IKEA entry threatens local furniture makers

CEBU, Philippines — Local furniture makers are worried about IKEA’s entry to the Philippine market considering the already fragile state of Cebu’s furniture manufacturing industry.

Professional researcher and market analyst Joey Roi Bondoc said aside from Metro Manila, the main target of the Swedish furniture giant in the Philippines could be Cebu, owing to the province’s upbeat market for home furnishings and sustained real estate growth.        

IKEA earlier announced to open stores in the Philippines after it clinched a deal with a local counterpart.

IKEA's simple but sturdy designs and self-assembly products are now familiar in homes around the globe and the retailer is aiming to generate 50 billion euros ($62 billion) in annual revenues by 2020.

Bondoc, who is also the research manager for Colliers International Philippines, said the home furnishing competition will be emphasized in a more interesting way in Cebu specifically as the province is known for its fine and export-quality home furnishing making.

While the industry may be threatened by the arrival of household name IKEA, Bondoc said it is also the opportunity for Cebu furniture companies to embrace the challenge and revive its expertise in manufacturing mass produced furniture pieces that appeal the mainstream market.

While IKEA has seen the huge potential for profitability in home furniture market in the Philippines, there is no reason why the local industry cannot take advantage of this opportunity.

IKEA is a Swedish-founded Dutch-based multinational group that designs and sells ready-to-assemble furniture, kitchen appliances and home accessories. It has been the world's largest furniture retailer since at least 2008.

Cebu as the home of world renowned furniture brands like that of Kenneth Cobonpue, among others should take this challenge proactively and be ready for a new competition paradigm playing with giant outsider.

Cebu furniture makers should adopt a more flexible operational style that can produce a diverse market spectrum from custom-made to mass production, as well as producing smaller designed home accents to accommodate the growing condominium dwellers market.

"IKEA's entry is both a threat and an opportunity for local players," Bondoc said explaining further that their success or failure in facing the giant competitor depends on their ability to adapt easily to changes and market movements.

Operating in 41 countries, IKEA is a global destination store for home furnishing, appliances, ready-to-assemble furniture, home accessories and kitchen products. It is the world's largest furniture retailer with more than 301 stores and 30 franchised units.