Entrepreneur

How This S'pore Furniture Company Went From Million Dollar Debt To Million Dollar Revenues

Taking over a family business isn’t always easy, especially when you’re young and trying to transform a business to go digital. These second-generation and third-generation business owners can attest to that.

But digitising a business doesn’t change overnight, and in my opinion, change doesn’t come easy if the leaders prefer to stick to what they are familiar with.

So you know a company is set for the long run if its leaders are the ones initiating the change.

However, for homegrown furniture company, Scanteak, one of their challenges was trying to change from within.

A Daughter’s Dedication

Jamie Lim, Regional Marketing Director of Scanteak / Image Credit: Pin Prestige

38-years-old Jamie Lim is the Regional Marketing Director and daughter of Scanteak’s founders, Mr Lim Pok Chin and Mdm Catherine Foo.

At first, it probably didn’t occur to Jamie that she would one day be taking over the reins from her father, who was a carpenter when he opened Scanteak’s predecessor, Hawaii Furnishings, in 1978 with his wife.

In a 2013 interview with AsiaOne, she said customer service skills had been inculcated in her since young.

She recalled finishing her homework in their Upper Bukit Timah showroom after school, and was then tasked by her parents to “entertain then customers’ children” which made her feel “very important”.

The eldest of three children, Jamie had pursued an education in business administration and marketing, and film in Los Angeles, and worked there for two years marketing films after graduation.

She told Singapore Tatler in 2013 that it was the year 2004 when her father had asked her to come home to join the company and presented her with the opportunity to rebrand Scanteak.

Jamie answered she would agree only if she would be given “free rein to run the business” but her father needed convincing.

The next year, she came back from the States and started work as a salesperson and worked her way up.

As her father’s daughter, she had always felt pressured to “set the benchmark and lead by example”. The hours were long but her hard work paid off.

Now, Jamie heads the Singapore’s business side of things on top of taking charge of marketing in the region, while her brother, Julian takes care of the Japanese market and handles the regional procurement operations.

Their youngest sister, Julia, was still schooling at that time in 2013.

Going Through Teak And Thin

Founder and Chairman of Scanteak, Lim Pok Chin / Image Credit: Scanteak

According to a blog post of an archived interview with Mdm Foo in 2012, Hawaii Furnishings had faced tumultuous times before it became Scanteak.

Mr Lim and Mdm Foo’s business was thriving and they were starting their own family. In 1984, they had two large showrooms in Hougang and Parkway Parade.

The husband and wife invested $3 million to get distribution rights for a French furniture brand called, Fly, and opened their 24,000 sqft. Parkway Parade store – but these were all “a big mistake”.

Mdm Foo said that business suffered for three months. They didn’t know much about international investments and figured that air-conditioning was unnecessary.

Eventually, they expended another six-figure sum to install air-conditioning but that did little to help their worsening situation.

They realised that at that time, people preferred “affordable and…good quality” Japanese products when they brought in French furniture that were seen as “old-fashioned” and overpriced.

The oil crisis happened and they spiralled into debt, owing a “few millions”.

However, they were not discouraged, going against advice to wind down Hawaii Furnishings.

Founder of Scanteak, Catherine Foo (far left) / Image Credit: Forbes Asia: The Next Tycoons

They went to France to negotiate their debt settlement with Fly, and the French admired the way Mr Lim and Mdm Foo went about in dealing with their problems that they appointed them their Asia distributor.

On top of the negotiations, they sold off some properties, including a West Coast apartment they bought in better times, and moved to a “cheaper location in Bukit Timah in 1986” to tide over their difficult time.

We sold them at a loss but you cannot be sentimental about these things. You just do what you have to do.

Mr Lim took trips to trade fairs in Europe where he was “exposed” to the minimalistic Scandinavian furniture made with teak, and in 1988, Scanteak was born.

Things turned for the better in 1994 as the couple learnt from their mistakes, clearing their debt and “business was starting to take off”.

“We lost a lot of money but we also gained a lot of respect. Personally, if I hadn’t gone through what we did, my world view would probably be more shallow,” Mdm Foo reflected.

It was reported that Scanteak “had a turnover of more than $100 million” in 2011, with 10 stores in Singapore and over a 100 stores in Taiwan, Brunei, Japan, and Canada in 2012.

On Matters Of Sustainability

Image Credit: Scanteak Instagram

As a furniture company specialising in products made of teak, wood from a type of tree commonly found in monsoon forests of South and Southeast Asia, they’d have to consider a variety of factors when buying and selling them.

Teak furniture tend to be more costly because they are unique due to their natural wood grains, durable – lasting up to 100 years according to the guide on Scanteak – and requires minimal maintenance.

Even though teak trees are one of the faster growing trees, they take 20 to 25 years to grow into a mature tree before it can be harvested, according to this thread.

The law of supply and demand states that if supply increases, prices tend to drop, and if demand rises, prices tend to go up too.

