me being such a tourist!When our group went to Malaysia we visited IKEA on the last day of our Asian Immersion Program. It was not really an official visit; no one met us or talked to us in IKEA but the experience of seeing one of the most read business cases that we had in AIM before your eyes is something very special for me.
I know that our visit to IKEA would probably seem weird to a lot of people... Don't deny it! hahahaha I was talking to some of our fellow MBA students from Malaysia. We had a joint case-room discussion with them just a day after we arrived in Kuala Lumpur. They asked me the usual things like "how do like it here in Malaysia?" "Which places have you visited?" and I answered that we were going to visit IKEA and they stared at me curiously. If you could see their faces you would seriously die of laughter. "Of all the places to go to why the hell visit IKEA?" --> This is what was written on their face! hahaha Any normal person would probably ask the same thing, even some of my fellow AIM delegates felt the same way.
Prof. Ortigas (AIM faculty for AIP) asked me in passing in one of our lunches if we should still visit IKEA because we could totally skip it to spend more time at Genting Highlands (Malaysia's top Casino/Theme Park spots) because we really needed the RnR. I expressed that in my opinion it would really be nice to see an actual business that we have discussed in the case room. I would love to see how they do things in IKEA in person and not let this just be another case that I have read. In a twist of fate one of our scheduled activity for Malaysia so the group ended up doing Genting Highlands and IKEA on the last day of our Malaysia visit.
When we got there I was amazed at the size of IKEA Malaysia maybe just because we don't have it here in the Philippines. We have MC Home Depot, ACE Hardware and DIY Hardware but but aside from Home Depot those hardware stores are the closest thing I could compare IKEA to. IKEA is a very unique furniture concept store that offers great furniture at affordable prices.
For AIM students who have read the case we know how IKEA could offer this proposition but for those who do not have a clue here is how they do it:
1. Their furnitures come in flat boxes and you have to put them together yourself.
* Their savings on delivery and putting the furniture together is passed on to their customers
* They also save on storage and transport costs because of these "flat" furnitures.
2. Information on the tags
* All the info you need to know is on the tags of these furnitures to save on employees who otherwise would loiter around store aisles waiting for you.
3. They make so many of everything...
* Volume lowers costs. So creating a lot of one thing saves lowers the cost of the furniture per unit.
other Strange IKEA ways
IKEA Malaysia also has a day care center for kids so that the parents could really shop around the store, they also have their own restaurant and other services including home and office furnishing consultants, delivery and assembly services (if you really want to for a fee). Malaysia is predominantly a Muslim country and IKEA Malaysia offers their customers and employees prayer rooms too. This shows how IKEA adapts to the country they are doing business in.
Now for the question: Will IKEA work in the Philippines??
As a stand alone concept store I don't think it can survive the Philippine retail culture. Based on my observation we Filipinos like the one stop shop concept that's why malls here are equipped with everything from grocery to entertainment to clothes you name it our malls would have it. I do not believe that we will go out of our way to visit a furniture complex unless it has a lot of other things attached to it.
And I'm not 100% sure about this but my guess is that majority of us don't want to bother with the "build it yourself" concept since we usually like things to be instant, it's easy for us just to buy it and have it installed.
And the most crucial thing is commuting in the Philippines is Hell. For the people who have cars they won't mind to have the stuff delivered because they can afford the extra fee but to people who don't have cars they will definitely have a problem because our public transport system will pose to be a real hurdle for those IKEA flat boxes. In the end they will still have them delivered which eliminates the value of the savings that is supposedly passed on to the customer if they took the items home themselves.
If IKEA was an annex of a super mall like SM's MALL of ASIA then it might work. Everyone likes to go to the mall at the same time they could visit IKEA and vice versa. But this will definitely conflict with SM owned hardware and furniture concept stores unless IKEA and SM partners up to give the Filipino people the IKEA experience.
The foot traffic problem could be solved with either partnering up with a Chain of Malls in the Philippines like SM or convert a big lot area into a place people would like to go to. They could invite leasers for restaurants and other service stores which would create foot traffic as well. But the retail mentality and habit of the locals might need a little more time to get used to the IKEA way.
