0:00 Fab India is a 60-year-old fashion giant that has a valuation of roughly 16,000 crores and has become synonymous with India's Rich ethnic wear with 1,600 crores in annual revenue they have brought a Revolution by being Pioneers in scaling India's Rich Artisan crafts at a huge mass retail level a company that has become a Tata equivalent in fashion industry by giving back to the ecosystem and supporting lives of 50,000 Artisans and 10,000 Farmers but before we dive into the Three core insights that Fab India has cracked beautifully over the last 6 decades it's important for you to go back 60 years and know why it all started also what might really shock you here is that they didn't start as an apparel brand nor were it started by an Indian in fact the company started
0:45 as an exporting company of Home Furnishings by an American entrepreneur John bisel back in 1958 John came to India for 2 years on a forward Foundation Grant and his job was simple to work as an adviser to India's handicrafts board and cottage industries and help Indian villagers in making better goods for exporting but as he learned more and more about the richness of India's craftsmanship he dropped all of his plans to go back and started Fab India the foundation of Fab India was simple yet super bow to work directly with Artisans and beavers and provide them sustainable employment and Export these Goods to foreign countries and put India on a world map so while that was the starting of the company a lot of things have changed for them over the last few years in fact the biggest change for them was 30 years later later in 1990s when John passed away and his
1:33 son William Bissell who is currently the chairperson of the company took charge of the business and saw a scope of making Fab India a retail giant they are today he saw that Indian economy was changing and saw the scope of growing consumption patterns and just imagine 1990s right it was a different time for us all together we had opened our economy after liberalization we as Indians got more exposed to Western culture with high internet penetration and high consumption of Hollywood movies and we were moving towards Western attires like t-shirt jeans Etc we were getting very influenced by Western culture and by this time Fab India had shifted their focus completely from being just an exporter to creating a daisy semi- premium brand that will sell majorly to Modern DC customers and there were a couple of reasons for this right
2:18 one of them was that their foreign clients had access to cheaper stuff at bigger volumes and they could also access to other Indian exporters since our economy had opened and I know this was a super counterintuitive and bold move considering at that time we were becoming more westernized in fact today you would be shocked to see that 65% of the Indian apparel Market is westernized but Fab India was not coming for a smaller share in a bigger Market but coming for a bigger share in a smaller Market Fab India knew that ethnic Vier would never go out of fashion in fact today ethnic Market despite being a smaller Market than the Western Market is so huge that one out of every five Autos ordered online is a s or a CA awesome so with that context in mind as understand the first thing that Fab India crack beautifully which is their
3:03 unique retail strategy behind 320 Indian stores and 10 plus international stores see the apparel category might sound like the most interesting and easy category to start with but it's not that because it's a touch in field category and we as Indians as you know are super price sensitive and this apparel space becomes very competitive because 60% of the entire apparel Market is unorganized so an apparel brand not only is competing with other apparel Brands but also compe with small unbranded sellers who sell at super low prices and this makes it really difficult for these Brands to make money and ask for a premium from a customer and yeah despite many online only Brands coming up lately and despite the high internet penetration rate we still only trust a brand completely if we are able to touch the products physically by the way probably that's the reason why an
3:49 average return rate on an e-commerce order is 30 to 40% and Fab India understood this beautifully so to establish a special bond with their customers and make them feel the quality of handwoven and hand printed items Fab India doubled down on their physical stores and they have done this in a unique and a way different way compared to other ethnic giants like Mana so let's understand Fab India's retail model but also other retail models that exist in this ecosystem but before we get into the retail insights let me tell you about something super special that will help you build a compounding career career outcomes at growthx see career Journeys are daunting tough and lonely and to give you a current scenario even leaders get one call for a round round one interview after applying to like 100 and we know this feeling right where you feel that am I not good enough is this
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5:21 model and other is a franchise owned and a franchise operated model known as the F model in a Coco model the company does not give franchises but rather expand on its own by having leases on its own name having the inventory risk on its own name and also operating the store by itself on the other hand in a 44 model the company gives franchise rights to other people who would own the lease and also own the inventory risk and this will help the company to expand at a faster rate by the way there are also other complex combinations to it where the party taking the ownership risk which is the least cost is someone else and The Parting operating the outlet is someone else this includes the franchise owned company operated model the FCO model and the company-owned franchise operated model the kofo model and the logic is simple if a company is super sure about certain strategic locations
6:07 like Prime locations of indran nagar in Bangalore or Canard place in Delhi they prefer owning the lease even if it's a franchise and Brands like manver use the kofo model a lot where the company owns the store but has delegated the operations to a franchisee and yeah this leads to different risk and different commission rates that a franchise gets so while a brand like manuver has gone for an asset light model of giving franchises out Fab India has gone for a deliberate Kix heavy choice of owning their own stores and also operating them by themselves that's the reason why they have twox a number of owned stores as compared to their franchises and this obviously makes sense for a brand like theirs as there's always a chance that the franchise owners might not ensure the same level of exact experience for customers and the brand name of Fab India gets diluted by the way the compan is also making changes to this and
6:54 moving towards AET light models as they want to diversify their retail strategy now coming to the second model of ret detail on the basis of brand exclusivity see there are broadly two types of outlets one is a multi-brand outlet or a large format store these are the stores where the Brand's product is put along with its competitors under the same roof and you can think of good examples in this category like shoer stop Reliance strs lifestyle Central and even pantaloons the second type of stores are known as exclusive brand Outlets these are the single brand big stores that only have one Brand's products exclusively and many big brands have done this like idas B man Etc and both of these models have their own pros and cons the pro of the multibrand store is that these stores have high footfall because customers have higher choices as they get access to multiple Brands under
