- a case study

Product planning, Strategy and Management

Presented byB.Karthika116130002M.Des (Product design) 2011-2013

‘How to leverage hand made products for business venture’

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 em-ployment. They blend indigenous craft techniques with contempo-rary 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 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 our products, whether it is handwoven textiles, hand block printing, hand embroidery or handcrafting home products.

fabindia - philosophy.....

34 countries

141 stores

511 Indian destinations

1000 crore turnover

Fabindia is India’s largest private platform for products that are made from traditional techniques, skills and hand-based processes.

Fabindia links over 80,000 craft based rural producers to modern urban markets, thereby creating a base for skilled, sustainable rural employment, and preserving India’s traditional handicrafts in the process.

fabindia - the company.....

1960 - Incorporation in Delhi

1976 - First retail store in GK

1977 - Contemporarizesdesign

1981 - Introduction of garments

1990 - Fiscal deficit reaches 8.5%

1991 - Indian economy opens up

1992 - Liaison with Habitat ends

1994 - Second store opens in Delhi

1999 - William Bissell becomes MD

2003 - Vision Plan I originates

2004 - Goes online

2005 - Vision Plan II is born

2006 - Garments make 70% revenue

2006 - 8% economic growth

2006 - Govt allows foreign single brandoutlets

2012 - Still growing and targets to reach

250 stores and 1000 crore turnover.

fabindia through the ages......

Primary motives

- Develop market for hand-woven products. - Provide rural employment apart from making profits.

Incorporated in 1960 in Delhi to export upholstery fabric.

By 1965, revenues of Rs. 2 million due to: - AS Khera, supplier of hand-woven rugs etc from Panipat - Habitat, major UK buyer of FabindiaPanipatproducts

1974 saw Fabindia’sfirst retail store in Greater Kailash with ad-hoc merchandising.

Habitat was acquired in 1992 and Fabindiacould no longer continueselling to it

John Bissell dies in 1998, passing the baton to son William Bissellwho becomes MD in 1999

fabindia under john bissell.....

‘Don’t get me wrong; I am not a bleeding-heart Liberal, rather a Libertarian. I don’t believe in charity or giving things out for free. I believe that the only way to allevi-ate rural poverty is to generate sustainable employment, and the only way to do that is if we run our business in a profitable manner. Yes, It seems contradictory that we pursue both a social goal AND profit but I believe that is the only way to do it.’

- William Bissell

fabindia under william bisell.....

End of license raj, and liberalization gave textiles duty concessions on machine imports.

Williams vision included expansion, depending less on exports and setting up retail operations

India saw robust economic growth, change in consumer patterns and growth of middle class by 2006

2003 saw the birth of Vision Plan I - Planned to grow to revenues of Rs. 1 b from Rs. 360 m in 4 years Achieved it in two years and Vision Plan II came along - It planned to achieve revenues of Rs. 2 b by March 2009.

Now, It targets to reach 250 stores and 1000 crore turnover by 2012

fabindia under william bissell.....

expanding the project range....

organic products

garments & fabrics

Furniture & Home furnishings

Started with 60 products when introduced in 2004. Today it has 200 different products which generate a monthly evenue of more than 5 million. It also promotes the brand as health and environment conscious which gives a direct message to the customers about the company’s principles.

One of the first retailers in India to offer ‘complete home solution’ which offered a one stop solution for their home needs. Fabindia furniture became a success due to their uniqueness, simplicity, functional and eco friendly nature.This sector claimed 60% of their annual profits.

Launched a full fledged range of garments catering to various users including Men, Women and kids of all age groups. The contemporary designs blended with uniqueness gave a massive appeal for a major crowd.

supply chain management....

Practice of inviting designers

Weavers and craftsmen also involved in the design process and made to interact with designers

Getting customer opinions and views

Sticking to their ‘green principles’

Importance on product innovation and diversification.

Suggested prototype developement project

We are promoting an alternate vision for the future; It is collaborative (with the suppliers) in the true sense of a word. It is participatory (with the customers that share our views).

design intervention.....

enriching the shopping experience......

premium stores

regular stores

concept stores

Premium stores house all the merchandise but mostly high end and exquisite.

Regular stores are for the fast moving merchandise and a wide variety and options are available in such stores.

Concept stores have very few merchandise but they predominantly function for the testing of certain products in the market, hence very few options.

advertising - is it necessary?

The products have an intrinsic value proposition as opposed to imposed value. It is due to this intrinsic value of our products we never felt the need to advertise. While we will announce the opening of a new store in the local newspaper, we never spend on ads per sec.

- William bissell

Strengths

1.Strong Pan-India presence andawareness2.Man-power expertise3.Competitive Pricing4.Robust supply chains and shortproduct development life cycles5.High marketing communicationsspend6.Quality consciousness andadherence to standards

Weaknesses

1.Product diversity lacking2.Stock as per running trends andserve to fads-inconsist-encytowards churning out qualityofferings in hand crafts3.Authenticity of handcrafts-No craftsmark present to validate thecrafts as against the Fabindiaofferings which have the sameimprinted on them

competitor - organized retail

Shopper’s stop, Pantaloons, Globus etc

Strengths

1.Source of finances is fixed and subsidies boost these initiatives over time2.Tie-ups with foreigngovernments facilitatingpermanent trade of nationalhandicrafts.

