Thailand Furniture Market Snapshot

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How can SB-design square, Index Furniture and Modernform survive after Ikea, a global leader, enters the market competition?

Currently, four key players dominate the furniture market: Index, SB Design, Modernform and Ikea. Ikea is a Swedish enterprise. It entered the market at the end of 2011. It made the market competition fiercer by bringing superior design and technology. Ikea has come to change the competitive landscape of the Thai furniture market by making Thai furniture companies not only compete on price but also on design.

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Thailand Furniture Market Snapshot

  1. 1. Canvassco is a market research and business consulting team spin-off from a large European MNC. We support Local and Multinational Companies (MNCs) to enter, develop and accelerate their business activities in South East Asia. For more informaiton visit our website www.canvassco.com or send us an email at contact@canvassco.com ESTIMATED MARKET SIZE FOR THE FURNITURE MARKET IN THAILAND TOP 4 PLAYERS SALES IN 2012 (THB) Index living Mall 7,547 SB Furniture 3,514 MARKET SHARE 1 % FY 2012 26% Millions THB 64 Billion 74% Millions Small and mid-size companies Top 4 Market Leaders Remark: the market size is estimated based on the annual income of registered companies reported under furniture industry. The figure exclude the production for an export market. Modernform Source: Canvassco Thailand Analysis IKEA 2,784 2,665 FACTORS INFLUENCING CUSTOMERS' FURNITURE CHOICE Millions Millions KEY PURCHASING INTENTIONS Quality I'll buy furniture if the store provides delivery services Utilization or Function The Size That is Suitable For Space Life Long Durability Warranty I like cheaper furniture only if it meet quality requirements Comfort Ease of Cleaning Materials Design Price Ease of Maintanance Matching With Other Items Fast Services After Sales Services Personal Care for Customers Service and Installation Colour I like store that I can buy various furniture I go to store to get information on furniture for new idea Shop atmosphere influences me to buy furniture Location of the Store Brand Important Quite Important Critically Important Top 5 purchasing intentions based on research conducted in 2012 using online survey. Sample size is 114 Thai consumers Source: Thanyamon Sakpichaisakul, (http://dspace.wul.waseda.ac.jp/dspace/bitstream/2065/38112/1/ShokenShuron_2012_9_Thanyamon.pdf) © Canvassco 2014 For more information please contact godchapan@canvassco.com
  2. 2. Canvassco is a market research and business consulting team spin-off from a large European MNC. We support Local and Multinational Companies (MNCs) to enter, develop and accelerate their business activities in South East Asia. For more informaiton visit our website www.canvassco.com or send us an email at contact@canvassco.com How  can  S B-­‐design  square,  Index  Furniture  and  Modernform   survive  a<er  Ikea,  a  global  leader,  enters  the  market  compeBBon?   Currently,  four  key  players  dominate  the   furniture  market:  Index,  S B  Design,   Modernform  and  Ikea.  Ikea  is  a  Swedish   enterprise.  It  entered  the  market  at  the  end  of   2011.  It  made  the  market  compeCCon  fiercer   by  bringing  superior  design  and  technology.   Ikea  has  come  to  change  the  compeCCve   landscape  of  the  Thai  furniture  market  by   making  Thai  furniture  companies  not  only   compete  on  price  but  also  on  design.       From  our  esCmaCon,  the  market  size  is  at  64   Billion  Thai  Baht  with  almost  2,000  companies   in  the  furniture  market  value  chain.  Index,  a   Thai  furniture  producer,  began  as  a  small   company  under  the  “Crown”  brand  in  1973.  It   later  became  known  as  the  “Winner”  brand,   which  is  now  the  market  leader  with  12%  of   the  total  market  share  and  over  29  branches   including  18  stand  alones  and  11  showrooms.   SB  Design  Square  started  as  a  small  furniture   store  in  1973  under  the  name  “Shaw  Brothers   Furniture”.  It  now  has  41  stores;  9  stand   alones;  15    showrooms  and  17  branches  joint   with  Home  Pro  possesses  6%  of  the  total   market  share.       Modernform,  started  as  a  manufacturer  of   ‘knock  down’  furniture  in  1964.  It  later   expanded  into  office  furniture  and  now  has  11   showrooms  including  some  private  dealers.  It   captures  4%  of  the  total  market  share.  