Entrepreneur

From Manufacturing To Retail: How This S'pore Furniture Brand Conquered China With 70 Stores

Founded in 2011, homegrown furniture retail store Commune was born from a “design thinking project” that its parent company Koda Ltd had embarked on to find a new business to pursue.

“We had always wanted to come up with a brand to call our own rather than only manufacturing for other brands,” said Joshua Koh, 37, co-founder of Commune.

Together with his brother Julian Koh, 35; and Gan Shee Wen, 41, the trio set up Commune to refresh their family’s furniture manufacturing business.

Koda was founded by their grandfather back in 1972. It primarily deals with OEM/ODM manufacturing of furniture for global furniture retail brands, and is currently run by the second generation.

Commune is a wholly-owned subsidiary of Koda, and procures most of their wooden furniture items from them.

They Had Zero Retail Experience

joshua koh commune founder
Joshua Koh, co-founder of Commune / Image Credit: Panels & Furniture Asia

According to Joshua, the decision to open a retail business was “consensual” — the second generation wanted to expand into a new business, and the trio wanted to start something of their own.

With no prior business experiences, they faced a steep learning curve in running Commune.

Joshua was a financial analyst at Bloomberg LLP, and currently serves as the Chief Executive Officer of Commune. 

Shee Wen started out as a Sales and Marketing executive in 2005 with Koda Ltd, working his way up to a VP position prior to joining Commune. He currently serves as the Group’s Chief Marketing & Sales Officer. 

Meanwhile, Julian started out with a Product Design position with Koda Ltd, involved in designing products and branding for Koda prior to joining Commune. He is now the Group’s Chief Design Officer, and is responsible for their design and innovation functions. 

The early years were slightly more challenging as nobody really knew what the ‘right’ way was to run a retail business.

However, after (almost) 10 years in operation, we have come to a point when our experience has been developed and we are more or less trusted to make decisions on how best to run the business.

– Joshua Koh, co-founder of Commune

They also credited their uncle Ernie Koh, who had a lot of experience working with major retailers under Koda for guiding them closely in their entrepreneurial journey.

Thanks to him, they were able to come up with a “basic understanding of what [they] should be doing.”

China Is Their Biggest Market Right Now

commune millenia walk singapore
Commune’s flagship store at Millenia Walk / Image Credit: Commune

When asked to describe Commune, Joshua said that it is more of a “lifestyle concept” rather than a regular furniture store.

Commune had been developed to target a relatively unserved mid market segment 10 years ago. This was really what made us so desirable when we launched as there were no other brands that served the needs of the middle market.

We believe in creating products and collections along design themes that relate to our customer base, rather than following a certain furniture style like Scandinavian or modern contemporary, which most other brands do.

– Joshua Koh, co-founder of Commune
commune millenia walk singapore
Commune’s flagship store at Millenia Walk / Image Credit: SquareRooms

However, one key challenge faced by the startup is the small market size in Singapore.

“With a population of just around five million people, Singapore alone would not be big enough for us to scale up significantly.”

This was why they were bent on expanding internationally. They launched their first overseas store in China in 2014, which has since grown to be their biggest market.

“We picked China as the main growth market due to its population size and also the increasing spending power of its consumers,” explained Joshua.

“Many businesses find it hard to survive in China due to the competitiveness in the market, but we continued to press on and spent a lot of time understanding the needs of the Chinese consumer.”

Digitalisation Efforts Cushioned Their COVID-19 Impact

COVID-19 has impacted many businesses and retail in particular, is one of the hardest-hit sectors.

Joshua acknowledged the effects the pandemic had on Commune, especially during the circuit breaker period.

However, thanks to their investments into digitalisation, they were able to “still clock in sales via [their] e-commerce channels even though shops had closed.”

commune virtual reality
Commune uses VR tech / Image Credit: The Peak

Commune has steadily embraced technology in recent years. It has tapped on tech like virtual reality (VR) and augmented reality (AR) to help customers better visualise how their furniture will look like in their homes.

Additionally, its Commune: In Motion platform provides customers with an omni-channel experience so they can make purchases anywhere in the store.

For instance, shoppers can use the app to scan an item’s QR code in the store and buy it via the app or mobile POS.

They can also add items to their shopping cart or wishlist them in the app before heading to the store. A salesperson will then scan their in-app QR code, before bringing them to physically view the products.

According to Joshua, Commune’s sales eventually picked up post-circuit breaker.

“We have clocked in double-digit sales growth in Singapore and China compared to last year for the months of July to September.”

He reasoned that the work-from-home situation has resulted in consumers wanting to invest in their homes as they spend a lot more time at home now than they did in the past.

commune alto
Commune’s sub-brand Alto / Image Credit: Commune

Early in January this year, Commune even launched a sub-brand called Alto, which was mainly created to address feedback from customers that some of their items were too small for larger homes.

“We created Alto with the intention to address the demand from these customers. The designs and materials were also developed with a more luxurious feel to them, given that owners of these larger homes also wanted something a little more exquisite.”

Alto opened its first Singapore store in Millenia Walk in December 2019 as an extension to Commune’s flagship store.

Beyond Singapore, Alto has also gained a lot of traction in China, where they have already opened five Alto franchise shops.

According to Joshua, another five will be coming online within the next six months.

Turned Profitable Within Just A Year

commune furniture singapore
Image Credit: Inside Retail Asia

“Our family has always been a prudent one,” commented Joshua.

They invested less than S$1 million to start up Commune, which quickly turned profitable in its first year of operation.

“(We) have always been in the black ever since.”

“All this was mainly due to our mantra of achieving sustainable and profitable growth, rather than high growth.”

Since its inception, Commune has seen a compound annual growth rate (CAGR) of over 20 per cent per annum and have stores across many markets in Asia.

Specifically, they have four in Singapore, four in Malaysia, one in Hong Kong, one in the Philippines and a whopping 65 in China.

Moving forward, they plan to expand their brand presence across the globe and continue to develop new concepts that cater to the e-commerce market.

“We are looking to expand in other markets in Asia such as India and Indonesia as these have high growth potentials due to their large population size and growing consumption patterns,” said Joshua.

“Europe is also on our radar as we believe that it is still the world’s leader with regards to furniture design and by having our brand presence there, we would be able to build up our brand to the world stage.”

When asked to impart a piece of business advice, Joshua noted that business challenges are ever-present, so it’s critical to always take stock of one’s passion.

With passion for the work that we do, we are better able to pick ourselves up when the going gets tough.

It is also important to constantly innovate as the business environment is ever changing, and so are customers’ expectation and demands. To stay constant would lead to failure eventually.

– Joshua Koh, co-founder of Commune

Featured Image Credit: SquareRooms / Ernie Koh

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