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Strong conscience, strong brand

Opinion, 04 May 2017
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Fabindia is a remarkable brand that has, in fact, become a Harvard Business School case study. On one level, it is ranked as India's largest retail fashion brand, well ahead of global competitors like Zara and Levi's – a cult brand, built on the ideas of ethnic pride, sustainability, respect for craftsmanship and commitment to society. But more than that, the brand extends to products like home furnishings, body-care products, foods, health supplements, accessories and stationery. So what is it that unites such a diverse, and seemingly incompatible, range of offerings?

Fabindia's products are contemporary and fashionable, yet they are ethnically inspired and crafted with traditional skills. But, in addition to this, an important component of the brand platform is Fabindia's purpose of serving its suppliers as well as its consumers. It has therefore worked over the decades to link 55,000 village-based artisans from remote parts of India to urban markets, thus creating a base for sustainable rural employment and helping to preserve handicraft traditions. But even more important, perhaps, is the fact that the company has gone to great lengths to address the problem that the artisans typically received only 5% of the tag price of their products, and to create a system where the artisans became shareholders. In that sense, Fabindia is a value-led brand – not unlike Bodyshop, which it predates – and it is this brand story that unites all of its offerings.

To wear a Fabindia garment, to eat a Fabindia breakfast cereal, or to have a Fabindia designed home is to make a statement of your world view. There are few brands in the world one can think of that have this kind of muscular elasticity. Yet the brand has never advertised.

The company was founded in 1960 by John Bissell, an American fabric buyer who settled in India. It started out by showcasing India's craft traditions and exporting home furnishings to the US. And as the company's original vision stated, over fifty years ago: "In addition to making profits, our aims are constant development of new products, a fair, equitable and helpful relationship with our producers, and the maintenance of quality on which our reputation rests."

In the mid-1990s, however, its business model was disrupted by changing business practices of its global buyers. But if one door was closing, a window was opening somewhere else: an affluent new middle class was emerging in India, and Fabindia reinvented itself to focus on this. It had long been a chic, niche brand – sold through one single retail outlet in Delhi. So it began an aggressive retail push, setting up a network of stores across the country. And it began to diversify its product range, adding on natural extensions of its core franchise of traditional indigenous know-how, such as organic foods, body-care and health products, hand-crafted furniture, jewellery and stationery.

Today Fabindia has 235 retail stores in 91 towns across India, as well as in cities from Rome to Kuala Lumpur. All of this has made it India's largest private platform for products based on traditional crafts. The company's experts work with its army of artisans, providing them with inputs like design, access to raw materials and finance, and quality control. And so, the brand is able to bring its consumers a choice of products that offer a high-touch alternative to today's assembly line of mass-produced goods. Fabindia is a $150 million business today. And it's a classic case of capitalism with a conscience.

So where does Fabindia go from here? That is the question it is now focusing on. As the market evolves, and as competitive pressures increase, Fabindia must balance the imperatives of growth and staying true to the traditional craft-driven DNA in which its advantage is rooted. The company recently hired a new managing director who formerly headed the Lifestyle Retailing business of ITC, the Indian cigarette-to-hotels conglomerate. And the fact that he spearheaded functions like digital initiatives and omni-channel technology innovations gives us an idea of the scope of Fabindia's ambitions.

But it's interesting to note that one of the management's chief preoccupations has been the mechanics of securing the shareholding of its 55,000 village artisans – and diluting the stake of the founder's family. It's a valuable lesson about how a strong conscience can create a strong competitive brand.

About the author

Anvar Alikhan is Senior VP & strategy consultant at JWT, India. He is also a columnist and guest faculty at the Indian Institute of Management, Calcutta.

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