in the business profile of this issue, we meet Mark Magee, CEO of IKEA Indonesia. IKEA opened its first store Alam Sutera Indonesia, Jakarta in October 2014. IKEA has 364 stores in 46 countries.
Mark, first of all congratulations on the opening of the first IKEA Indonesia! How was the response to date?
The response was excellent! So many people have waited so long for us to open, so all we have to do is open and they came in large numbers! So far they have been very satisfied with the experience. We have about 18,000 visitors per day on weekends, so somewhere around 35,000 on a weekend, and they come from far away, not only Jakarta. Our first customer was to Bandung and she cried, she was so happy!
What attracted IKEA to open the store in a satellite city outside Jakarta?
the company's director for IKEA around the world is that for low prices, we must have low costs. Therefore, if we were to take a location right in the city center, the cost would be astronomical. The IKEA business model is that we should be placed in a satellite around the city, always on a toll road or highway, always on a junction that has sufficient capacity to allow 35,000 visitors to get to us on a weekend, and Alam Sutera ticks all the boxes. In addition, it is one of the hottest residential areas of Jakarta, so it is home to the middle class growing in Indonesia; this is the future of Indonesia, and that's why IKEA is here. If you go against traffic on weekday mornings, you have maximum 30-40 minutes from downtown.
Have you noticed trends of Indonesian customers at IKEA? What are some of the best sellers?
The surprising thing is that we sell more middle market ranges, which I think is a reflection of the customers we serve here are from the A, B C . hooks. Indonesian customers are very demanding. The best salespeople are so far from the chair MAMMUT children BILLY bookcase, whose design is 45, the KLIPPAN sofa bed, chair POÄNG IKEA and red heart with arms, FAMNIG HJÄRTA.
You are a native of Newcastle, England. How did you end manage IKEA Indonesia?
I joined IKEA ten years ago this summer. I worked with them in the Netherlands in a business development role, the development of markets from Iceland to Australia, working with franchises around the world. Before that I was with MFI for twenty years, where I was Head of International Business.
This was a chance conversation in November 2011 when it was clear that IKEA would open in Indonesia and they needed an experienced furniture retailer to take the brand in Indonesia, and they chose me. I arrived with a small office a few people and we took nearly 400 employees and a department store.
Store opening IKEA Alam Sutera was not something that happened overnight - the only construction process took two years . What are the major challenges that had to be overcome and that you continue to face
We are very thorough in our analysis of the market ?; the first investigations in 2010 were feasibility studies on the market. I would say that in terms of the first conception of the idea to the store opening is the fastest, it has never been done in all countries of the world, a four-year development cycle .
Because of the economy and the fact that there are huge amounts of construction in progress, the challenge is to find a qualified workforce, access to the number of welders, electricians, blocks of workers, brick layers that you need on a given day to produce the building. There is a great competition for limited resources we have. We also had some problems with too much rain during the dry season, which coincided with our working foundation. In fact, we set our goal to open on 1 September and we had a delay of six weeks, which said the industry is considered a very good performance.
with any international business, import and passage through the port has challenges at specific times of the year Lebaran and Christmas when the ports are congested. Infrastructure elements, roads, ports and airports, are ongoing challenges.
What does that other IKEA furniture companies in Indonesia do not?
First of all we are doing is creating a better life every day for many people, which is a Swedish translation to the mass market. We do this by offering a wide range of well designed, functional products for the home with prices so low that as many people will be able to pay them.
It is not only low price, it's about quality. Each product must live up to the five pillars of democratic design: form, function, quality, durability and price. In IKEA, a great product to 100% of these five points. Everything in the store is designed by IKEA IKEA Sweden by Swedish designers. IKEA furniture in kit invented in 1956, which means you get about six times the number of products on a pallet, which immediately means your cargo is 1/6 the cost of delivery. We are conscious business costs very.
I flew from Auckland to Amsterdam in the economy because nobody steals in IKEA business, because if we make the products more expensive; it took me 36 hours to five aircraft. I said to the assistant of directors, "Why not do it on four?" And she said, "You had to stop in Sydney, Mark because we saved 50 euros"
What are the products offered are manufactured locally [?
Indonesia produces 550 items that are made for IKEA; fluff, garden rattan furniture, curtains and carpets and products are not only sold here, they go to our 364 stores in 46 countries .
in May 2014, the government banned foreign direct investment in the retail sector as part of a growing trend of economic nationalism. You were already established by this point but it affected you in any way?
IKEA Indonesia is managed by PT Hero Supermarket Tbk, so no impact for us. but we wanted to put the company in this way; it was not an answer to maneuver around regulations. We always felt it was better to work with a local company, as they are an experienced retailer.
What have you learned so far to do business in Indonesia and do you have an idea for other companies looking to expand Indonesian shores?
is a fabulous country with a world class traffic! It is a great place to do business, there is no doubt about that, but it is not an easy place to do business. When you come, you must understand this challenge. I think as long as you approach with a positive mental attitude, all things can be overcome.
IKEA Indonesia provides a 100% return policy within 30 days of purchase, which is quite unique in Indonesia. How you are able to do so and you expect other retail companies will follow in your footsteps
I would not say a refund policy? ; I call it a sales strategy. If you are a customer in Indonesia and want to buy something with a high ticket price, you want to ensure that this product works and function in your home. If you know there is not a generous return policy and if you have any doubt, the reality is that you do not buy it. Here we take a different view and 99% of customers buy and not turn back. It is about ensuring that the customer is happy because if they are not happy, they will not consider you the next time they need your services. In emerging markets the service levels in retail really need to step up. IKEA would not do it if it was not good business practice.
You have an extensive CSR plan, including the Project Blue Bag and the education campaign Plush. Why is it important for IKEA to give back to Indonesia and how do you keep doing it?
We did not want CSR is something that we talked about in an annual report, we want it to be a real and active part of everything we do. The blue bag was something that we developed when we read the conditions of slums in northern Jakarta. There, something like 2% of the population is connected to the sewage system, and infant mortality is much higher than it should be because of the lack of access to clean water. We sell the blue bags, we do not give away plastic we bags to the first company to do in Indonesia, and consumer response
Mark Magee IKEA Alam Sutera
been positive. We sell to Rp.9,900 and 100% goes to local sanitation project and wastewater Mercy Corps Indonesia and we are looking to finance 100 septic tanks in Penjaringan slums of North Jakarta. Each plush IKEA sells worldwide, IKEA donates € 1 to Save the Children and UNICEF, and is dedicated to educational projects for children. In Bandung the IKEA Foundation funded a charity project for three years, providing a fully integrated education for disabled children through Save the Children.
Does IKEA Indonesia have resolutions of new year 2015
This is the same as what it is today: to create a better everyday life for the many people of Indonesia. It really is a fantastic company to work. Merry Christmas and a Happy New Year!
Thank you, Mark! To contact, please email: marketing@ikea.co.id