12 December,2008

School of Business
Management
NMIMS

Anurag Kalita (331)

Kopal Doshi (313)
Shristi Dalmia (308)
Amit Baweja (306)
Ashit Shetty (355)
MBA (CP)
DIVISION: D

A study submitted to Dr. Rajan Saxsena in partial fulfillment of the requirements of the Customer Acquisition
and Retention Course.
 Declaration

We hereby declare that out report titled “Fabindia” is an original work. The list of references used has
been detailed at the end of this report, and the rest of the document contains our thoughts, learnings
and recommendations. We also declare that we have not consciously attempted to plagiarize from any
existing literature.

Anurag Kalita (331)

Kopal Doshi (313)

Shristi Dalmia (308)

Amit Baweja (306)

Ashit Shetty (355)

MBA (CP)

DIVISION: D
Table of Contents
1: Introduction................................................................................................................................................................... 1

2: Industry Overview ........................................................................................................................................................ 2

3: Target Customer ........................................................................................................................................................... 2

4: Marketing Mix .............................................................................................................................................................. 3

5: Competition Analysis ................................................................................................................................................... 4

6: Customer Connect Initiatives...................................................................................................................................... 5

7: SWOT Analysis............................................................................................................................................................... 6

8: Future Plans................................................................................................................................................................... 7

9: Recommendations ....................................................................................................................................................... 8

10: Appendix ...................................................................................................................................................................... 9

11: References ................................................................................................................................................................. 21

1: Introduction

“Fabindia was founded with the strong belief that there was a need for a vehicle to market the vast
and diverse craft traditions of India and thereby help fulfil the need to provide and sustain rural
employment.”

“Our endeavour is to provide customers with hand crafted products which help support and
encourage good craftsmanship.”

In 1958, John Bissell left New York, to work as a consultant for the Ford Foundation. Highly
impressed with the Indian handloom textiles, he decided to exhibit this craft to the outside world.
This led to the genesis of Fabindia in 1960, primarily as an export house, in order to provide
equitable employment to traditional artisans and to fuse the best aspects of East-West culture. In
1975, the first Fabindia retail outlet was opened in Greater Kailash, New Delhi. By the early eighties,
Fabindia had forayed into the production of garments made from hand-woven and hand block
printed fabrics.

Fabindia started dealing in a wide range of upholstery fabrics, durries, home linens, furniture, lights
and lamps, stationery, home accessories, pottery and cutlery. In 2004, their food products range and
in 2006, Fabindia Sana, their authentic body care products range was launched. Recently, they have
also ventured into the jewellery segment. However, the major chunk of Fabindia’s product range is
textile-based.

Customer Acquisition and Retention 1

The company has continued to focus mainly on the artisans and sources its products from over
15,000 craftsperson across India. With a strong foundation, as stated above, the company has been
successful in increasing their presence all over India. They have also opened some international
stores in Italy, UAE, Qatar and China.

2: Industry Overview
The apparel industry is one of India's largest foreign exchange earners, accounting for nearly 16% of
the country's total exports. The 1996 Indian textile exports approximately amounted to Rs. 35,000
crores of which apparel occupied over Rs. 14,000 crores.1 The Traditional clothes market is growing

at 11 per cent a year.2

An estimated 30,000 readymade garment manufacturing units and around three million people are
working in the Indian textile industry. Many leading fashion labels are being associated with Indian
products. However, till today, the industry is dominated by sub-contractors and consists mainly of
small units of 50 to 60 machines. India's supply base is medium quality, relatively high fashion, but
small volume business.

3: Target Customer
Fabindia started as a wholesale export company and is still active in the wholesale sector. The target
customers in each segment:

Retail:
Fabindia initially focussed on providing an Indian experience to the foreign buyer. In the 80’s, it
realised there is an untapped market among the upper and higher middle class. With the economic
boom in the 90s, the focus has shifted to the upwardly mobile consumers in metros who like Indian
prints. They are now also focusing on tier 2 and tier3 cities. The target audience is college going
youth and young professionals and just married couples in the higher middle class category.

