THE planned entry of Swedish furniture-maker Ikea in the Philippines is seen to challenge the ingenuity of local home furnishings’ players, who are now enjoying brisk sales in the domestic front.
To cope with the expected competition, Colliers International Philippines advised the local industry players to embrace the growing trend of offering specialized or customized services and find opportunities by shifting to mass production.
“Should the entry of Ikea push through, it would pave the way for an interesting competition between foreign and local players (in the home furnishing sector),” said Joey Roi Bondoc, research manager at Colliers International Philippines, in an interview yesterday.
Inter Ikea Systems B.V. has awarded the franchise right in the Philippines to a company called Ikano.
While Ikea’s flagship store will be in Manila, Bondoc said that if the company plans to expand its reach, it would definitely pick Cebu as its next destination.
“Cebu has a retail base that is growing, armed with a spending power that is also increasing.”
Ikea’s entry is seen to pose challenges to local players, who are now shifting gears by courting the local market as global exports of furniture and home furnishings still recover.
Bondoc said that condominiums, condo-hotels, hotels, and offices have become the main markets of local furnishing and furniture players. He advised the sector to further upgrade their services by offering customized solutions for their clients as well as venture into mass production.
Colliers, he added, sees the entry of more foreign brands, following the move by the government to ease the paid-up capital for foreign players.
Ikea is known for its simple but sturdy designs and self-assembly products. The company is aiming to generate 50 billion euros ($62 billion) in annual revenues by 2020.
Innovation and differentiation are still key factors that would help drive success in any business, according to Bondoc.
The furniture industry is expecting to grow by 10 percent this year. Philexport trustee Myrna Bituin said local players are now focusing on high-end markets and catering to overseas projects. The organization also saw an equally strong local demand fueled largely by a booming property market.