|Type||Social enterprise / NGO|
|Industry||Design, sales of clothing, accessories, jewellery, home goods, development, economic empowerment of women|
|Founded||Dhaka, Bangladesh (1978)|
|Founder(s)||Ayesha Abed, Martha Chen|
|Key people||Sir Fazle Hasan Abed, Chairman, BRAC
Mushtaque Ahmed, Executive Director, BRAC
Tamara Hasan Abed, Senior Director, CEO
Abdur Rouf, COO
Sasi Kumar, General Manager, AAF
|Revenue||USD 50 million (FY 2012)|
|Website||www.brac.net / www.aarong.com|
Aarong is one of the leading retail chains in Bangladesh operating under BRAC, the largest non-profit in the world. Fighting to uphold the dignity of the marginalised, this chic brand began as a humble project. It was established in 1978, with the mission to provide income-generating and social development opportunities for poor rural women, while also protecting and promoting Bangladeshi handicrafts. Aarong operates production units in rural and semi-urban areas as a part of its social enterprise model and provides the market linkage through its own retail outlets. All profits generated through sales are ploughed back into expanding opportunities for more low-income producers and to cross-subsidise BRAC programmes for the ultra poor, health, education and livelihood development. Aarong received recognition as a Superbrand in 2009, and remains the market leader in the Bangladesh fashion industry.
In the 1970s, BRAC was examining any and all possibilities for alternative forms of productive livelihood, especially for women, and the proper commercialisation of arts and crafts turned out to be a promising option. In 1976, Ayesha Abed, the wife of Sir Fazle Hasan Abed, founder of BRAC, initiated many of the major activities of Aarong by identifying and experimenting with various crafts that women could produce at home such as nakshi kantha, embroidered goods, baskets, mats and items made of cane, bamboo and jute. However, the two main obstacles to turning craft production into a worthwhile enterprise were maintaining good quality and proper marketing. In 1978, BRAC entered into a joint venture with the Mennonite Central Committee, the international development arm of the Mennonite Church, to open a shop in Dhaka called Aarong – meaning ‘village fair.’ The Mennonites had a long experience of producing handicraft to generate income and had established a programme called Ten Thousand Villages, which worked with artisan groups around the world and sold their products through catalogues and retail shops in the US and Canada. In the first year the Mennonites assisted with the business side of the operation while BRAC worked to develop the skills of village women and their products. During the late 1970s and early 1980s, BRAC focused on developing Aarong’s product lines and production capabilities. They began to study and catalogue the designs and motifs of traditional art forms by visiting museums, elderly craft masters and private collectors. They experimented with indigenous forms and materials, adapting them to possible new lines. They hired master craftsperson to help train village women and created a textile design and service workshop in Manikganj to experiment with materials and technologies in stitching, weaving and dyeing. BRAC also started producing historically imported items such as, men’s panjabi. In 1982, the Ayesha Abed Foundation (AAF) was established by family and friends to commemorate the memory and work of the late Ayesha Abed who passed away leaving behind her newborn son, Shameran, and young daughter, Tamara. The foundation was created to develop women’s skills in various crafts through an appropriate working environment, financial and technical assistance and training. Initially it was registered with the government to receive foreign charitable donations and raise funds, but now operates exclusively as a part of Aarong. The AAF board comprises of the eight family and friends of the late Ayesha Abed. Its budget is part of the Aarong initiative under BRAC. The AAF workers are all members of BRAC’s village organisation groups or the family of the members.
AAF’s first project, the Manikganj centre, was opened on 3 September 1983. The foundation buys handicrafts made by the village women, other NGOs and handicraft producers. In addition to starting the AAF, Aarong opened four retail outlets and began exporting a small percentage of goods to fair-trade organisations during the 1980s. By the mid to late 1980s Aarong began to emerge as a fashion brand despite the fact that Bangladesh was still new to the fashion industry.. Aarong was the first brand to start organising photo shoots along with fashion shows, exhibitions and other forms of media-focused events. Through these groundbreaking marketing initiatives, Aarong was able to expand its popularity and brand identity within the country. By the early 1990s, Aarong became the leading fashion house in Bangladesh and had created a one-stop destination for middle to upper class urban shoppers. At the same time, Aarong’s product designs brought consumer attention back to the products and styles that are indigenous to Bangladesh. Its designers blended the traditional with the contemporary in a way that catered to consumers and started a revolution in trends, adopted by countless other boutiques and stores. During the 1990s, Aarong continued to build brand equity through fashion shows and media publicity events. The emerging prominence of fashion in Bangladeshi society played a catalysing role in doing this. Aarong also continued to expand its production capacity with the addition of three new AAF centres. However, by the late 1990s and early 2000s, Aarong faced a financial setback as a result of mediocre management and a lack of innovation. Between 2001 and 2004, the company was restructured to improve everything from costing, pricing, design and marketing to new product introductions and brand innovations. In 2004, armed with an improved set of processes, a brand new vision and a new management team led by Tamara Hasan Abed, Aarong resumed its impressive performance. In 2004, its sales totalled almost USD 14 million. Aarong earned a profit of USD 1.96 million for BRAC which was distributed among its agriculture, education, and health programmes, with the majority going to a special programme for the ultra poor. In 2013, Aarong had crossed USD 50 million in sales.