Institutional Buyers:
It has a dedicated team to handle institution buyers like heritage hotels, resorts and corporate houses.
They target organisation which want to portray Indian roots and eco-friendly culture.
1
Ministry of Textiles report, http://apparel.indiamart.com/industry/apparel/

2
“ Womenswear brand W plans expansion”: Sravanthi Challapalli, Business Line Feb. 9 2008

Customer Acquisition and Retention 2

 4
:
M
a
r
k
e
t
i
n
g

-List Price -Discount - Affordable and quality prod

M PROMOTION
COM M UNICATION - Rely on Cus tomer Recomme dation

i -Word of Mouth
x PRODUCT-Nine different Product
CUSTOM ER VALUE - Prod ucts are hand made & tra ditional

Offerings
CONVENIENCE - Outlets at majo r, up market l ocations

PLACE
PRI -99 Outlets across India
CE
CU
ST
O
MEFabindia’s Marketing Mix can be defined under the following parameters:
R
CO
ST
4.2 Product : Fabindia’s products are its differentiating factor and it has made sure over the
years that the quality and the style of the products is maintained. It has a large product range
which includes -Garments for men and women, Accessories, Home Linen and Furnishings,
Home Products, Floor Coverings, Body Care Products and more recently, Organic Food
Products and ethnic Jewellery. All the products have at least one factor which is handmade and
thus, supports artisans. This is a very strong customer value leveraged by Fabindia, which is that
of traditional, ethnic products which support poor artisans and provide livelihood to a large
number of people.

4.3 Place : Fabindia has stores in more than 95 locations across India. The stores include the
premium, regular and concept stores. It is trying to increase coverage in order to make sure that
the products are available at the largest number of places possible. It also differentiates its stores
according to the products stored. For eg. In Mumbai the Khar Store is only a Furniture and
Upholstery while the nearby Pali Hill stores Garments, organic products, Body products and
Jewellery. This also ensures convenience for the customers since the products are either
available in the same store or in nearby stores.

5: Competition Analysis
Competition Faced by Fabindia is from both the organised and unorganised retail sector. (Appendix
10.1) The unorganised sector has the local tailors who provide customised garments to the
customers at reasonable prices and the local NGOs selling wares. However, the scale of operations
does not pose a major threat to Fabindia.

A far greater threat is posed by the organised sector especially Government owned Khadi Gram
Udyog outlets and Cottage Industries Emporiums across the country. The product mix offered by
both is similar to Fabindia. Also, they have the backing of the governments. However, the quality of
products and service provided by Fabindia is perceived to be higher than that of the government run
outlets.

Customer Acquisition and Retention 4

The organised retail sector also includes outlets by corporate houses like Lifestyle and Westside
which cater to the same demographic profile. However, the products served are more contemporary
in nature and does not aim at the same target audience. Stores like Anokhi have the same target
audience, but do not have the reach of Fabindia.

6: Customer Connect Initiatives

“A delighted Customer is our Best Brand Ambassador”

Fabindia does not follow any customer acquisition strategy. It mainly focuses on customer retention.
Fabindia creates its market through its existing customers which is quite evident from the fact that
about 85% of its customers are repeat customers. The Unique Selling Proposition of Fabindia is the
quality of the fabric and the traditional style, which is always in vogue. They have designed the
stores’ decor and ambiance keeping this in mind. They constantly try to improve upon the quality of
the products in order to retain their customers. (Appendix 10.3)

The company concentrates on customer feedback by maintaining a visitors’ register to record

customer views. The store managers prepare a report, which is periodically reviewed by the Product
Selection Committee at Fabindia in order to know about the buying pattern among consumers.

Recently, CRM software has been implemented in some of the stores which will help in maintaining
a centralized database. This will help Fabindia in retaining customers by building lasting
relationships and improving loyalty. The implementation, however, is still in its nascent stage, but is
soon expected to be spread across all the stores in the country.

