Fabindia designs new growth path

Fabindia designs new growth path
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First Published: Mon, Sep 07 2009. 10 22 PM IST

New ideas: A Fabindia store in Connaught Place, New Delhi. The retailer has tied up with three children’s books publishers to licence their illustrations for designs to be printed on its furnishings,
New ideas: A Fabindia store in Connaught Place, New Delhi. The retailer has tied up with three children’s books publishers to licence their illustrations for designs to be printed on its furnishings,
Updated: Mon, Sep 07 2009. 10 22 PM IST
Chennai: Ethnic wear retailer Fabindia Overseas Pvt. Ltd is weaving a complicated design this year to revive sluggish sales.
At one of its Chennai stores Fabindia has moved out its furnishings business to an exclusive outlet next door and introduced a new apparel range for teenagers.
Earlier this year, Pune, Bangalore and New Delhi got the first three Fabindia sari stores. And a few months ago, Bangalore’s Garuda Mall became an experimental site for Fabindia’s only organic foods booth.
New ideas: A Fabindia store in Connaught Place, New Delhi. The retailer has tied up with three children’s books publishers to licence their illustrations for designs to be printed on its furnishings, among other things. Ramesh Pathania / Mint
Fabindia, started in 1960 by an American, John Bissell, also debuted in the Western wear market in August as a franchisee of UK retailer East, with a store neighbouring its flagship Fabindia outlet in the Greater Kailash area in New Delhi. It has a 25% stake in East with an option to pick up the remaining interest over the next two-three years.
The ethnic wear retailer has also tied up with three children’s books publishers to licence their illustrations for designs to be printed on its furnishings and other items such as photo frames and mugs.
“We are constantly innovating and taking calls whether it is the kiosk model for organic foods or the exclusive outlet model for saris,” says Sunil Chainani, director of Fabindia Overseas and East. “We do see the children’s market as being significant as well.”
Earlier this year, the retailer spoke with children’s book publishers Tara Books and Tulika, both Chennai-based, and Young Zubaan of New Delhi about licensing illustrations.
“We work with folk and tribal artists and most of them are used to doing such work for bedspreads, etc.,” says V. Geetha of Tara Books.
Fabindia will pay the publishers a one-time royalty for each image, with the copyright to use the images for two to three years.
The retailer is not new to innovation. Its corporate structure has artisans as part owners and its product range comprises handcrafted, eco-friendly products.
It started with a furnishings range and has since expanded to ethnic garments—now a major chunk of its sales—jewellery, organic foods and even bodycare products such as soaps and shampoos.
But the economic downturn and high real estate prices have had their impact, forcing Fabindia to rein its nationwide march.
Last year, the company had planned to open 80 stores to bring the total number of its outlets to 158, but later revised its expansion target. Its store count so far is 106.
Revenue rose to Rs300 crore in 2008-09 from Rs257 crore the previous year but growth more than halved to 17% from 40% in 2007-08.
In June, credit-rating agency Crisil Ltd, a subsidiary of Standard and Poor’s, said in a note that Fabindia has a strong presence in the handicraft retail segment through its brand and an efficient supply chain-management system, but there are “risks relating to concentration of revenues in the garments segment, and limited exports”. Crisil has a “stable” outlook on the retailer.
Still, some of the new initiatives appear to have been implemented in haste.
For example, Fabindia recently started selling books printed by Tara Books, Tulika and Young Zubaan in its stores but withdrew after about a month citing “internal policies”. The company has assured the publishers that the books will be back on the racks soon.
There is a danger of diluting the brand by getting into too many store formats and products, a retail expert said.
“If saris are part of the Fabindia brand as an umbrella, then it is alright, but if it is a standalone Fabindia sari store, I am not sure how the economics will work,” said consultant R. Sriram of Next Practice Retail, who founded the Crossword bookstore, now a fully-owned subsidiary of retailer Shoppers Stop Ltd.
“Its (Fabindia’s) plans to sell organic food products in the mall comes from the thought, ‘how best can I sell the product?’ and not ‘how best can I serve the customer’. Nobody goes into a mall to purchase soups,” Sriram added. The retailer’s organic foods range includes soup mixes, pickles, jams, organic cereals and pasta.
Fabindia’s Chainani says the company has always been nimble to change. If any of the new formats don’t work, the company will not pursue it.
“The worst mistake one can make is to say ‘I am determined to go this way’ and keep on putting good money after bad money,” said Chainani.
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First Published: Mon, Sep 07 2009. 10 22 PM IST