Ikea Case Study

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In 2015, Mandaue Foam, Inc. continues to lead home furnishings sales with a 22% value share. It is a major player in indoor furnitures and posted Php 37.4 Billion sales in 2015. Followed by San Yang, Blims and Home World, which are other key players in the indoor furniture segment.

Last July 2016, ABS-CBN news reported that IKEA will soon open in the Philippines. IKEA, a swedish retailer revolutionized the furniture industry by offering cheap but stylish furnitures. In the past it is being marketed on-line by Lazada and the news of opening a store locally worries many entrepreneurs as it may kill local manufacturers.

Our local market represents only 20% of the industry’s furniture production volume, the rest is exported to the US and Europe. Low-cost quality labor and innovative designs with the incorporation of mixed media has kept the export industry alive. However, firm owners has always been challenged for having a hard time capturing the mid-range, high-volume furniture niches.

The lack of capital and technology are the key reasons for the apprehensions. They cannot match prices and quality of cheap imports and it will require a lot of adjustments to cater these markets. The local retailers think that it would be better to focus on their current high-end, low volume market niches.

Through the years, the Philippine furniture industry has metamorphosed into a highly diversified manufacturing sector. Aware of growing need to improve their productivity and competitiveness, majority furniture firms are investing in technology and streamline their production. To survive the pressures of globalization, there is a shift from production of low-end furniture to more emphasis on quality, design and materials, rather than on mass production of pieces.