Fabindia also has the Mystery Shopper Program in order to gauge the customer satisfaction level.
Mystery shoppers posing as normal customers perform specific tasks such as purchasing a product,
asking questions, registering complaints or behaving in a certain way and then provide detailed
reports or feedback on their experiences to the management. It serves as an effective tool to improve
the customer experience.

Customer Acquisition and Retention 5

7: SWOT Analysis
STR

 Differentiable products  No
GT
EN

HS

specific promotions
 Customer Loyalty  Inconsistent service in stores
 Brand recognition and loyalty strategy

S
E
S
S
E
N
K
A
E
W
 Diverse product mix  Limited channels of business
 Partnering with suppliers  Sourcing strategy skewed
 In-house manufacturing towards suppliers
 Price Trends Setter  Inconsistent quality of
 Different categories of stores products
THRE
ATS

 Substitute producing  In store merchandising &

S
E
I
T
I
N
U
T
R
O
P
P
O
competitors navigation
 Not in touch with Fashion  Promoting e-business channel
Trends  Organic foods market
 Customer acquisition
strategies

7.1: Strengths
The product mix available at Fabindia can be easily differentiated by the customer. The uniqueness
of the fabric or styling has created a new category as identified by the customer as ethnic wear. This
leads to a very high brand recognition and connects with the customer value. It has an enviable
presence in diverse product lines as garments, furniture, furnishing and upholstery, body care,
organic foods and the very recently introduced jewellery line. Due to its variety of stores, it can reach
to different categories of customers.

Customer Acquisition and Retention 6

7.2: Weakness
This absence of promotions strategy is believed to be resulting in sales below its potential levels. The
sourcing strategy followed for accepting raw materials is heavily supplier centric. In the past there
have been incidences when due to delay in sending supplies for winter garments manufacture,
inventory was carried over to the next year and suppliers were not made to share the damage. It
operates through its own stores and that too fed by a centralized hub model of supply chain
management.

7.3: Opportunities
Merchandising within stores is still in a rudimentary stage. The shopper navigation can be greatly
enhanced by focusing on the store layout and appropriate merchandising techniques which succinctly
create individual product areas. There is great opportunity to grow along with the fast growing
organic foods department. Out of the total customer base for Fabindia, a high percentage comprises
repeat customers. This leads to an inference that Fabindia can focus on customer acquisition
strategies.

7.4: Threats
Already many firms have tried to recreate the model of Fabindia. Hence, .Fabindia needs to innovate
and diversify into different product categories. It should be nimble and responsive to changing tastes
of its customers. Also as it is suppliers are mostly artisans and manufacturing is labour driven,
controlling costs can be a challenge. Also it needs to ensure that the customer service provided and
the quality of products is consistent.

8: Future Plans
The future plans of Fabindia include leveraging the Organic Products section, since it is still in a
nascent stage in India. It plans to expand nationally, as well as internationally. It is also trying to
reduce the number of defects in the products to a minimal which include bleeding of colours,
shrinkage etc.

Customer Acquisition and Retention 7

9: Recommendations
Since the number of stores has more than doubled in the last four years, it needs to consolidate its
position and make sure that the supply chain problems are overcome. Also, as the survey and the
interview have pointed out, the visual merchandising of the stores needs to be improved
dramatically. In order to increase awareness about the location of the stores, it needs to market itself
more aggressively. It also needs to develop the online store and increase awareness about it.

Customer Acquisition and Retention 8

10: Appendix
10.1: Competitors of Fabindia

STRENGTHS WEAKNESSES

UNORGANIZED SECTOR

Tailoring Outlets 1. Reaching out to customer 1. Very fragmented business

with larger dispersion. approach.
2. Ensures convenience of
demanding service.
NGOs Promoting 1. Strong community based 1. Lack of retailing expertise
Handicrafts operations. and inability to minimize
2. Complementary products costs.
manufactured with other 2. Products are mostly produced
firms. for souvenirs or artifacts of
collector’s interest.
ORGANIZED SECTOR

RETAILING HOUSES :

Garments Based (Shoppers 1. National presence of outlets. 1. Diversity of product is very

Stop, Westside, Reliance 2. Retailing expertise and less.
Trends, Globus) competitive pricing. 2. Retailing brands and in-house
3. Agility for quick product labels have a considerable
development cycles. share of product mix. The
trends are designed as per
recent garments and
accessories trends.
Government Handloom 1. Strong legacy attached to 1. Business is heavily
Initiatives products. influenced by bureaucratic

Customer Acquisition and Retention 9

(Khadi Gramodyog, Cottage 2. Subsidized manufacturing approach of employees.
Industries Emporium, State and costs. 2. No significant product
Government departments) evolution.

