Saturday, January 16, 2021

Profitable Retailing: Fabindia’s Awesome Location Strategy: Expert Analysis

Whenever I see a new store of Fabindia coming up, I can’t help but marvel at the Location Strategy followed by the company. 

While other apparel and lifestyle brands are busy opening up Retail Stores either at CBDs and High Streets like South Extension, Connaught Place, Commercial Street, M.G. Road, Park Street, Esplanade etc. or the newly opened Shopping Malls, thereby paying high rental cost through their nose, Fabindia opens up its outlets in Community Centres or even Neighbourhood Centres.

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This helps them achieve the 2 most important objectives of a retailer.

First of all, they are able to save on the rental cost, which constitutes as much as 25-30% of the total retail cost in India vis-a-vis 10-12% in western countries. This is because rents in Community Centres and Neighbourhood Centres are much lesser than in CBDs and Shopping Malls.

More importantly, the Fabindia stores attract customers by standing away from the crowd, portraying exclusivity at affordable prices, offering ease of parking and hence attracting customers from a wider catchment area.

We start with one of the first stores of Fabindia where the story of reaping the location advantage started.

In the early 2000s when the Green Park market was nothing more than a Neighbourhood Centre, with EverGreen Sweet House being the anchor store, Fabindia and Raymond were 2 of the first apparel and lifestyle stores to open shop in this market. This set the ball rolling.

The opening up of these 2 stores also helped change the customer profile of this market, as the customers started visiting from a wider Trading Area thereby increasing the footfall and the average bill value of the market.

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Today after more than 15 years, Green Park is a smarter version of the close by located South Extension market. From a neighbourhood market which used to retail only daily need convenience products and services to the nearby colonies’ residents, it has evolved to become a community centre where people visit from other South Delhi localities to shop for Apparel, Jewellery, Electronics, Food etc. It would not be wrong to say that Fabindia being one of the pioneering brands was primarily responsible for this transformation.

Hence it was a Win-Win situation for all- The brand gained by lower cost and higher sales & profits, the market gained by having a wider reach & higher revenues and last but not the least, the Customer gained by having a much better Retail Experience than the other over-crowded, bursting at the seams markets. In fact, recently, the company has shifted its store from one shop to another shop in the Green Park Market only.

The same story was repeated by Fabindia at Vasant Kunj. The store opened up a few years back at Local Shopping Centre at Vasant Kunj. Again, Fabindia got the first-mover advantage of being the only brand in that market. Today, after 5 years, the store is visited by loyal customers as an Experience Centre where they can shop, eat, socialize, hang out et al.

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The latest store of Fabindia which has come up at Hauz Khas (G-Block market and not the main market) is another instance of the brand going for smaller markets, rather than bigger markets with higher rents and more traffic snarls.

A look at the different stores of Fabindia in Delhi and Delhi NCR (refer to the table above) will further add credence to the Location Strategy of the brand. Out of the 39 stores of Fabindia in Delhi & Delhi NCR, 14 stores are located in NCR region, i.e. Gurugram, Noida and Greater Noida.

Moreover, out of these 14 stores, 10 stores are located in shopping malls; while in Delhi, only 2 stores are situated in Shopping Malls, while all the other 23 are present in markets.

Hence, although Fabindia is present in Shopping Malls, it chooses these malls outside Delhi, in NCR like Gurgaon, Noida and Greater Noida, where the rentals are much lesser than Delhi. Also, in Delhi, the stores are located in smaller markets like Vishal Enclave, Kapil Vihar, Sundar Vihar, Sarita Vihar, Preet Vihar, Kamla Nagar, Ramphal Chowk, Delhi Cantt, Punjabi Bagh etc.

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Hence, in Delhi, Fabindia is present in only 2 malls and 6 CBDs like South Extension, Greater Kailash, Connaught Place, Khan Market, Select Citywalk, DLF Promenade etc. Apart from these, it makes its presence felt by having 2 stores at the Airport as well.

This strategy gives the brand the cost advantage with a good spread throughout Delhi & NCR, thereby focusing on not only marketing their brand effectively but also on gaining the advantage of Profitable Retailing, which is a rarity in today’s world of mounting costs and increasing online and offline competition.

Hats off to the Location Strategy of Fabindia.

Prof. Shankar Sahay is a practising educationist with more than 29 years of experience in Fashion, Management, Marketing, Merchandising and Retailing. He may be reached at shankarsahay7@gmail.com

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