Growth and success
Today, Aarong's reach has spread beyond Manikganj to the rest of the 60 sub-districts of the country. It has grown into a thriving enterprise showcasing ethnic wear to beautiful crafts from silks, handloom cotton, endi to terracotta, bamboo, jute and much more. From a single shop, Aarong has grown into one of Bangladesh's biggest retail chains, with 13 stores spread across the major metropolitan areas of the country - in Dhaka, Chittagong, Comilla, Khulna and Sylhet. The company also operates 13 AAF centres while ensuring the livelihood of over 65,000 artisans and their families thus directly benefiting over 320,000 people. In addition, through the profits redistributed among BRAC’s programmes, Aarong benefits hundreds of thousands of people, while providing service to consumers.
Brand and customer overview
The word Aarong means ‘village fair’. The brand is meant to generate an emotional connection and loyalty while bringing people together to showcase the best that Bangladeshi’s highly skilled artisans have to offer. The Aarong brand is well-known in the urban and middle-class communities and is synonymous with high-quality products that bring consumer attention back to the products and styles that are indigenous to Bangladesh. The customers of Aarong are not only the urban Bangladeshi communities but also include Bangladeshis expatriates looking for products that connect them to their roots and represent their identities as a Bangladeshi. The customers also include foreigners visiting Bangladesh, and as a result Aarong was mentioned in the guide to Bangladesh, Lonely Planet. It is a place to pick up a piece of Bangladesh as a souvenir to remind them of the culture, vibrancy and warmth of the people and country.
When Aarong first opened in 1978, the only handicraft marketing outlet and competitor was Karika. Today, Aarong is the leading brand of its own kind in Bangladesh, particularly at the department store level, product range and retail footprint. However, at the individual product level, Aarong competes with thousands of different retailers who make products similar to those found in Aarong stores, but very few of them maintain fair trade practices like Aarong. In the future, Aarong’s biggest competitive threat is the potential influx of foreign retailers from India who benefit from a lower cost of manufacturing as they utilise more efficient production methods and do not provide extensive worker benefits. In addition to Aarong’s strong brand awareness and presence as the leading fashion house in Bangladesh, a key point of differentiation is the department store level product range and location status. Aarong is a one-stop shopping location with products ranging from clothing to household items to children’s toys. Aarong stores have convenient features such as, parking areas and in-store cafes to wrap up a day of shopping.
Design, manufacturing and distribution overview
Aarong utilises decentralised manufacturing process to accomplish its goal as a social business by employing production workers in various rural and semi-urban areas. A purely commercial business would locate its production centres in concentrated areas where infrastructure and a low-cost labour supply are available. Many of the products are produced in off-site locations by workers who have very little exposure to the final products that are sold at the retail level. An overview of the design, manufacturing and distribution process is outlined below:
Aarong’s process flow
Aarong has more than 800 micro, small, and medium entrepreneurs in 60 districts and produces goods through its own production centres, including the AAF production centres and sub-centres. The AAF production largely focuses on textiles while the external independent producers cover the non-textile items such as, pottery and jewellery expert tailoring work.
