Agenda History Case Background SWOT Analysis Situation Analysis Problem Statement Alternatives and their impacts Evaluation of alternatives Recommendations
History Fabindia was founded in 1960 with a mission to provide work and employment to India’s skilled rural artisans and to protect traditional weaving and printing skills. They were initially export oriented, but later started establishing local retail outlets from 1975. Fabindia deals with a wide range of upholstery, fabrics, dhurries, home linen, furniture, lights and lamps, stationary, home accessories, pottery, cutlery, food products, authentic body care products and jewellery Company has continued to focus mainly on the artisans and sources its products from over 15000 craftsperson across India.
History In the early 80’s, Fabindia made a significant addition to its product range by adding ready to wear garments too in their retail offerings In 1999, on John Bissell’s death, his son William aged 32,formally took over as the Managing Director of Fabindia. The Company’s domestic expansion had been spectacular after William took over By 2001, Fabindia had six stores concentrated in the metro cities. By the end of 2004, these had increased to 20, and the company was seriously considering expanding its stores into the tier-II and tier-III, cities as well as overseas. Presently they have 99 stores all across India and in addition stores in Dubai, Rome and Guangzhou (China), Manama (Bahrain), Doha(Qatar)
SWOT Analysis Strengths Online selling enables it to capture distant markets Invest in technology which is power saving and fast (hydro extractors) Building strong relationships (eg panipat unit, habitat and with its suppliers) Acknowledge the need to innovate constantly in terms of assortment and variety Create products that are a mix of mill-made and craftsman made to ensure highest quality Store managers allowed to be more entrepreneurial and given hands on experience Enjoys benefits of being a niche player with a distinctive style (Upmarket retail outlets and segmentation strategy)
SWOT Analysis Weakness Constancy of ABV irrespective of store size (Rs.1250) Uncertainty of supply at the right time and higher chances of loss of produce in case of organic items due to storage and shelf-life concerns Huge spread of suppliers may raise costs of transportation and other affiliated costs Lesser scope to integrate the supply chain with the help of IT due to illiteracy prevailing among suppliers Shortage of qualified personnel
SWOT Analysis Opportunity Higher growth of upper middle class and upper segments who splurge on both basic and luxury product in the near future than the growth in GDP Organised retail which now constitutes only 3% presents opportunities of growth vis-a-vis the unorganised sector Expand further into the global market Threat Attractiveness of the sector may toughen competition from larger players with deeper pockets Rise in rentals may narrow margins therefore hindering expansion
Situation Analysis Rapid scale-up would require more qualified personnel and formalization in organization. Absence of organized retail sector in India has lead to shortage of qualified personnel. New retail chains like Pantaloon, Trend Ltd, Shoppers World, ITC have entered in garments sector posing potential threat to Fabindia. 70% of Fabindia’s revenue are generated from garments. Small players like, privately owned Anokhi, Govt. owned Khadi, State Govt owned Phullkari, Rajasthali, Chunari etc have also expanded and opened their shops in major cities of India. New product lines were introduced and have shown positive results. In last two years organics and body care revenue has seen a growth of 100 times. Increasing number of shops will require more investments due to increasing rental and property rates. Another major challenge for Fabindia could be capital for expansion. For desired exponential growth Fabindia may require additional external capital. Supply chain of Fabindia is based on trust with uncertainty of supplies from it’s rural suppliers. Estimate of supply has always problem for Fabindia.
Problem Statement Fabindia Vision “To grow in terms of revenue to Rs 8.6 billion from 200 stores by FY 2011”