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October 21, 2007

The Fabindia story

Business Today has an profile of Fabindia, a retailer of ethnic ware, which recently raised a round of Private Equity funding.
Fabindia is recasting its supply chain, setting up dozens of "supply-region companies" that will gradually take over its entire supply chain in a particular region; these companies will also offer shareholding to Fabindia's suppliers in line with the vision plan articulated by Managing Director William Bissell (40), who sees himself as a champion of free market in the NGO- and government-dominated handicrafts sector.

For a company that owns India's most successful and chic brand of handloom garments and handicrafts, that's only one of many exciting developments taking place-Fabindia has opened 37 stores in the last 18 months; sales have been growing at a CAGR of 40-50 per cent over the last three years; and margins are so attractive that investors are queuing up with their cheque books.

Bissell, who is married to an Indian, says Fabindia's emphasis on utility and contemporariness, rather than beauty and quaintness, have created "sustainable demand". Result: customers buy a product because they need it, not because they think it's beautiful. "Fabindia's regular customers tend to be Indians who are not insecure about their identity; who appreciate the fact that they have an extraordinary culture and that a handmade product has an intrinsic value, not an externally imposed price of a big brand, inflated manifold by advertising and packaging," says Bissell. Then, given that its "basic" line of garments starts at a price point of Rs 150, Fabindia has become synonymous with "affordable chic".

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.