Ayesha Abed Foundation (AAF) Centres
As of 2013, Aarong operated 13 AAF centres and 638 sub-centres that are responsible for employing more than 30,000 artisans, mainly women. The AAF aims to work with the most underprivileged women in the society. Therefore, the centres and sub-centres are located in semi-urban or rural areas. AAF engages its workers with other women of similar socio-economic backgrounds and creates a platform which they can use to achieve income generation and personal growth. Using that platform, women receive trainings and can choose to utilise the opportunity to change their lives. The AAF is closely interrelated with other BRAC programmes; the female workers are the participants or a family member of the participants of the village organisations of BRAC’s development programmes-. These organisations are involved in microfinance and other economic, social and environmental development programmes. Additionally, the workers of AAF centres and sub-centres are given access to other BRAC programmes. The AAF produces handicraft items that require a large labour input. The vast majority of the women employed at the sub-centre level does embroidery work as well as block printing, screen printing, dyeing, tie-dyeing and weaving – all of which are performed at the centres. Its major products include: • Panjabi, fatua, taaga for men • Salwar-kameez-dupatta, saree, yoke, long dress, kurta, shawl, taaga for women • Household and other items, such as bed covers, cushion covers, wall mats, tablecloths, bags, purses, napkins
Aarong is committed to social accountability and has been certified a Fair Trade Organisation in 2007. It performs social audits on all of the micro, small, and medium enterprises from which it sources its products. Producers are required to maintain various health, safety, environmental, labour and working condition standards in their production units. To democratise the management decision-making process, producers can attend regular stakeholder meetings to provide their input on the policies and procedures, and direction of the organisation. The AAF and Aarong’s own production units are devoted to the socio-economic empowerment of all women and therefore provides a comprehensive set of workers’ benefit through the Artisan Development Initiative (ADI): • Access to microfinance and interest bearing saving accounts • Regular awareness on menstrual and maternal health, human rights, and issues affecting young women • Free legal aid • Free health check-ups and medical care for referral cases • Free eye examinations, medical care and eye-glasses • Subsidised tube well/latrine • Child birth delivery subsidies • Welfare fund and retirement benefits (fund stands over BDT 100 million as of December 2007) • Advance wage payments • Daycare centre • Free schooling for children • Linkage to government benefits Wages are paid to workers on a piece rate basis and are based on an average production time per piece. Average daily wage rate for workers has been increased steadily over the last 10 years.
As of 2013, Aarong utilised approximately 800 independent producers who employed approximately 30,000 freelance artisans and labourers. The majority of the independent producers own small entrepreneurial businesses that employ family members or other local labourers. Aarong maintains fair-trade and workers’ rights-oriented guidelines for independent producers. For example, to apply to be a producer for Aarong, a business must satisfy pre-determined working quality and environmental requirements. Workers must also be paid on a timely basis and the wage rates must meet competitive thresholds. In return, Aarong provides its independent producers with various services such as full design and marketing support, payment upon delivery, working capital loans, and interest on deposits. Additionally, producers are able to attend capacity building training programmes that aim to improve their managerial, financial and technical skills. Independent producers generally provide non-textile goods and highly skilled services such as tailoring. Major products include: • Weaving • Pottery • Metalwork • Jewellery • Bamboo products • Leather • Candles • Paper • Tailoring
Aarong maintains a dedicated marketing staff to assist with major marketing initiatives including traditional print and billboard advertising, exhibits and fashion shows. In 2008, Aarong celebrated its 30-year run by participating in numerous fashion shows and sponsoring a nakshi katha exhibition titled Story of Stitches at the National Art Gallery of Bangladesh.
Aarong’s export business started in 1986, with an initial order from Traidcraft, a UK-based fair trade organisation. Aarong is a recognised fair trade organisation and a provisional member of IFAT, the global network of fair trade organisations. Based on Aarong’s reputation as a social business, it has successfully grown its export customer base over the last 20 years through the addition of a number of fair trade organisations in Europe, North America, Australia and New Zealand. In 2007, nearly five per cent of sales came from exports, approximately 85 per cent of which were to fair trade organisations and the remaining 15 per cent to commercial organisations. The fair trade organisations are mostly wholesalers that channel products to retail outlets such as world shops or fair trade shops. Goods sold in this form are usually marketed under the importers’ brand; however, retailers tend to attach stories in the tagline or promotional materials about Aarong and the social and financial benefits it provides for the development of the underprivileged artisans. Aarong maintained a London-based franchisee that accounted for approximately 11 per cent of total export sales in 2007. Aarong franchised itself in London to cater to the needs of the large Bangladeshi community living in the region. However, the franchise was not continued after 2010 in anticipation of launching an e-commerce website. In 1991 and 1992, Aarong opened its own retail outlets in Vancouver and London. Due to poor management and inventory control both locations were closed in 1994; however, Aarong remains focused on a long term strategy to enter the mainstream Western markets.
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