Can Fabindia Grow Further? How? What Will Be Effects of Growth?

Q2. Can Fabindia grow further? How? What will be effects of growth?

Ans :- Fabindia Inc. was incorporated in 1960 as an export house in New Delhi and in 1976 they opened their first retail store. Since 1999, they changed their business focus from export house to retail business. During 2001 to 2006 its sales/ has grown significantly from 386.8 million to 1293.9 million as it has started expanding its retail stores in tier 1 and tier 2 cities in India.

Fabindia portfolio is divided into four major categories:-

* Garments: - It is account for 70% of Fabindia revenue in which women wears accounts for almost 50% of this category's revenue. Pure cotton garment are the unique selling point of Fabindia which are trendy and ethnic. In order to gain much in this segment Fabindia can go for alliances with other retail stores in which those stores will be selling their garments as well . This move will save cost for both on basis of share the space of store. They can also come up with their own stores in tier 1 and tier 2 cities on the basis of calculation of profit.

* Home furnishing: - this section accounts for 30% of total revenue. Fabindia was one of first retailers in India that offered "A complete home solution". India is a growing economy and disposable income of Indian consumers is also increasing so huge potential exist here. People in India are not as much aware about this fabulous segment of Fabindia; in which furniture is made by using natural friendly material, so they must do some sort of advertising to spread awareness.

* Body care: - Body care accounts for less than 1% of revenue of Fabindia. Worldwide Body care market size is $91 billion, driven primarily by Asian market. Fabindia should start focusing in this segment as it is a profitable segment to focus upon. In this segment Fabindia can sell its products by its own stores as well as by alliance with high end beauty parlours or with malls as their customers will be from elite class of society.

* Organics: - Organics accounts for less than 1% of revenue of Fabindia. This is most growing section as organics products are in its infancy with very little competition in market. Many research reports suggested that there are an estimated 2-3 million potential consumers of organic products exist in India. Global size of this market is apprx. $70 million means a huge customer base to serve. Fabindia can serve this segment by expanding its reach in market either by franchisee or by its own stores.

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