Designer Boutiques 1. Scope of product 1. No uniformity in price across

customization. products.
2. Highest level of customer 2. Limited models of SKUs
intimacy. manufactured.
Organic Foods (Reliance, 1. Well established business 1. Profitability concerns as
Godrej Agrovet, ITC Foods, houses with high brand organic market is still at
Organic India) equity. nascent state.
2. Established and
technologically equipped
supply chains.
FABINDIA MODELLED GARMENT HOUSES

Anokhi 1. Differentiable products. 1. Minimal product lines.

2. Established brand and 2. Handicrafts from western
market. regions
Bombay (Swadeshi) Stores 1. Servicing high value 1. Only located in Mumbai
customers. 2. Priced at a much higher
prices than average Fabindia
prices.

Customer Acquisition and Retention 10

10.2: Questionnaire for Customer Survey
NAME:

SEX:

AGE:

LOCATION:

EDUCATION BACKGROUND:

- High School
- College
- Graduation
- Post Graduation

CURRENTLY WORKING AS:

QUESTIONS:

1: How much do you generally spend on Clothes per month?

- 0-500
- 501-1000
- 1000-2000
- >2000

2: How much do you generally spend on Home Furniture and Furnishings per year?

- 0-5000
- 5000-10000
- 10000-15000
- >15000

3: Have you heard about Fabindia

If yes, how did you find out about Fabindia?

- Internet
- SMS
- Print Ads
- Word of Mouth
- Gift certificates

Customer Acquisition and Retention 11

 - Others ____________________________

4: Have you visited any of the Fabindia outlets?

- Yes
(Specify Frequency) -Once
a week
- 1-2 weeks
- 3-4 weeks
- > 1 month
- No

5: Were you able to find a Fabindia Outlet in your city?

- Yes ( Specify)
- No

6: Rate your experience at Fabindia in terms of your satisfaction level for the following:

Highly Satisfactory Average Unsatisfactory Highly

Satisfactory Unsatisfactory

Service

Products

Range of
products
available

Location of
the Store

Display of
goods at the
store

Quality of
Products

Customer Acquisition and Retention 12

 Price

7: To whom would you recommend Fabindia ?

(Tick whichever is appropriate)

- Friends/ Relatives

- Business associates

- Teenagers/ College goers

- NRIs/ Tourists

- Elderly

8: Which of the following do you think was instrumental in your choosing to buy the products?
Rank them on scale of 1 to 5 with 1 being the most important.

- Traditional work

- Support to poor artisans

- Quality of the product

- Price

- Range of products available

- Convenient Location of the store

- Service provided by the staff

- The ‘Fabindia’ Brand

9: Which of the following words would you associate with Fabindia?

- Traditional

- Indigenous

- Versatile

Customer Acquisition and Retention 13

 - Artistic

- Comfortable

10: Which of the following products of Fabindia were you aware of before you visited the

store?

- Garments (Men)

- Garments (Women)

- Accessories ( Duppattas, scarves etc.)

- Home Linen and Furnishings

- Home Products (Furniture, Tableware, Ceramics etc.)

- Organic Food Products

- Floor Coverings

- Body Care Products

- Jewellery

11: Which of these products would you buy from Fabindia?

- Garments (Men)

- Garments (Women)

- Accessories ( Duppattas, scarves etc.)

- Home Linen and Furnishings

- Home Products (Furniture, Tableware, Ceramics etc.)

