Thailand Furniture Market Snapshot

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ESTIMATED MARKET SIZE FOR THE FURNITURE MARKET IN THAILAND

FY 2012

THB 64 Billion

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.

Small and mid-size companies

Top 4 Market Leaders

MARKET SHARE

Source: Canvassco Thailand Analysis

26%

74%

1 %

Index living Mall

SB Furniture

Modernform

IKEA

7,547 Millions

SALES IN 2012 (THB)TOP 4 PLAYERS

3,514 Millions

2,784 Millions

2,665 Millions

Critically ImportantQuite Important Important

Utilization or FunctionThe Size That is Suitable For Space

Quality

ComfortEase of Cleaning

Life Long Durability

MaterialsDesign

Ease of MaintananceMatching With Other Items

Colour

Brand

Warranty

Fast Services

Personal Care for CustomersAfter Sales Services

Service and Installation

Price

Location of the Store

I'll buy furniture if the store provides delivery services

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

I like cheaper furniture only if it meet quality requirements

FACTORS INFLUENCING CUSTOMERS' FURNITURE CHOICE KEY PURCHASING INTENTIONS

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 )

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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 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.

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 TVs. 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.

How can SB-‐design square, Index Furniture and Modernform survive a<er Ikea, a global leader, enters the market compeBBon?



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 SB-‐Design furniture a?er geSng the Total SoluDon service. SB-‐Design aims to have over a 10% total growth a?er introducing “Total soluDon” campaign. Although Ikea has the design advantage over SB-‐Design, SB-‐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, SB-‐Design is

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 SB-‐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



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.

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INTRODUCTION

GROWTH MATURITY

DECLINE

•  Business Idea Generation

•  Business Model Generation

•  Market Opportunity Assessment

•  Market Feasibility Analysis

•  Concept Test •  Product and

Market Fit Test

•  Customer Segmentation Analysis

•  Distribution Channel Analysis

•  Marketing Channel Analysis

•  Go-To-Market Strategy

•  Sales Acceleration

•  Value Proposition Assessment

•  Market Share and Competitor Analysis

•  Pricing Strategy •  Analysis of Unmet

Needs •  Brand Positioning

Analysis •  Market Expansion

Strategy

•  Brand Loyalty

•  Customer Satisfaction Study

•  Competitive Positioning Analylsis

•  Market Barriers

•  Switching Factors

•  Product Features and Unbundle Strategy

•  Exit Strategy •  Repositioning

Strategy (Re-Branding)

•  Product Improvement Strategy

•  Vertical & Horizontal Market Expansion Strategy

Thailand Furniture Market Snapshot

Business

Transcript of Thailand Furniture Market Snapshot