"Physical retail will continue to become more experiential": Karan Kumar, Fabindia

Amidst reports of low footfalls in malls and stores at high streets, Fabindia, renowned for its ethnic wear range, has launched its 24th experience center in India. Spread across 9,430 sq.ft, the store in Mumbai hosts a wider range of products across apparel, home decor, beauty, wellness and other categories. Apart from this, the experience centres also provide services, such as Fab Cafe, which serves organic food, alteration and interior design studios and Kids zone.

“By the end of the year, we plan to have 35 such centres to be operational. Currently, we are in 17 cities spread across metros, tier I, tier II and tier III cities. In fact, the tier III cities, such as Amritsar, Agra, Coimbatore, Trivandrum, have pleasantly surprised us,” informs Viney Singh, MD, Fabindia. He adds, “These centres will account for about 25 per cent of our retail space and 35 per cent of our revenue.”

Fabindia started its journey as an exporter of garments, fabrics and home decor in 1960. Jhon Bissel, an American working in New Delhi, founder of Fabindia, launched the first domestic retail store in 1976 in New Delhi's Greater Kailash. Today his son, William Bissel, runs the show and the Indian retail chain has more than 250 outlets in the country. The parent group, Fabindia Overseas's reported revenue from operation in FY 19 was Rs 1,121 crore netting a profit of Rs 180.26 crore. In India, it competes with Manyavar, TCNS (maker of W and Aurelia), Biba and private labels of Shoppers Stop, Pantaloons and the likes.

As per consultancy firm Technopak, the Indian ethnic wear industry is expected to grow to Rs 1,26,210 crore in 2019. According to the firm, ethnic wear is the single largest category in the women's wear segment as 71 per cent women find sarees and kurtis comfortable. An analyst says it is not only festivals and occasions that is fueling the demand for ethnic wear in India among women. “The rise in the number of women going to work is a big driver of that growth,” he believes. However, as per his estimates, the lion share of the spends on retail goes to the unorganised sector, which he puts as the biggest challenge for the chains operating in India.

Manyavar is spending plenty this festive season, it has already rolled out a series of commercials featuring top Hindi film faces including Alia Bhatt. However, this does not change Fabindia's marketing strategy. “Our marketing spends and strategy has never been and will never be indexed to what competition does. How can I tell my story better and to a number of people through engagement, immersion and media formats is what I bother about,” says Karan Kumar, chief marketing officer, Fabindia. He is of the opinion that the pie is big enough to fit in more players, “It’s good if there are more players selling and marketing the category,” he says.

Not competition, but inclusion is Kumar's challenge at this stage. “Women are our largest consumer base and we want to expand our presence among men and kids as well. There is a task of going beyond the ethnic offering that we have. Fabindia has forever been know as a leader in the ethnic-occasion-based-offering. We now want to move into everyday casuals. It follows a language, which is slightly more indo-western, more fusion. We need to de-seasonalise shopping only from an occasion or festival-led lens. To get more people more often to Fabindia to buy a more diverse range of products is the challenge," he asserts.

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A step in that direction was the marketing initiative in association with the Board for Control of Cricket in India (BCCI) believes Kumar. During Indian Premier League in 2019, Fabindia associated as style partner of the tournament. As a part of the partnership commentators, experts, presenters (around 100) wore Fabindia clothing throughout 45 days of the cricket season. “Close to 1000 pieces of clothes were on display during pre, post and mid-match broadcast. This was our way of saying, we are so much more than what people normally associate us with,” shares Kumar.

If industry sources are to be believed then Fabindia spends close to Rs 60 crore in marketing. Print gets the biggest chunk of it followed by digital, which is estimated to be around 20 to 25 per cent. The brand also spends on influencers as it hosts several live events in its stores.

“Essentially there are three levers that we activate. A mass platform, such as a newspaper comes into play whenever we announce a new launch. The second lever is to drive continuous customer engagement. For that we organise live events in our stores, invite craftspeople to come to our stores and demonstrate. The third lever is our loyalty programme, Fab family, something that we launched in February earlier this year. We use the CRM and loyalty programme as pieces that helps us in hyperlocal marketing. So we are able to have more of one-on-one contacts and conversations, led by huge amounts of data analytics targeting people with the right kinds of products they are looking for,” he says.

While this has been the strategy so far, will it change as the focus gradually shifts towards the underserved markets in tier II and III? “The three core pillars of marketing are not going to change,” replies Kumar. He adds, “The title of the newspaper we put our ads in might change as there might be a different one that does better in tier III than the ones we use in metro market. Similarly, the kind of influencers we work with might change because every micro-city will have its own set of influencers, which are higher performing. The nature of events might undergo a little bit of change."

Also Read: "We're still wondering if TV is the right medium for a fashion brand": Siddharth Bindra, MD, Biba

On one side when Fabindia is expanding its physical retail presence there are reports claiming that the pre-Diwali sales in Delhi, Mumbai and Bengaluru has been lowest in recent times. Many attributed the slowdown to larger economic issues while few pointed towards the recent e-commerce sales, which were widely promoted by Flipkart and Amazon. Isn't e-commerce a threat for offline retail? “Both will continue to co-exist," says Kumar. Adding, “I dare to say that physical retail will be our dominant share of the overall sales channel. If you look at some of the leading international brands, they continue to be heavily led, in terms of revenues, from physical stores even today and I don't see that changing real soon.”

He believes that there is still a very large part of the overall consumer base who wants to come, touch, feel and experience the product, try it on themselves, get it customised and altered. “Physical retail will continue to become more experiential and immersive. If it can evolve in that direction of becoming more than just allocation of product display and sale but a destination where there is a lot of experience, engagement, services that are being offered. I think physical retail is here to stay,” he asserts.

The e-commerce platforms relies on heavy discounting to woo customers. Kumar feels this will change as the government of India rolls out regulations to ensure a ‘level playing field’. “In last one year we have seen a greater amount of fiscal discipline in discounting that the various e-commerce and digital players have brought in to their overall marketing strategy. The days of having a hugely uneven playing field because of extremely heavy discounting are behind us,” he says.

Close to 65 to 70 per cent of Fabindia's total revenue comes from the sale of apparel. However, in experience centres categories, such as home decor and personal care see a higher skew. People spend more time in the experience centres and that is a big change in behaviour that the retail chain has observed when compared with other stores. “The customer journey results in improved revenue. The conversion rates are higher, the ticket value is higher, the average bill value is higher," Kumar concludes.