival of Indian traditional weaving techniques, fabric and color dyeing, and is today the largest private platform for traditional and ethnic products, techniques, and skills.
Fabindia stores also offer diversified range of products and have become a one-stop shop for fashion, accessories, and a host of high quality ethnic products. This also sets them apart in the marketplace.
How the company is leveraging these strengths in order to meet the rising competition remains to be seen. It has, however, moved from offering its products only in standalone cities and towns, to opening stores in modern malls which are becoming increasingly popular in Indian cities. Fabindia’s new stores are larger and have been set up in New Delhi, Mumbai, and Bangalore. Labelled by Fabindia as “Experience Centers,” the stores stretch over 10,000 square feet, a significant increase on their average sized 2,500 square feet store, and include exclusive spaces such as an Alteration Studio, Interior Design Studio, Organic Wellness centre, and India-inspired Fabcafe. When questioned about the intentions of the stores, CEO Viney Singh stated “We want to build stores where customers can engage with the brand; it should not be only about the product must also be about the experience” (Martins 2017).
Fabindia has also expanded its apparel offering beyond its ethnic range and has introduced silhouettes traditionally associated with Western wear. The company has an online presence and sells on its own website and through e-tailers including Amazon. It is experimenting with the franchise model and has launched a new level of retail experience, scaling up like a global brand (Tiwari 2014).
Fabindia also needs to address changing tastes, especially of the younger generation. Influenced by global fashion trends, this generation arguably prefers to dress casually and is more comfortable with Western wear than ethnic wear. In 2014, Fabindia started its sub-brand, Fabels, which is targeted at young urban Indians and consists of clothing that displays the classic Western silhouettes for men and women. Its range includes jackets, tops, palazzos, trousers, shirts, skirts, dresses, bags and shoes, scarves, and jewelry. Fabels uses weaves, block prints, and hand embroidery techniques for its premium range of Western garments. However, reviews of Fabels have so far been unexceptional and the initiative has reportedly still to catch up with customers. It is also a matter of debate whether the company should have added a Western line that may dilute its strong positioning as a retailer of India-centric ethnic apparel.
Fabindia has also introduced customization and is getting more attuned to specific tastes. Instead of selling the same products nationally, it has started stocking products more suited to local tastes. For example, products selling in New Delhi were considered too hot for Mumbai and southern states. They were reinvented in a lighter fabric while maintaining the same style and the signature “Fabindia look.” Similarly, stores now stock products that cater to local tastes: the company found that the color preferences in New Delhi and Mumbai were quite different: New Delhi preferred conservative colors like grey, green, blue, and brown, while Mumbai preferred bolder colors and floral prints—a possible influence of Indian movies produced in the city and the flamboyant film stars who live there.
Moving forward, the company may need to develop its online strategy t to consider whether it should sell on its website only, which ensures exclusivity more in line with its brand equity and its offline strategy of having its own exclusive stores. Online platforms, on the other hand, achieve better distribution and enable comparison with other brands, but at the same time the company loses its exclusivity. The company may, therefore, not be able to capitalize on its unique identity built on the concept of social business.
This case focuses on marketing strategy and is recommended for use in postgraduate marketing classes. It requires students to consider Fabindia’s future strategy and can be used in advanced classes to explain the concept of social business and how companies can fulfil their commercial objectives even while they serve the long-term interests of their producer communities.
This case will help students understand the importance of building social objectives in a company’s mission and vision. Students will appreciate the importance of building long-term buyer-merchandiser relationships; helping and upgrading suppliers wherever the need be.
Students will also learn how such a strategy helps businesses to earn a unique position in the minds of customers. The goodwill generated has been instrumental in the survival of the company for over fifty-seven years. Students will also appreciate that fashion is not just about the latest trends and designs, but that traditional styles and methods still hold a strong pull for consumers. Students will learn that consumers have a taste for “fashion with a purpose”—a position which Fabindia firmly occupies. A major learning outcome is how a brand remains relevant over a long period of time even while sticking to its core purpose of social betterment by encouraging traditional products and weaves.
Students must propose an ongoing strategy for Fabindia. Students should produce a SWOT analysis for the brand and work out how it can remain relevant in the face of strong multinational corporation competition and how it can hold its ground against big global brands.
The company keeps its positioning intact but offers new designs and new retail experiences that attract younger consumers. In this argument, Fabindia continues with its business model but adds new products and services, and new retail experiences.
The company should not interfere with its iconic product line by introducing more Western-oriented products. As it holds a strong position and has huge brand equity, it will continue to attract certain segments of buyers. It can rely on the fact that traditional fashion will always have a customer pull. The company should find ways of building its brand equity further and expand its reach.
The instructor can start the discussion on how Fabindia’s strategy has helped the company to grow and survive. The concept of a social business can be introduced and students can be asked to give their opinions on whether a company can actually serve the twin objectives of making profits and ensuring producers receive fair prices. Students should be encouraged to read about Dr. Yunus and how his ideas have gained traction over the years, to watch videos relating to Fabindia, and to study its website.
With this background, students can think of alternatives that the company can pursue without harming its original positioning. In the opening remarks, the instructor can pose questions about the social purpose of business and of fashion brands. Does business have the single purpose of making profits? The instructor can give examples of other brands such as Danone Communities, Cafe Feminino (Peru), Essilor (France),—companies that have built social objectives into their DNA. Questions on brand positioning can also be introduced: How can a brand position itself uniquely in the highly competitive field of high fashion? Can it survive on the basis of tradition alone? How far should fashion brands innovate their product offerings?
In the concluding remarks, the instructor should emphasize that fashion and luxury brands have a responsibility to society. While they do cater to wealthy customers, they also must ensure that the weavers and suppliers are paid fair wages.
Examples of fast-fashion brands that source cheaply can be compared and contrasted with social businesses such as Fabindia: for instance, the Rana Plaza disaster in 2013 showed how major fashion brands were having their apparel stitched in unsafe conditions in Bangladesh. The five-storey garment factory collapsed on April 24, 2013, resulted in 1,134 deaths with 2,500 people injured, making it the deadliest garment-factory accident in history.
An interesting group activity consists of asking students to check the labels of the clothes they are wearing and to ask them whether they care where their clothes come from and how they were made. The instructor should ask students whether they care only for the labels or also about their supply chains.
Another activity is to a discuss how often students wear traditional clothes from their home countries. Is it important to wear popular fashion brands, or is it important for students to maintain their culture in formal settings like a classroom?
Students can be encouraged to watch videos on YouTube that explain the concept of social business and of William Bissell, the founder of the company. Links to these videos are provided in the references.
Students can investigate other similar brands to Fabindia in the clothing/apparel industry. The instructor can point towards the websites of Arzu (Afghanistan) and Jaipur Rugs (India) which also incorporate social sustainability and the idea of “fashion with a purpose” in their operations.
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The author(s) wrote this case solely to provide material for class discussion and independent learning. The authors do not intend to illustrate either effective or ineffective handling of a situation. The comments and interpretation presented are not necessarily those of the company or its employees.
This case has been written on the basis of published sources only. The interpretation and perspectives presented in this case are not necessarily those of the company in question or any of its employees.