- Organic Food Products

- Floor Coverings

- Body Care Products

Customer Acquisition and Retention 14

 - Jewellery

12: Have you bought any Products from the Fabindia Online Store? (Specify)

- Yes _______________________________________________________________

- No________________________________________________________________

13: What would you like to change in the outlet?

Interpretations:

Why Choose Fabindia Quality of Products

Range of
products
17 17 Highly
available
33 Satisfactory
8 Service
Satisfactory
provided by the
staff 25 58
17 Unsatisfactory
The ‘Fabindia’
25
Brand

Customer Acquisition and Retention 15

 Customer Feedback - Areas
of Improvement
8.33% Loyalty Program

25% Wider Range in

Home Products
41.67% 8.33% More International
Stores
Better Display
16.67%

Customer Acquisition and Retention 16

10.3: Transcript of Interview with Zonal Manager Fabindia
Interview with Ms. Shraddha Pandey, Zonal Manager Fabindia, s.pandey@Fabindia.com

Q: Can you give an idea how many customers walk into Fabindia stores without knowing what the store is all
about?

A: Very few. Almost all the customers are repeat customers.

Q: There is an issue of supply chain with organic products. The products are not always available. So how do
you deal with customers in that case?

A: We are the biggest seller of organic products in India. And as the market of organic products is at a very
nascent stage, people understand if there is non availability at some point of time.

Q: As you have said that most of the customers of Fabindia are loyal customers, so what does Fabindia do to
acquire new customers?

A: Virtually we do nothing. Fabindia creates its market through their existing customers only. We have 99
stores all over India. Recently we have opened a store in Bhopal also. Initially there was not much market but
over a period of time every store flourishes.

Q: Keeping this thing in mind, what kind of growth figures do you have in mind for Fabindia, because you
don’t advertise as such, so customers coming in might be less compared to the scenario where advertising is
also done?

A: Its growing at a fairly fast rate as evident from the number of stores which are opening every year. And I
don’t think advertising will affect much of our customer base because almost 85% of the customers are loyal
customers. Sometimes people are so much inclined towards uniqueness of Fabindia that they don’t believe in
telling others that they are wearing a Fabindia garment. Else word of mouth is the main factor of success of
Fabindia.

Q: Can you tell us something about the mystery shopper program in Fabindia?

A: In mystery shopper program, a person hired by management goes to every store and shops there and then
give a feedback according to the customer perspective. The store people never come to know or for that matter
suspect anyone whether he is a mystery shopper or not. There are almost 200 customers coming everyday to
Fabindia so anyways you can’t judge. As far as report is concerned, the feedback is given to every individual
shop and that is a very detailed feedback. It consists of minute details like signages outside, restrooms,
behavior of staff, etc. So it serves as a tool to provide better customer satisfaction.

Customer Acquisition and Retention 17

Q: As the number of customers visiting Fabindia is pretty large, there must be some customer complaints also.
What are those and how do you handle them?

A: Main complaint is regarding the faulty product. Sometimes Fabindia product color fades off. But in the
maximum cases we replace the product. As far as organic products are concerned, there is a less scope of fault
because they all are kept on shelf after taking care of its expiry date etc..

Q: What is the competitive strategy of Fabindia?

A: I don’t think there is any threat to Fabindia when competition is concerned. The companies like Anokhi,
Khadi Bhandar, W, etc are not that big in supply and distribution network as Fabindia is, so I don’t think we
face a significant competition.

Q: Don’t you think that not having a competitive strategy is a loophole in a way. Suppose a big company
enters the market with a buzz, then it might eat upon some share of Fabindia?

A: I don’t think so. While looking at Fabindia, don’t look it just as a store. See the depth in the network. The
supplier who is providing sari to Fabindia is doing it from past 20 years. He looks upon us as the people who
have transformed his life. I have been to a village in Uttar Pradesh and trust me there are lot of villages which
are entirely made up of people supplying to Fabindia. We are very fair people, and clear in our mission and
vision, so there won’t be any problem arising in upcoming years also.

Q: You have 3 kinds of stores, how do you differentiate which place which store will suit the best?

