Hail to the New Retail Temple in Town

You live in Tangerang? So far away.

See you in when IKEA opens?

Oh, sure!

(Grrrr.)

Earlier this month my friend Lailai, a good resident of Tangerang, tweeted the conversation she had with someone in disdain. As a good friend I gave her a comforting pat, though didn’t manage to stifle my laugh.

True, Tangerang is outside the city limit. And true, as I discovered last week, the hordes of Jakartans suddenly found no trouble braving traffic jams on toll roads and long queues by the entrance to pay their homage to the newest retail temple in (the next) town, the Swedish home décor retailer IKEA. The hordes have arrived when McDonald’s, Burger King, iBox and H&M opened their doors for business, and they will arrive again when the next global brand with mass appeal descends from our collective, aspirational cloud of wishes.

Must say I’m no stranger to IKEA. If you spent a few years as a cash-strapped student or entry-level employee in the US you’d come to appreciate the affordability of IKEA’s simple designs and good quality merchandises. A standard 3-seater couch with fabric upholstery started at USD 900 at that time, so USD 400 for a similarly-sized couch that came with a washable, changeable slip-on cover would certainly find its own lucrative market. A big plus, certainly, that the merchandises didn’t appear cheap. The corners square, the colors bright, the seams in and the finishing fine. And since you were filled with extra energy and curiosity of twentysomethings, carting home and assembling your own furniture would be a badge of honor on its own.

Now, on the prices. Again, must say that I wasn’t very surprised that upon entering Indonesia IKEA merchandises didn’t appear too cheap anymore. For starters, import taxes. And before that, costs of transporting from overseas manufacturing facilities to the Tangerang loft. Business math on this one is very simple so, yeah, as long as those factors remain unchanged IKEA prices wouldn’t come down to the level they’ve long been hyped for. The ones who can afford IKEA furniture and soft furnishings here are the very crowd who can shop in Informa, ACE Hardware or the now-closed I Wanna Go Home. Sorry, Jakarta urbanites always eager for value deals of catchy brands. Sorry, Ingvar Kamprad. Relax, people who worry IKEA will kill off our mom-and-pop furniture makers.

Now, on our furniture makers. In graduate school there was a business case on IKEA we had to discuss in Operational Management class. Like a typical real case published by Harvard Business Review with permission from the related corporate(s), it ran few long pages and inundated with numbers—and one detail stayed with me to this day, that IKEA sourced a good chunk of its products then in Indonesia. Upon returning to Indonesia later I once stumbled into a small shop in Kemang peddling what I quickly surmised as ‘reject’ products churned by IKEA’s manufacturers here– a home décor equivalent to fashion outlet stores in Bandung. I bought a throw pillow cased in IKEA’s iconic embroidery and stripe patterns, and now kicking myself for not buying the matching lampshade along because when I returned several months later the shop had closed without leaving a new address.

When I was in IKEA last week I consciously peered through the labels to see if I could spot a Made in Indonesia inscription. Either my eyes betrayed me, IKEA has stopped sourcing from Indonesia, or they simply would quietly include the Indonesian made items to the lineup later when the brand had gained a sure footing in the market (something that GAP and Banana Republic pulled off here on fashion category, I observed).

Even if from nothing out of USD 3 billion furniture Indonesia aims to export in 2014 is ordered by IKEA, Indonesian furniture already built a name and market for itself. A market that still has a lot of untapped potentials, especially from the fact that practically all of the exported furniture was shipped as unlabeled commodity to be marketed under a foreign brand. And that is the actual sore point on our furniture business—that we’re the country of gifted crafters who draw abundant inspirations from our diverse native cultures and can replicate any design torn off décor magazine pages, as happens any day and twice on Saturdays between Kemang Timur and Jepara, but we’re not the country of global furniture brands, let alone retailers, as we could be.

And becoming a global brand or retailer takes a whole lot more than just churning out creative crafts. Beyond inspiration, it takes rigorous quality control, solid supply chain, smart pricing strategy and integrated sales and marketing plan— run perpetually like clockwork. Does it take mega capital to do so? Eventually, yes. But it can start small. When Ingvar Kamprad founded IKEA in 1943, he started small, too. Not just Indonesian consumers, Indonesian producers should be marching down to Tangerang, too– to learn how to rival IKEA, say, in 20 years’ time.

Hail to the new furniture temple in town. Hail to the country’s new Chief, who started out as a furniture businessman. Maybe the Chief can steer Indonesia furniture crafters to become global retailers.

As published: http://www.thejakartapost.com/news/2014/10/24/urban-chat-hail-new-retail-temple-town.html

This entry was posted in Econ & Biz, Marketing & Branding, UrbanChat. Bookmark the permalink.

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