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Fabindia to open 200 franchise operated stores

Franchise News India:  Fabindia Overseas Pvt. Ltd, a retailer of ethnic wear, furniture, and table and bed linen, will invest close to Rs.150-175 crore over the next two-three years as it seeks to open 200 franchise-run stores in smaller cities.

The company has thus far steered clear of taking the franchise route.

“For the first time, we are opening franchisee operations because there is a lot of economic vitality in these markets,” said William Bissell, managing director of Fabindia Overseas. The company will look at cities such as Jabalpur in Madhya Pradesh, Tiruchirappalli in Tamil Nadu and Asansol in West Bengal for its new stores, Bissell said.

The firm, in which L Capital, the private equity arm of luxury goods maker LVMH Moët Hennessy Louis Vuitton SA, and PremjiInvest own a stake, clocked revenue of around Rs.1,000 crore in 2013-14.

The company is profitable, said Bissell, and the expansion to smaller towns will be internally funded. The franchise route, he explained, would help Fabindia partner local players who have access to real estate space and capital.

Analysts say pricing and the choice of merchandise will play a huge role on how consumers relate to the brand in smaller markets.

“Their prices and styles will have be dramatically different from what they typically sell in bigger cities,” said Rachna Nath, an executive director at consulting firm PricewaterhouseCoopers.

Smaller towns are largely influenced by Bollywood (in terms of designs and styles) and it has to be seen if consumers adapt to the idea of wearing clothes with the sensibility that Fabindia offers.

The five-decade-old chain of retail stores, famous for its hand-woven and hand-printed fabrics that often resonate traditional Indian prints and motifs, has grown to around 175 stores across 73 cities in India since it first opened a store in Delhi in 1975.

Over the next 12 months, the company will also invest an additional Rs.100 crore to expand its retail network across metros where it will add 35-40 stores and outside India. The company already has a presence in Dubai and Singapore.

Source: livemint

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