[SINGAPORE] Faced with rising rents and a shortage of manpower, furniture firms here are taking measures to overcome their problems.
"The two main killers are rental and manpower," said Xu Xue Ting, group retail manager of furniture manufacturer and retailer Star Furniture.
Rental cost is a major bugbear for the firm, which operates out of large retail spaces, some spanning 20,000 to 30,000 square feet. This is especially so in the case of its stores located in shopping malls, where rents can rise up to 10 per cent each time leases come up for renewal.
"There is also the belief that you reap what you sow. So investing in a prime retail location should pay for itself in terms of traffic, which can be converted to sales," he added. "The reality is that this is not guaranteed."
Aside from rentals, increased levies on foreign workers have had an impact.
"Increased levies obviously translate to direct costs, but beyond that, trying to get Singaporeans to do the jobs we need is challenging," he said.
According to Alison Kwok, executive director of interior construction firm Cathay Interiors, a carpenter training programme initiated by the Singapore Furniture Industries Council (SFIC) failed to attract many locals who were willing to commit to the rigours of the profession. While traditional master carpenters work six-day weeks, many of the applicants to the training programme want to work only five days a week, making them less attractive to employers.
To better cope with their problems, some in the industry want the government to review its manpower policies.
"I think I am not alone when I say that I hope the government can reconsider its manpower policy and look at the different industries rather than use a broad-brush approach," said Mr O'Hara.
Companies are also keen to look at boosting productivity to get the most out of their workers.
Furniture company Koda has sent its staff for upgrading courses over the past two years and invested in an enterprise resource planning (ERP) system.
"The reduction of cost by trimming down on labour and reducing overheads no longer solves the issue," said Ernie Koh, executive director of sales and marketing at Koda. "We need to reflect on more innovative ways of increasing productivity."
Automating certain processes is another way to boost productivity.
Marcus Wong, business development director at furnishings retailer and manufacturer Danovel, noted that with government grants and programmes such as Spring Singapore's Capability Development Grant, small and medium- sized enterprises (SMEs) are more able to invest in machinery to improve their productivity. Danovel has invested in a cutting machine to help boost productivity.
Automation extends beyond the production floor.
Said Chris Ang, general manager of furniture retailer and manufacturer Woody Antique Furniture: "In terms of the sales staff, we are automating our invoicing and product catalogues in an effort to increase productivity while maintaining the same high standard of service."
Star Furniture and Woody Antique House have also started to explore the possibility of using an online showroom.
"Through e-commerce, we pay zero rental and minimal manpower cost," said Star Furniture's Ms Xu.
The firm, whose e-commerce platform was launched in February last year, initially had 10 per cent of its products displayed online. Because of the platform's popularity, the firm is looking into expanding its online product offerings to serve a wider base of customers.
Firms are also outsourcing operations and stock to other countries in the region, where rents are lower. At Koda, non-key jobs such as accounting and administrative work have been relocated to Vietnam, China and Malaysia. Woody Antique House, meanwhile, is considering storing some of its inventory in factories overseas to save on warehouse space here.
Companies are investing in design, too. Star Furniture recently tied up with a local designer for one of its newer collections, JotterGoods.
Koda's Mr Koh, who is also president of SFIC, feels that design should be embraced by the furniture industry.
"It is important to view strong design capabilities as a key element to stay competitive," he said.
Cathay Interiors' Ms Kwok believes it is important to ensure that there is a market for well-designed pieces that come with a higher price tag.
Giving an example of how a massage in Thailand is much cheaper than one here, furniture that is considered expensive in Singapore may still be moderately priced elsewhere and sell well, she said.
To market local furniture overseas, furniture companies should take a leaf from Singapore Airlines' book, Ms Kwok said. Good design, service and presentation are key selling points, she noted. By building up a good reputation, the Singapore brand will become more attractive to customers.
Ultimately, companies should come up with customised solutions and strategies.
"I think each individual company will have to develop its own coping strategies based on its specific challenges. I don't know that there is a one-size-fits-all solution," said Mr O'Hara.