Asian Immersion Program (AIP) Sept '09
I know that our visit to IKEA would probably seem weird to a lot of people... Don't deny it! hahahaha I was talking to some of our fellow MBA students from Malaysia. We had a joint case-room discussion with them just a day after we arrived in Kuala Lumpur. They asked me the usual things like "how do like it here in Malaysia?" "Which places have you visited?" and I answered that we were going to visit IKEA and they stared at me curiously. If you could see their faces you would seriously die of laughter. "Of all the places to go to why the hell visit IKEA?" --> This is what was written on their face! hahaha Any normal person would probably ask the same thing, even some of my fellow AIM delegates felt the same way.
Prof. Ortigas (AIM faculty for AIP) asked me in passing in one of our lunches if we should still visit IKEA because we could totally skip it to spend more time at Genting Highlands (Malaysia's top Casino/Theme Park spots) because we really needed the RnR. I expressed that in my opinion it would really be nice to see an actual business that we have discussed in the case room. I would love to see how they do things in IKEA in person and not let this just be another case that I have read. In a twist of fate one of our scheduled activity for Malaysia so the group ended up doing Genting Highlands and IKEA on the last day of our Malaysia visit.
When we got there I was amazed at the size of IKEA Malaysia maybe just because we don't have it here in the Philippines. We have MC Home Depot, ACE Hardware and DIY Hardware but but aside from Home Depot those hardware stores are the closest thing I could compare IKEA to. IKEA is a very unique furniture concept store that offers great furniture at affordable prices.
For AIM students who have read the case we know how IKEA could offer this proposition but for those who do not have a clue here is how they do it:
1. Their furnitures come in flat boxes and you have to put them together yourself.
* Their savings on delivery and putting the furniture together is passed on to their customers
* They also save on storage and transport costs because of these "flat" furnitures.
2. Information on the tags
* All the info you need to know is on the tags of these furnitures to save on employees who otherwise would loiter around store aisles waiting for you.
3. They make so many of everything...
* Volume lowers costs. So creating a lot of one thing saves lowers the cost of the furniture per unit.
other Strange IKEA ways
IKEA Malaysia also has a day care center for kids so that the parents could really shop around the store, they also have their own restaurant and other services including home and office furnishing consultants, delivery and assembly services (if you really want to for a fee). Malaysia is predominantly a Muslim country and IKEA Malaysia offers their customers and employees prayer rooms too. This shows how IKEA adapts to the country they are doing business in.
Now for the question: Will IKEA work in the Philippines??
As a stand alone concept store I don't think it can survive the Philippine retail culture. Based on my observation we Filipinos like the one stop shop concept that's why malls here are equipped with everything from grocery to entertainment to clothes you name it our malls would have it. I do not believe that we will go out of our way to visit a furniture complex unless it has a lot of other things attached to it.
And I'm not 100% sure about this but my guess is that majority of us don't want to bother with the "build it yourself" concept since we usually like things to be instant, it's easy for us just to buy it and have it installed.
And the most crucial thing is commuting in the Philippines is Hell. For the people who have cars they won't mind to have the stuff delivered because they can afford the extra fee but to people who don't have cars they will definitely have a problem because our public transport system will pose to be a real hurdle for those IKEA flat boxes. In the end they will still have them delivered which eliminates the value of the savings that is supposedly passed on to the customer if they took the items home themselves.
If IKEA was an annex of a super mall like SM's MALL of ASIA then it might work. Everyone likes to go to the mall at the same time they could visit IKEA and vice versa. But this will definitely conflict with SM owned hardware and furniture concept stores unless IKEA and SM partners up to give the Filipino people the IKEA experience.
The foot traffic problem could be solved with either partnering up with a Chain of Malls in the Philippines like SM or convert a big lot area into a place people would like to go to. They could invite leasers for restaurants and other service stores which would create foot traffic as well. But the retail mentality and habit of the locals might need a little more time to get used to the IKEA way.
Asian Immersion Program (AIP) Sept '09
Blogs are so informative where we get lots of information on any topic. Nice job keep it up!!
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