Ikea   entered  the  Thai  market  2  years  ago  and  it  has   already  penetrated  into  4%  of  the  total  Thai   furniture  market.  In  total,  the  top  four  leaders   dominate  only  26%  of  the  total  market  share.   This  shows  that  the  market  is  very   fragmented.   © Canvassco 2014 Ikea  in  Thailand  is  the  biggest  Ikea  store  in   Southeast  Asia.  It  does  not  use  the  tradiConal   TV  adverCsing  methods,  however.  It  has   chosen  to  market  itself  by  sending  free   catalogues  to  target  customers,  totaling  over  a   million  catalogues  sent.  This  technique  has   proven  very  successful.  Their  orders  have   exceeded  expectaCons  in  2012  by  exceeding   the  37%  target  sales  goal.  Ikea  is  trying  to   overcome  the  challenges  of  the  Thai  furniture   market  by  focusing  on  safety  and  small  space   design.  Thus,  allowing  customizaCon  of   products  that  allows  the  customer  to   ulCmately  design  their  own  furniture  to  fit   their  room  size  and  space.       Ikea  is  trying  to  compensate  for  its   weaknesses  in  delivery  and  assembly  by  giving   these  services  to  customers  free  of  charge.   Ikea  is  markeCng  to  the  shopper  by  creaCng   an  appealing  shopping  environment  including   a  cozy  and  comfortable  Restaurant  and  Food   kiosk  in  the  store.  It  is  also  making  the  market   fiercer  by  offering  a  discounted  price   promoCon  twice  a  week.  Ikea  is  now   beginning  to  penetrate  the  mass  market  by   adverCsing  itself  more  oaen  on  T Vs.     Index  has  started  to  enjoy  big  growth  since   2010  with  the  “Joy  Price  Campaign”  and  then   with  the  “Joy  Design  &  Joy  Quality”  campaign.   They  began  to  segment  the  target  customers   into  4  categories:  Mix  and  Match,  RomanCc   SensaCon,  Italian  Modern,  and  TradiConal   Elegant.    Index  gained  more  than  50%  of  its   sales  from  new  property  projects  (new   condominiums  and  housing  projects)  aaer   introducing  white-­‐furniture  design.   For more information please contact godchapan@canvassco.com
  3. 3. Canvassco is a market research and business consulting team spin-off from a large European MNC. We support Local and Multinational Companies (MNCs) to enter, develop and accelerate their business activities in South East Asia. For more informaiton visit our website www.canvassco.com or send us an email at contact@canvassco.com The  white-­‐furniture  line  of  Index  grew  over   100%  and  created  a  boom  in  the  market.   Index  plans  to  grow  more  than  10%  a?er   introducing  free  3-­‐D  Room  displays  that  allow   customers  to  design  their  room  and  furniture   layout  on  a  computer.  Index  is  also  trying  to   capture  the  emerging  market  of  built-­‐in   segmenDng  by  making  built-­‐in  furniture  at   reasonable  prices.      Index  is  expanding  their  up-­‐country  coverage   aggressively  as  a  defense  strategy  against  Ikea.   They  are  also  infiltraDng  community  malls  in   Bangkok.  Index  is  trying  to  use  the  community   mall  shopping  concept  to  compete  with  the   cozy  comfort-­‐shopping  atmosphere  of  Ikea’s   single  store  in  Bangkok.  Index  is  now  using   limited  ediDon  &  exclusive  design  campaign;   running  monthly  as  another  strategy  to  catch   shopper  aKenDon.     SB-­‐Design,  the  first  furniture  maker  to   introduce  knock-­‐down  furniture,  is  now   enjoying  a  growth  in  revenue  a?er  introducing     the  3D-­‐Pro  Designer,  which  provides   customers  with  a  design  advisor  to  match  the   customer’s  budget  and  preferences.  This   opDon  is  called  the  “ Total  SoluDon”  service.   They  claim  that  over  50%  of  customers  come   back  to  buy  S B-­‐Design  furniture  a?er  geSng   the  Total  SoluDon  service.  S B-­‐Design  aims  to   have  over  a  10%  total  growth  a?er  introducing   “Total  soluDon”  campaign.       Although  Ikea  has  the  design  advantage  over   SB-­‐Design,  S B-­‐Design  is  trying  to  catch  the   niche  market  by  matching  the  customer’s   unique  style  like  vintage,  classic,  modern  and   many  more  segments  that  Ikea  doesn’t   idenDfy  as  clearly  with.  Currently,  S B-­‐Design  is   © Canvassco 2014 beginning  a  new  campaign  called,  “Condo  fit”.   It  targets  condominium  projects  by   introducing  funcDonal  furniture  in  limited   areas  and  small  spaces  at  reasonable  prices. Modernform  is  the  premium  furniture  market   share  leader  with  30%  of  total  premium   market.  