Fabindia’s inclusive capitalism

A Gandhian experiment with community-owned companies
is not just a flourishing retail enterprise in India,
but a model for all kinds of companies in the developing world


This year Fabindia turns fifty. Founded in 1960 by John Bissell, an American working with the Ford Foundation in New Delhi, as an export house to market Indian handloom textiles, Fabindia is now also a leading lifestyle retail brand with 115 stores in big cities and small towns across India, and overseas.

Yet more than its spectacular growth, which has turned Fabindia into a household name, its unique business model has evoked awe and admiration, not to mention a Harvard Business School case study as well. Though by no means the only business founded on the balance between commercial profit and social commitment, Fabindia is certainly among the most successful. In 2008 it registered revenues of Rs 250 million, an increase of 30 per cent over the previous year, and certainly a long, long way from the Rs 0.9 million that Bissell used as seed capital when he started out.

Fabindia’s business philosophy was summed up by Bissell as: “In addition to making profits, our aims are constant development of new hand-woven products, a fair, equitable and helpful relationship with our producers, and the maintenance of quality on which our reputation rests.”

Bissell’s vision translates as a kind of inclusive capitalism, linking over 40,000 craft-based rural producers, primarily weavers, block printers, woodworkers and organic farmers, to modern urban markets through its “community owned companies” which act as value adding intermediaries, between them and Fabindia. These companies are owned, as the name suggests, by the communities they operate from; a minimum 26% shareholding of these companies is that of craft persons. The ownership structure is mutually beneficial for Fabindia and the artisans, with the retailer ensuring it has the supplies it needs while the artisans are assured a steady income. The model Fabindia has, in the process, developed and nurtured a base for skilled, sustainable rural employment, and preserving India's traditional handicrafts in the process.

For all its success, Fabindia continues to try and resist the temptation of going “mainstream”, content to develop and widen the niche segment where its presence is formidable. This belief is being put to test, as John Bissell’s son, William, who took over after Bissell’s death in 1999, plans to open 150 more stores in the next four years! How Bissell overcomes the natural constraints of his unique business model while maintaining the scorching pace of expansion is what the business world is waiting to find out.

Given Fabindia’s track record and adherence to principles of quality, fair pricing, customer satisfaction and, above all, commitment to provide employment to thousands of v illage weavers and artisans, the answer is a no-brainer! In the intensely competitive retail sector, Fabindia’s unique business values have helped not just shaped the way the Indian middle class dress and furnish their homes, but set a high standard of vision, innovation and social commitment.

13-03-2011