Fashion Point—Cutting Out the Middlemen

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Abstract

It was quite frustrating for Zain that a good chunk of his time and efforts was spent dealing with suppliers. Although, they were constantly pestering Zain to settle accounts quickly but they were elusive when it came to responding to regular complaints regarding defective or wrong consignments. At a relatively young age, he had to take on responsibility of running his family’s textile trading business “Fashion Point”, when his father passed away in 2013. It had only been five years that he has been managing the family business in Lahore as the Chief Executive but he had not only learned the ins and outs of the business but also expanded it quickly, taking some radical decisions. He had recently started to toy with the idea to try and have cloth made through looms and dyeing units instead of just buying it in bulk from cloth suppliers. He had requested quotations from potential weaving and finishing partners and was poring over the numbers to try and make sense of how to go about analyzing this decision. That night, Zain was contemplating if such a venture made business sense.
Fashion Point
Fashion Point was founded in 1987. The founder, Javaid Abbas, joined limited number of shopkeepers in Azam Cloth Market (ACM), Lahore who sold patent textile mill products to retailers. At that time, ACM had only a few hundred shops which operated at a wholesale level, majority of which sold gents Shalwar Kameez1 fabric. Strong purchasing power of consumer, high demand for Shalwar Kameez and low level of competition – all factors made the cloth business very attractive at that time.
Over the years, the dynamics of market changed. Primarily because of good margins and very low barriers to entry, many people joined this business. By 2018, ACM was home to over 5,000 shops. Also, wholesale markets in different parts of the country had been formed that have diverted the flow of customers from away ACM. In this context, Faisalabad was the biggest competitor. Moreover, the nature of business was highly commoditized. There were certain standard construction styles of fabric which were followed by manufacturers across almost all categories. This makes it easier for the customers to judge prices across different qualities and buy from the cheapest available source. This cut-throat competition had compelled market players to discover all routes to access cheapest ways of procurement.

Authors

• Omair Haroon, Suleman Dawood School of Business, Lahore University of Management Sciences

• Mohammad Basharullah, Suleman Dawood School of Business, Lahore University of Management Sciences