However,  it  is  not  well-­‐known  to  the   mass  market  at  all.  It  captures  75%  to  80%  of   the  housing,  condominium  and  office  project   market  and  20%  to  25%  comes  from  the   premium  furniture  market.  Although  they  are   the  premium  furniture  seller  in  Thailand,  they   seldom  adverDse  and  do  markeDng  acDviDes.   This  has    started  to  lose  them  market  shares  to   SB-­‐Design  and  Index  once  these  compeDtors   entered  the  housing  and  condominium   market.   Therefore,  Modernform  expanded  into  the   hospital  furniture  market  and  now  they  have   gained  more  than  5%  of  the  total  market.  As   for  the  mass  market,  while  S B-­‐Design  and   Index  have  been  compeDng  harshly  in  the   indoor  furnishing  market,  Modernform  has   chosen  to  focus  on  outdoor  products,  as   customers  are  focusing  more  on  outdoor   living,  thus,  avoiding  the  fierce  indoor   furnishing  market  with  the  Big  3  compeDtors.     The  current  potenDal  buyers  are  younger   generaDon  who  starts  to  have  their  own   residences.  Quality;  store  environment;   various  product;  and  salesperson  are  the  most   important  influencing  factor  for  making   decision  when  buying  furniture.  The  store   atmosphere  was  the  second  most  significant   factor  influencing  furniture  purchase  decision.   Therefore,  the  store  should  display  furniture   arrangement  in  an  enjoyment  environment  to   For more information please contact godchapan@canvassco.com
  4. 4. Canvassco is a market research and business consulting team spin-off from a large European MNC. We support Local and Multinational Companies (MNCs) to enter, develop and accelerate their business activities in South East Asia. For more informaiton visit our website www.canvassco.com or send us an email at contact@canvassco.com persuade  customer  in  making  decision.     Moreover,  various  furniture  design  and  mul7-­‐ types  func7on  with  mul7ple  price  range  of   furniture  products  are  require  to  respond  to   various  customers’  needs.  The  research  survey   shows  that  famous  celebrity  adver7sing  are   not  effec7ng  on  purchase  decision  at  all.   However,  salesperson  is  the  strong  influencer.   Therefore,  the  staff  should  be  well-­‐trained  on   the  product  informa7on.     The  loca7on  distance  is  not  a  key  factor  for  a   customer  at  all  as  long  as  the  stores  provide   reasonable  delivery  price.  However,  the  stores   need  to  provide  a  full  service  facili7es  such  as  food  corner,  playground  and  available  parking   lot;  and  if  the  furniture  store  located  in  the   area  where  restaurants  and  supermarkets  are   located.  This  would  be  the  advantage  to  the   furniture  sellers.     In  conclusion,  even  though  the  Thai  furniture   market  is  geEng  fiercer  from  the  entry  of  big   players  like  Ikea,  the  compe77ve  landscape  is   shiGing  towards  a  focus  on  design.  This  shiG   has  introduced  new  design  techniques  and   trends.  This  shiG  has  increased  consumer   awareness  on  furniture  products.  The  Thai   furniture  market  is  expected  to  grow  10%  in   the  future  due  to  the  increasing  consumer   income  and  the  growing  property  market.     MATURITY Our  comprehensive  market   research  and  business   development  services  help  you   with  your  Sales  and  Marke7ng   INTRODUCTION strategy  throughout  your   product’s  life  cycle.   DEVELOPMENT •  Business Idea Generation •  Business Model Generation •  Market Opportunity Assessment •  Market Feasibility Analysis •  Concept Test •  Product and Market Fit Test © Canvassco 2014 •  Customer Segmentation Analysis •  Distribution Channel Analysis •  Value Proposition Assessment •  Market Share and Competitor Analysis •  Pricing Strategy •  Marketing Channel Analysis •  Analysis of Unmet Needs •  Go-To-Market Strategy •  Brand Positioning Analysis •  Sales Acceleration •  Market Expansion Strategy GROWTH DECLINE •  Brand Loyalty •  Exit Strategy •  Customer Satisfaction Study •  Repositioning Strategy (ReBranding) •  Competitive Positioning Analylsis •  Market Barriers •  Product Improvement Strategy •  Vertical & Horizontal Market •  Product Features and Expansion Unbundle Strategy Strategy •  Switching Factors For more information please contact godchapan@canvassco.com

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