Answer1

Fab India has come a long way from its humble beginnings as an export shop
in 1960, with its transition from an export house to a retail store the business
model of Fab India has been changing during this period. Initially Fab India
operated as a middleman between Habitat, a UK-based retail company and
Bharat Carpet Manufacturers. Habitat became a major customer, making up
60-65% of Fab Indias revenue and was a major driver of its growth for 28
years. The business model was straightforward and simple as BCM was
providing something which was demanded by Habitat. The company only
targeted foreign market in its initial years.
However, in 1976 FabIndia took its first step towards retails by setting up a
small shop to check out the responses to the company, selling mainly the left
over supplies from export orders of home furnishing. In 1977 the retail model
expanded and company started collaborations with famous designers to
acquire university students.
During 1988 the company decided to expand its operations by setting up a
collective with leather workers, printers and durries weavers which turned out
to be a setup for DAH. With its declining relationships with Habitat the focus
of the company shifted from exports to more of retail oriented. This also
demolished the position of FabIndia as a middleman.
The new idea was to carry out business under their own brand name which
would consolidate their position in the Indian market. This plan was backed by
setting up stores in Delhi, Bangalore, Madras and Bombay. The home market
sales were 35% with a year on year growth of 40% and the home markets
took over exports (52.4% vs 47.4%).
The vision plans were made in order to expand companys operation in the
Indian market as the product was widely accepted by Indian consumer.
Highlights of vision plan 1:

Adding up a new store a year

Increase monthly sales from 20 million to 80 million in four years
More intensive use of capital (hiring professional managers, renting stores
instead of buying them)
Customizing garment range so to be widely accepted by consumers in
other cities
Adding new organic products to their existing product line (diversity
factor)

Highlights of vision plan 2:

Increasing turnover from 80 million to 200 million in four years

Active problem solving to add competitive advantage
Skill based compensation and bonus plans to keep employees motivated
Becoming lifestyle retailer with strong national presence
Converting companies into number of hubs

Highlights of vision plan 3:

Setting up Supplier region companies, Market regions and Global support

practices
Decentralizing the companys management

The success factors include:

Proximity to the customers and supplier (initially with Habitat and BCM)
Corporate Social Responsibility
Welfare of the artisans
Diversity across products
Understanding of demand of the end consumer and ability to shape
product according to their needs
Core positioning as Indian ethnic products
Presence in international markets
Knowledge of market
Differentiated marketplace for different customers
Quality over quantity
Decentralized management in later stages
Handmade products have incredible demand, same goes for organic
products which provide high margins
The extensive training process of the employee
Setting and successful implementation of goals
Flexibility in production process

Answer2
Strengths
Rigor depth and breadth of
management and clarity in
planning process

Weaknesses
Shortage of qualified personnel
to power the growth.

Suppliers as key stakeholders

Commitment to the founding

mission.

Involvement of store managers

and staff

Supply chain bottleneck

Trust and bond among all

supply chain members.

The brand is losing out on

attracting new customers as it
hugely depends on repeat
purchases

Quality control, mystery

shopper program

Wide product range

The autonomy given to

employees has helped induce
accountability among them
The brand has maintained its
Indian-ness with the
authenticity of hand-woven
fabric for over years
The fact that the brand strongly
believes in word of mouth
marketing which has proved
very effective as the brand
does not advertise
Opportunities
Growing organic products
market (2-3 million potential
consumers)

Not enough experienced

personnel to push FABINDIA
towards growth in the retail
sector
Limited global penetration
despite huge potential in NRI
market

Threats
Future competition in organic
market expected from bigger
players like Shoppers Stop and
Pantaloons.

Growing consumer incomes

Financial funding required for

growth

Flourishing suppliers

Competition
Foreign Players
Unorganized market
KVIC

The brand needs to tap the

potential of organic foods by
creating awareness about their
merits
Display of FABINDIA products in
MBOs and collaborating with
various construction groups
would give greater visibility to
the brand
Geographic expansion in US
and UK with huge Indian
population

Social mission vs. Company

growth

In my opinion there is a change required at the micro level as they lack

professional managers in the company which plays a crucial part in decision
making processes. At the macro level they have done extremely well by
establishing themselves as an ethnic Indian wear brand. Their products are

widely accepted by the end consumer, although the bottleneck in the supply
chain management could be worked upon to make FabIndia a more effective
organisations.
In my opinion FabIndia should remain in niche market and rather than
broadening their position they should focus on consolidating their position in the
niche market, the reason behind this would be as follows:

They have vast experience which adds up to their expertise in this field
and in the long term they will be able to outperform competition
Proximity to artisans, suppliers and consumers have allowed them to have
good relations with them
With the purchasing power of the consumer increasing, in the long run
quality products will be high in demand
Expansion may result in brand dilution

Answer3

The first step that I would recommend would be to sort out their supply
chain bottleneck due to which they are unable to provide large number of
products to their existing customers.
They can start with the customer loyalty program whereby the frequent
visitors will get certain percentage of discount, this will help the company
to retain their existing customers and attract the new ones
If the company is targeting only the niche market they can come up with
personalized products for their customers whereby the customers can get
what they desire
Varieties of store outlets can be opened to cater the specific needs of the
customers (for example: wedding wears, festive wear and so on)

Answwer4
In my opinion if they broad base their positioning, then in that case they should
be broadening in terms of both the type of customer and the type of product.
Why should they broaden the type of product?

They are selling premium products and to acquire the mass market they
should be able to produce products which have less retail prices
In the mass market the number of players would be more and hence the
competition would be higher, in order to overcome that they need to
compete with their competitors at a price at which they are currently
selling products
Adding more types of products would help them diversify their portfolio
which will eventually spread the risk
Large portfolio of product would give them more visibility in the market
Organic market is already growing rapidly and to cater the increasing
demand the company can come up with few additions in their already
existing organic product range

Why should they broaden the type of customer?

They have targeted people above certain income level as they are selling
premium products. In order to tap the mass market, they should be able to
fulfill the demands of customers below those income level at desired
prices
Foreign markets with higher population of Indians is an area to explore for
companies like FabIndia

Having products for different classes of customers will create a brand awareness
among the consumers