2004 Feb Issue
Cover Story
IKEA Malaysia Boleh!
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Retailers in Malaysia scramble for frequent customers
Ready-to-eat frozen foods still a steaming-hot treat
Malaysia warming up to frozen foods
China based standards coming soon to RFID technology

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IKEA Malaysia Boleh!

It took five years for IKANO Corp Sdn Bhd to build its new flagship store - IKEA Mutiara Samansara. But the long gestation period is worth it, as Joseph Lau, general manager of IKEA Malaysia reveals in this exclusive interview with Yoki Wong of Retail Asia.

When you set out to build a store that exceeds the shopper's expectations, you can expect a few surprises, pleasant ones, that is.

The new IKEA Malaysia store, located in the up-and-coming new township of Mutiara Damansara in Petaling Jaya, Selangor, may be just six months old but it has become the talk of the town. The huge sprawling building, in IKEA's distinctive blue and sunny yellow, has become a prominent landmark, used as a point of reference to Mutiara Damansara in many housing development campaigns in the neighbourhood.

Joseph Lau, general manager, IKANO Pte Ltd, the franchise owner of IKEA Malaysia, speaks with pride and passion of the new outlet, the largest dedicated home-furnishing centre in Malaysia. The 360,000sqf store is also the largest IKEA store in Asia.

Lau, who has been with IKEA Malaysia from day one when IKANO set up the original IKEA store in One Utama shopping centre in 1996, is delighted that Malaysians can finally experience the full IKEA concept. “In our old location (it leased space at One Utama shopping centre), we did not have the space or the freedom to set up a full-concept IKEA store,” he explains.

The IKEA store at Mutiara Damansara, which is more than four times the size of the original store, has been a hit with the Malaysian shoppers from the moment it opened its doors.

The new store, barely six months in operation, has already garnered several awards and accolades, and the “very positive feedback” from happy shoppers is music to his ears. Winning the Chicago-based International Housewares Association's prestigious Pan-Asia Global Innovator Award (GIA) 2004 is the icing on the cake for Lau and his team.

Winning awards and accolades is one thing, but winning shoppers over to the store is what concerned Lau more. “At the end of the day, that is all that matters — the customers. If they are happy with the store, they will visit us over and over again.”

The new IKEA store has been drawing half a million shoppers every month, a figure that Lau has not anticipated. “This traffic is more than any other IKEA store in Asia, beating even the store in Shanghai, a city with a population of 20 million,” he exclaims.

“The general belief is that when you move from a shopping centre to a stand-alone you may not get the same number of shoppers, as a stand-alone is specific destination-driven. But this has not been the case for us.”

Besides drawing crowds from the immediate Klang Valley area, the store has been attracting shoppers from throughout West Malaysia and even from as far as Sabah and Sarawak in East Malaysia and Brunei. “There are shoppers who fly in for the weekend to shop at IKEA, and we have even seen tour buses come in with busloads of out-of-town shoppers,” says Lau.

Sales in the first six months have also been above Lau's expectations.

The company has been recording strong revenue growth since its inception, growing 12% in 1998 over 1997 in its first full year of operation, 6% in 1999, and 28% in 2000. It finished 2002 with revenues of RM110 million (US$28.95 million) and RM125 million in 2003; and Lau is confident of at least a 50% increase in sales this year.

A chartered accountant by profession, Lau brings a new perspective to the retail trade. His enthusiasm and exuberance, and his boleh, or “can-do” in Malay, attitude is catching and has infected his 500-strong staff force.

It has been an exhilarating first six months for the team — from the time they had to unload and set up 400 container loads of merchandise to the day the store opened on 14 August 2003, it had been all systems go.

Being part of a reputable global group like IKEA of Sweden certainly helps but it is the local team's attention to detail and being sensitive to the needs of the local customer that make IKEA Malaysia a success.

“First and foremost, we want to be customer-friendly; we want to be a five-star store for our customers. When we started planning the store five years ago, we wanted to put in every possible convenience for our customers,” recalls Lau.

The general manager and his team have indeed spared no efforts to make their vision for the store come true. A walk through the mega two-level store reveals a host of family-friendly features. These range from strategically-positioned rest areas, a nursing room and baby-changing facilities to special shopping trolleys for mothers with toddlers, shopping trolleys for the disabled, a prayer room for Muslims, sewing facilities and 26 check-out counters.

The store is kid-friendly in every way. Smaland, its playroom with the Swedish-forest theme, caters for children aged between three and 10 years and plays host to 12,000 kids on average each month. Parents who leave their children in the supervised playroom are given a beeper for easy contact.

It has also placed more than 10 playhouses throughout the store and near the exit to keep children entertained while parents queue to pay and pack their packages, a feature that shoppers with young children obviously appreciate.

The attention to detail extends to the store's 2,000-lot basement car park, which it shares with the newly-opened IKANO Power Centre. It is huge, brightly lit and patrolled by the store's security staff.

