Capitalising on rural urban gap

Acknowledging the need for bridging rural demand and urban product availability FabMart was conceptualised. In an interview Alphonse Reddy, CEO, FabMart shares the new and innovative concept of FabMart and its future plans via franchising.

Rita G Chauhan (RGC): How was the idea of FabMart conceptualised?

Alphonse Reddy (AR): We realised that there is a latent demand for branded products in small-towns. Customers here have the desire and the buying capacity, but often find themselves traveling to bigger towns to buy these products. The retailer in the small-town is also not equipped with enough knowledge, infrastructural capacity or investment for inventory to be able to serve these customers. This need for bridging rural demand and urban product availability is what led to the conceptualisation of FabMart. FabMart’s innovative business model will help RU-ral – ur-BAN retail divide reduce. Retailers will enjoy the power of a multitude of brands while customers will have access to all their high-end product needs.

RGC: Share with us the growth and success journey of ‘FabMart’. How has been the journey so far?

AR: FabMart’s Ru-ban model was abstracted in early 2012. We launched for the first time in Andhra Pradesh in September 2012 and invited retailers to franchise with us. The response has been overwhelming. We have already received more than 150 registration queries, of which 20 have be scrutinised, selected and appointed, while the other registrations are being processed. Further registrations are also being accepted. Following Andhra Pradesh, we have launched in Tamil Nadu in October, where we are expecting response just as great as we received in Andhra Pradesh.

RGC: What inspired you to adopt the franchise route for expansion of your brand?

AR: Small-town retailers own a unique advantage of good-will of customers they have nurtured over years. A customer often depends on their local retailer for opinion while buying any important product. These small retailers constitute more than 90 per cent of the retail in India and have an outreach to customers beyond big towns. India has the highest density of mom-and-pop shops in the world, with 11 shops per 1000 people, and these small stores have the potential to drive India’s economy outside of the metros. Forming a strong network of these franchisees for small-town penetration was therefore, not a difficult choice to make.

RGC: How is FabMart different from other retail chains? What is the USP of FabMart?

AR: The key differentiator of FabMart.com from other retail chains or e-commerce sites is that the shopping experience for customers in Tier III and IV towns is completely seamless by the inclusion of local retailers as part of the model. These affiliates support front end sales and serve as delivery partners. In towns where a lot of companies are struggling to facilitate online bookings and cash-on-delivery, we decided to instead empower the retailer with these brands and depend on benefits of his local-knowledge, experience and exposure to stand-out and boost our presence.

RGC: What are your future plans in term of franchise expansion?

AR: After receiving excellent response in Andhra Pradesh, we have embarked into Tamil Nadu with a similar model of identifying and appointing franchisees. Following this, we would like to first explore our market in Karnataka before proceeding into the rest of the country.

By the end of this year, we target reaching out to 500 retailers across south India and increase our strength to 2,500 by the end of 2013. In the year to follow, we aim to be present across 6,000 small towns all over India with 12,000 franchisees.

RGC: Where do you see your brand in the next five years?

AR: FabMart is a very unique retail model that encompasses benefits at all levels of the retail-chain; be it the customer, the retailer or the company itself. Our success majorly lies in the success of our retailer-partners. In Five years, FabMart would have reached out to each one of 6,000 small-towns in India, offering customers there, a great range of lifestyle products.

RGC: What according to you is the scope for aspirants keen on taking the franchise for FabMart?

AR: Successfully appointed applicants, would be some of the few exclusive retailers in their town, to be chosen as FabMart franchisees. They would have access to more than 5,000 brands across clothing, accessories, electronics, cosmetics and home décor; the power of technology and the backing of a fast-growing brand. They would have the benefit of a zero-inventory model, reduced storage based risks and an up-to-date product catalogue. FabMart will provide them with necessary branding and signage and marketing support from time to time.

RGC: What are the basic fundamentals that you seek for in your franchisees for opening a FabMart store?

AR: The first and the most crucial feature of a retailer to qualify for a FabMart franchisee would be his willingness to upgrade to a smart-retailer. With business located at a popular area in their town, retailers are expected to have at least five years of experience in successful retail. Besides these basics, it is necessary for the retailer to hold an excellent reputation in the local market for quality of service and good financial standing. Basic English and computer knowledge are also a criterion.

RGC: How much initial investment and area is required by aspiring franchisees?

AR: As the model is that of zero-inventory, a major investment on acquiring products and storing them is eliminated. The only one-time investment of the franchisee would be at the time of tie-up, where a nominal deposit of Rs10, 000 is collected as a caution against the tablet device that is provided to them. For the store, a frontage of 20 ft to the main road is a requirement. Overall, the investment for franchisee is less than Rs 50,000.