7:40 the same roof but the con is that each brand gets a very limited shell space in the case of exclusive brand Outlets the pro is that the brand only show its own skus in the store and gives customers a grand experience that they want to give but the con here is that if the brand does not have a loyal set of customers or a higher brand recall the stores won't work at all and would lead to losses Fab India values the brand positioning and customer connection so much that they've been bullish on ebo since the day one so much so that these stores Drive 80% of the revenue they want the customer to enter a completely new world when they enter a Fab inia store and show these customers the value of Craftsman and their Heritage that's why they've been so rigid when it comes to the ebo model that they have now the fourth largest Ebu Network in the country after the brands like man Biba
8:28 and W and not just that they have even added roughly 30 experience stores the huge stores which are like two to three times Biggers this means that if a regular store is 3,000 squ ft big these stores are 8 to 12,000 ft bigger and are like the Hub of all product categories Under One Roof along with additional Services be customization of apparels Design Studio Services kids and play section and even a Fab Cafe the logic is simple prioritize customer experience establish trust make them fall in love with the quality and get High conversion and high repeat rates so while this has solved for the front a experience they did something super unique at the back end too so let's talk about the second inside cracking the supply chains trust see at the very core the reason why John
9:13 started the brand in 1960 was to empower the Craftsmen and artisans in the country and as you have discussed earlier in the video as well they have access to a community of 50,000 Artisans from 21 states and more than 12,000 Farmers from five states by the way they don't have access to all of these people directly and that's why they have a solid layer of 900 third party contractors in between to get in touch with all of these people a big extensive supply chain that they have curated over 60 years a supply chain that trusts Fab India completely and this trust has become the sole USP of why so many Artisans want to work for them but before we understand how Fab India made Artisans trust them we need to realize that this is very valuable for us as a country because craftsmanship has been a decaying art form in India and the number of Artisans has reduced by 30% in
10:01 the last 30 years so preserving this is very important not only for our culture but also for the world because India makes 95% of the world's hand boen cloth yeah you heard that right that's how important we are to the world that's why even the government is taking a lot of initiatives lately to promote these communities and Fab India over the last six decade has gone all out of their way to help these Craftsmen so let's understand how Fab India has done this see every region state or Village has a unique craft that has been passed on for generation ations to them and is unique to that particular geography and you must have heard it yourself somewhere for example Punjab is known for ful craft Tamil Nadu is known for Kumari craft and chamba is known for chamba craft and here is an extensive list for you to check out the most popular crafts all of these crafts are different in design colors techniques and even
10:48 materials all the small communities that practice a certain specific craft in a particular area are called clusters right now there are roughly 750 clusters in the country that employ more than 2 lakh Artisans as per Ministry of textiles and what Fab India has done beautifully is that they've actively worked on developing these clusters through various programs like craft cluster development livelihood IMPACT Program which is a 50 CR expensive program and involves multiple steps which includes identifying a craft in a village or state teaching or upskilling Artisans of that area providing financial literacy to these Artisans and giving trial orders and also integrating them into supply chain helping them build capacity and also doing quality checks to make sure they understand the legit criteria this is super valuable because while Artisans are skilled they
11:35 lack awareness professionalism business mindset and exposure to new techniques so by instilling these skills they have not only helped clusters become economically strong but also helped them become confident and by making them feel that whatever they do is valuable to the world as a result many clusters developed by Fab India have now turned into active hubs of these crafts where even the newer generation is getting into this side of business which is truly remarkable also roughly 50% of these artisans in our country are women and hence helping this Society has helped increasing average household income in the most conservative sections and helped in women empowerment creating a holistic bigger social impact they have done a lot of other stuff like creation of NOS for Artisans and creation of handicraft official certifications that verify if a particular item is hand Boven or not and
12:20 this is the reason why their Artisans not only trust them but also respect them for their contributions in fact William even tried a unique ownership model where he want Artisans to own a stake in the company and while this thought was revolutionary and one of a kind it had to be scrapped out later now moving on to the third strategy which is SKU diversification when you think of Fab India you would instantly think of cortas Sardis or even Neu jackets and yes they have made sure that they nail this category by using a mix of hand movement and traditional techniques and apparel is not the only thing they do and as you know already it was not even the first thing they did when they started though they were fully focused on this category for like 40 years the reason why it accounts for 80% of the revenues in FY 23 they don't want themselves to be an apparel brand and that's why they have slowly expanded
13:06 their SQ mix in the last few years in 1982 84 they launched clothing in 2000 they launched Home Products based on non-textile in 2004 they entered organic food category in 2006 they entered Personal Care category in 2008 added handcrafted jewelry to their portfolio cut to 2024 they even have Home and Design and even dining in the service portfolio and this is a very startup like thinking for a 60-year-old company because they don't want to be an apparel brand but a theyy Lifestyle brand also they have done this very strategically by creating separate brands in separate vertical for example for the personal care category they have a separate brand called Fab Essentials for the organic food category they have organic India and for the dining they have Fab cafes
13:51 and it makes sense right because in know that the customer would think of apparel first when he or she would hear of Fab India hence it makes complete sense to position these Brands differently in each of the vertical because different branding leads to different perceptions and while they created some of the brands inhouse they even don't hesitate to acquire new brands they acquired organic India an organic food and supplement based brand in 2013 as a company aligned with their values and even that company was working with thousand of farmers over a landscape of 2.4 million hectares when Fab India acquired them by the way Fab India is also planning to sell organic India off to tatas as they want to pay back their debt obligations and want to focus on the other remaining categories in a better way so these were the core insights behind the success of the 60-year-old fashion brand and yes don't
14:36 forget to check out career outcomes by growthx in the description I'll see you in the next one ciao