Weaknesses

1.Ambience-non-attractive tomodern day shoppers are fed on the excellent ambiences of theretail formats.2.Standardization defeatscustomization hands-down.

competitor - govt. initiatives

Cottage Industries Emporium, KhadiGram Udyog, State Government Department

Strengths

1.Product customization facilities-extremely high2.Highest level of customer intimacy Relationship marketing

Weaknesses

1.Exorbitant prices-notmeant for masses2.Not a robust supply chain-not meant to be a pan-India operation

competitor - designer boutiques

Ritu Kumar’s, Ritu Beri’s, Rohit Bal, ManishMalhotra, Sabyasachi Mukherjee, etc

Strengths

1.Effective in addressinghigh geographicaldispersion2.Customization facilityavailable

Weaknesses

1.Source of finance-not secure2.Next-to-nil brand equity3.Customer loyalty-low4.Scarcity of skilled manpower- lack of ability to employ the same which is critical for expansion

competitor - unorganized sector

Mom and pop stores and local tailoring units.

Strengths

1.Strong commitment towardslocal communities2.Helps in making its clientsself-reliant3.Encourages womenentrepreneurs and hence awomen can supplement themales income towards a family

Weaknesses

1.Lack of expertise on partof the manpower2.Lack of ambition tospread out on a pan-Indiaor even a regional basis3.Lack scales of economy

competitor - NGOs & SHGs

Quintessential Indianness in fabric through the years

- Popular for authenticity of hand-woven fabric

Sourcing system from rural India - Strong supplier relationship - Provision of capital loans(in agreement with banks) - Leniency on order fulfilment & no-return policy - 100% use of supplier’s capacity

Sustainable employment opportunities to rural skilled poor

Employees are given autonomy and hence inducing accountability

Focus on customer retention instead of generation - Large chunk of buyers are repeat purchasers - Product quality improvement done keeping this in mind

Word-of-mouth strong enough not to require any advertising

Strengths of fabindia.....

Quintessential Indianness in fabric through the years

- Popular for authenticity of hand-woven fabric

Sourcing system from rural India - Strong supplier relationship - Provision of capital loans(in agreement with banks) - Leniency on order fulfilment & no-return policy - 100% use of supplier’s capacity

Sustainable employment opportunities to rural skilled poor

Employees are given autonomy and hence inducing accountability

Focus on customer retention instead of generation - Large chunk of buyers are repeat purchasers - Product quality improvement done keeping this in mind

Word-of-mouth strong enough not to require any advertising

Delays in delivery from artisans - Opportunity losses due to irregularity - Difficult to predict quantity and time of thaancoming from weaver - also arises as different stores are encouraged to order different stock

Insignificant spend on marketing communications - Losing out on attracting new customers instead of depending only on repeat purchase

-Not enough personnel to push Fabindiato greater growth Unavailability of people experienced in retail sector - Unavailability of people believing in the same mission - More formal processes would face resistance from existing employees

Untimely delivery of products - Transport, storage and shelf-life issues of organic foods - Suppliers were spread pan-India

Weaknesses of fabindia.....

Unorganized local operators - Handloom retail shops/chains in regional pockets - Souvenir shops providing indigenous products at lower prices

Entry of organized brands and companies into retail - High expected growth & entry of business houses in large ways - Competitors access funds from conglomerate partners or markets

Tilt of Indian consumers towards foreign brands - Foreign brands alter lifestyle choices of the target market - Imported or designer home furnishings have greater flaunt value vis-a-visFabindia

Development of government co-operatives - Boost in future to KVIC and state handloom units - Improvement in their ambience and shopping experience

Rising prices of real estate could hamper growth

- Opening new stand-alone stores will be tough

-Experimenting with formats and markets may not be advisable

Threats....

Latent potential of organic foods market: - Leveraging changing consumer tastes & perceptions

- Awareness generation of merit in these foods

Utilize multi-brand retail outlets and construction groups - Display of Fabindiaproducts in MBOs and department stores

- Leverages footfalls of the store, increasing likelihood of sales - Use of Fabindiahome furnishings in modular flats of buildings

- If consumer buys this flat or any other, and is impressed, will use Fabindiafurnishings

Leveraging Web 2.0 tools and techniques - Tying up with matrimonial sites for designer fancy wedding wear - Interactive website for designing as per individual requirements

- Customization level is high

- Lead time between fixing of occasion date and event can be used fordelivery

Opportunities.....

Thank you for your time! :)

The solution does not always lie in advertising or the communication. Innovation can be at any level, you need an eye to identify what that innovation would be and how easily it can be encashed upon in the most interesting yet engaging manner.