Lau takes the safety of the customers very seriously. “More than 70% of our customers are female and safety is a priority for them,” he says.

Apart from dedicated parking for the disabled, the car park also has a family parking bay. Believed to be the first of its kind in a retail mall in Malaysia, the family parking bay is located nearer to the entrance, and each lot is bigger to accommodate prams and family-sized cars.

Other small but thoughtful touches — such as the addition of a dedicated customer loading/pick-up area — contribute to the enhanced IKEA shopping experience. “The customers love it,” he says of the customer loading/pick-up area. “We have ‘trolley jockeys' stationed in the loading bay to help the customers load their purchases into their cars when necessary.”

Shoppers are impressed with the car park and have been quick to voice their appreciation. One enthusiastic IKEA shopper went so far as to describe the car park as “the biggest ballroom in Asia”.

One of Lau's initial concerns was that the shoppers would complain that the mammoth store would be too long a walk from the entrance to the check-out area at the exit but surprisingly there have been no complaints.

“We recognise that it's a long walk from the entrance of the store to the exit. So we have added two cafes — Markethall Café and Exit Café — where the shoppers can stop for a snack and a rest before they pick up their items from the self-serve ‘warehouse' area and join the check-out queue,” he explains.

Furthermore, IKANO has installed glass doors for the emergency exits, which helps to create a feeling of ‘openness' as the shoppers can look out and see natural light, and this too help to reduce the size of the store.

Lau admits that all these features add to the cost but the company's first priority is the customer. “When the customer sees that the store is friendly, secure and comfortable, they will stay longer and shop more often.”

Having made his point that the customer comes first, Lau adds that IKEA's Mutiara Damansara store has retained its ‘European' ambience that is the hallmark of an IKEA store anywhere in the world. “We have ‘localised' the store by adding features that would help our customers create homes that are typically Malaysian, while keeping the Swedish flavour that our shoppers expect,” says Lau.

For example, the store has created a wet-kitchen display set in its showroom. A feature that is not found in the West, the wet kitchen is an essential part of most Malaysian homes. The display features cooking utensils generally used in wet kitchens in homes where Asian-style cooking is done such as stir frying, deep-frying, making spice mixes and cooking curries.

The outlet offers a selection of made-in-Malaysia products, but Lau is quick to point out that these products are sold not just in the local store but also in other IKEA outlets worldwide.

Products are sourced by IKEA of Sweden, a wholesale organisation with nine central warehouses worldwide, including one in Malaysia. Located in Shah Alam, the warehouse serves the whole of Asia and operates independently from IKEA Malaysia.

However, IKANO has spearheaded a local initiative — the introduction of the IKEA Friends Visa Card. Co-branded with Alliance Bank, the card has two credit limits, one for IKEA purchases and another for other transactions, says Lau.

The card offers an interest-free instalment payment plan for purchases of RM1,000 and above in a single receipt. Customers can opt for either the nine-month or the 12-month payment plan.

“We are in Phase One of the programme. IKEA is a retailer, not a credit company — and that's how the co-brand card came about. We want to take care of certain customers who need it,” explains Lau.

Currently, IKEA has 45,000 members in this programme and this makes it one of the largest co-branded Visa cards in Malaysia.

Looking ahead, Lau says the Malaysian market can easily accommodate four IKEA stores. He envisages a second store in the Klang Valley area, and possibly one each in Penang and Johor Baru. “But we have to analyse and understand each market carefully. Although the customers are all Malaysians, their profiles differ from city to city,” he explains.

Typically, it takes five years to develop an IKEA store, Lau says, adding that IKANO has already started to analysis the other two markets that have been identified. As for the Klang Valley area, he believes the existing store will be able to cater to the marketplace for the next five years.

“We started planning for this store way back in 1998, from looking for the right site to the development and building up of the store. It is a long gestation period but it is necessary to get it right.”

He points out that the company does not want to lease retail space again. “We are going to acquire the property because we are here for the long run and we want to be able to control our destiny.”

Lau's experience in finance is put to good use in his new position. “Retail is just another business. Like all other types of businesses, it is all costs, turn­overs and bottom lines, but ultimately it is about the customer. Retailing has a lot to do with understanding the customer psychic,” says Lau.

“We want to be the leading home-furnishing retailer in Malaysia and this store is the first step in that direction. We are just beginning to live our vision to offer the Malaysian consumer everything they need at affordable prices — a home-furnishing store filled with inspirations, tips and ideas.”

This means work on the shop floor is never ending. “We are always fine-tuning our research and getting feedback from customers, analysing customer flow and merchandising hot spots to ensure that we have a pulse on the customer's heartbeat …”

Affectionately described as “the very big blue and yellow box in Mutiara Damansara”, the IKEA megastore has changed more than just the city landscape — it has added a new dimension to the shopping experience of millions of homemakers in Malaysia.

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