A: It depends upon mostly on the demographics of the place. Like if its Dehradun, we will open a concept
store. Sometimes a concept store is transformed in a full fledged store depending upon its sales. So it all
depends on where & at what scale we are opening a store.

Q: As majority of the revenues of Fabindia comes from garment business, what is the positioning of other
avenues like furniture in Fabindia marketing?

A: Furniture market of Fabindia is also doing very well. Actually the demand is high and we are not able to
cater to all of that. This is because of the reason that the furnishing is unique and it also comes under
handcrafted products. Quality checks are periodic and it helps us to provide quality products to the market
where the demand is high.

Q: What are the different marketing channels used by Fabindia?

Customer Acquisition and Retention 18

A: We do mobile marketing, i.e., invertising and also advertorials, i.e., whenever a new store or a new range
of products is launched, we put a news in the newspaper, so that customer comes to know. We don’t believe in
conventional advertising. It’s the word of mouth that helps.

Q: Do you have any customer loyalty program?

A: No, we don’t have. Actually we think that in these programs, it’s the customer who ultimately pays for
that. We rather keep our prices fixed and work on a fair margin.

Q: The perception in the mind of a consumer is that Fabindia is for upper middle class and high class people.
So what does Fabindia doing to break the ice?

A: Yes, I think that is a barrier and we are working on this front. I guess the USP of Fabindia is the quality of
the fabric, and the style, which will never go out of fashion. So we are constantly improving upon the quality
of the products and that way retaining the new customers and moving out of that niche segment slowly. We
believe that a customer comes again and again to buy the products.

Q: How do you take care of customer feedback?

A: This aspect of marketing is dealt by the store manager of every store. We have a Product Selection
Committee which reviews the position of the store periodically on the basis of the report of the store manager.
As he is always present in the store, he knows what does a customer feels and likes. Moreover, we have a
customer comment register in which he can write something if he wants. More recently, a CRM software is
implemented on some of the stores which will help in keeping a centralized database. But that is just at its
nascent stage.

Q: Anything which you consider as the weakness of Fabindia?

A: Our fabric still shrinks sometimes. We are working on that though. You have to realize that the person who
is working on that is weaving under the bulb. So we are putting up a system where we can recheck the
material before reaching the end user.

Q: Where do you see Fabindia in the coming future?

A: When I joined Fabindia, we had 40 stores, & now the number is more than doubled. So we see Fabindia to
launch more products which are close to customers same way as we launched organic products, Sana, and
jewellery.

Customer Acquisition and Retention 19

Customer Acquisition and Retention 20
11: References and Bibliography

JOURNAL
1. Wharton School of the University of Pennsylvania, “The Poor as Stakeholders: Can
'Inclusive Capitalism' Thrive in India?”, Knowledge@Wharton, November, 2008.
2. Jain R., “Mobile Magic: Making wishes come true now”, Netcore Solutions, June, 2006.

3. Mohanty B. & Roy R., “Fabindia Overseas Private Limited*”, Xavier Institute of
Management, Bhubaneswar, Vilakshan, XIMB Journal of Management ; March, 2008

4. Khaire, M. & Kothandaraman P., “Fabindia Overseas Pvt. Ltd.”,

ONLINE
1. The Economic Times: “Fabindia launches its first-ever jewellery
line” http://economictimes.indiatimes.com, 12 August 2008.

2. Wikipedia, The free encyclopaedia: “1worldspace satellite radio”

http://en.wikipedia.org/wiki/Fabindia, December 2008

3. Business Standard: “LUNCH WITH BS: Fabindia MD William Bissell”

http://www.business-standard.com/india, 14 November 2006

4. Fabindia, Company information and online shopping portal

http://www.Fabindia.com, 5 December 2008

5. Rediff.com: "The amazing success story of Fabindia"

http://www.rediff.com, 18 June, 2008.

6. Infochangeindia, “The Fabindia School: Harbinger of change in rural Rajasthan”

www.infochangeindia.org, 2 November, 2008.

BOOK
1. Saxena R., Marketing Management, SAGE Publications, New Delhi, First Edition

Customer Acquisition and Retention 21