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Jakarta Post

Urban Chat : Hail to the new retail temple in town

You live in Tangerang? So far away

Lynda Ibrahim (The Jakarta Post)
Jakarta
Fri, October 24, 2014

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Urban Chat :  Hail to the new retail temple in town

Y

ou live in Tangerang? So far away.
See you when IKEA opens?
Oh, sure!
(Grrrr.)

Earlier this month, my friend Lailai, a resident of Tangerang, published the conversation she had with someone in disdain via her Twitter account. As a good friend I gave her a comforting pat, though didn'€™t manage to stifle my laugh.

Yes, Tangerang is outside the city limits. And true, as I discovered last week, hordes of Jakartans suddenly had no trouble braving traffic jams on toll roads and long lines by the entrance to pay homage to the newest retail temple in (the next) town, the Swedish home décor retailer IKEA.

The hordes came 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 merchandise. A standard three-seater couch with fabric upholstery started at US$900 at that time, so $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, is that the merchandise 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, I wasn'€™t really surprised that upon entering Indonesia, IKEA merchandise 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 at 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, I once stumbled into a small shop in Kemang peddling what I quickly surmised as '€œreject'€ products churned out 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 or IKEA has stopped sourcing from Indonesia, or they simply will quietly include the Indonesian-made items in the lineup later when the brand has gained a sure footing in the market (something that GAP and Banana Republic pulled off here in the fashion category, I observed).

Even if nothing out of the $3 billion worth of furniture Indonesia aims to export in 2014 is ordered by IKEA, Indonesian furniture has already built a name and market for itself- a market that still has a lot of untapped potential. Practically all exported furniture was shipped as unlabeled commodity to be marketed under a foreign brand.

And that is the actual sore point in our furniture business '€” that we'€™re the country of gifted crafters who draw abundant inspiration from our diverse native cultures and can replicate any design torn off décor magazine pages, as occurs 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 Kamprad founded IKEA in 1943, he started small, too. Not just Indonesian consumers but 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.

___________________

Lynda Ibrahim is a Jakarta-based writer and consultant, with a penchant for purple, pussycats and pop culture.

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