Businesses like Scanteak are at the end of the teak demand and supply stick.

In an interview in 2014, Jamie said she has carried on the tradition to maintain the relationships her parents had built with their suppliers who had been with them for more than 15 years at that time.

She believed strongly in “quality and longevity, above cost” and it would “take a lot more than a better price to convince [them] to make a transition”.

“We now only use plantation teak which means that for every tree cut down, they have to plant another,” she said, apparently a strategy that had been established for more than a decade already.

Scanteak was reported in 2016 to have started being conscious about their teak sources, making sure to get “sustainable teak wood from Indonesia” from timber mills that are certified for their “sustainable practices”.

The company signed a US$2.4 million (~S$3.1 million today) deal the same year with two Indonesian wood and timber furniture suppliers.

Scanteak Isetan Scotts / Image Credit: Scanteak

Jamie said, “We insist on getting wood that has been legally harvested. Sustainable wood is more expensive than non-compliant wood, but at Scanteak, we feel it is our social responsibility to care for the environment.”

Besides making sure their supply chain remains sustainable, the business also has to sustain, i.e. be operable and profitable.

In the 2014 interview, Jamie was described to have brought her 10-month old daughter to a work event, and explained, “In family businesses, young talent can learn the soft skills that they would not learn in any business school.”

My brother and I were exposed from a young age, going to meetings and so on: we made connections. Now we are connecting with our business partners’ kids, so the second or third generation can continue that network.

Perhaps, continuing the legacy is also a way to keep the business going and starting young is important.

I understood that Jamie was put in charge of rebranding Scanteak, turning it into more of a lifestyle retailer than just a furniture shop.

I found out that she was the one who had came up with this moving ad, probably as part of her ‘Feel at home’ campaign she created back then.

She submitted a commentary to Channel NewsAsia on recognising the need for leaders of family businesses to ‘change or die’.

As she eloquently put it, “Every business leader must drive transformation in the face of disruption or risk losing market relevance.”

The ambitious now-mother-of-three had introduced a Customer Relationship Management (CRM) system, a Point-of-Sale (POS) system, and an e-commerce platform – but not without facing some resistance.

She noted that staff were reluctant to adopt these new practices at first, as they thought that their jobs would be put into jeopardy.

Even my own parents were sceptical that customers would purchase furniture online. Things had chugged along fine for over 20 years, so why fix what was not broken? There was a lot of convincing to do.

To encourage senior management and employees to be receptive of the changes, she found herself an ambassador within the company who was trusted by staff.

Her plan succeeded thanks to that ‘ambassador of change’.

“Today, our sales employees are now adept in using the new POS system, and require no more than five minutes to generate a sales order, a task that used to take more than twenty minutes.”

Jamie pointed out another problem when introducing change and explained that it’s important to celebrate the small victories along the way.

“Much of the reason why people in the organisation resist change and why other organisations fail to transform is because they think transformation involves the adoption of complex technology and necessitating a complicated, painful exercise.”

She rolled out the the first phase of their e-commerce platform in August 2017, “both to test the market as well as to make it easier for [their] staff to adapt to a new system”.

Besides saving on the costs of adopting a new system, the demographics of showroom visitors widened through this “step-by-step approach”.

Jamie expressed confidence that they will see “double-digit growth in 2018” and reported that overseas offices want to follow suit upon hearing about the successful implementation of the e-commerce platform in Singapore.

Furniture Forward

A Scanteak store in Kichijoji, Tokyo / Image Credit: Scanteak Japan Instagram

Just last year, Scanteak achieved the Singapore Quality Class (SQC) certification after the adoption of the Business Excellence (BE) framework that was initiated by SPRING Singapore.

The certification allowed the company to “better…assure its overseas partners of the quality of its products and business operations and carry out its expansion plans”, according to the report.

By recognising the need to go digital, Jamie might have saved her family business from getting eliminated.

But, of course, she hasn’t abandoned their brick-and-mortar stores. In fact, she was “quick to emphasise” their importance, as stated in this interview with SGSME.

We’re just becoming omnichannel, creating more channels for customers to buy. We are going to aggressively push (ahead with e-commerce) to better serve the customers’ experience.

They have also diversified their products; Scankomfort, its latest mattress brand that is available in Singapore and Taiwan, and Scanfloor, a wooden flooring brand and Scanliving, a leather furniture brand, are only available in Taiwan.

Jamie wants to bring the Scanliving concept back home but is facing “back-end constraints”, so she is opening a warehouse in Johor to aid the operations here.

As of 2017, Scanteak has a revenue of about $100 million and a total of 150 stores in Singapore, Taiwan, Brunei, Japan, Canada, USA, and Germany.

Visit Scanteak’s website here, and follow them on Facebook here and Instagram here.

Featured Image: Pin Prestige, Scanteak SG Facebook

 

Subscribe to Vulcan Post Newsletter

Stay updated with our weekly curated news and updates.