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UAE Freezones Biz News Updates
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Made in UAE: Intercoil makes it its business to put you to sleep
Intercoil, the UAE manufacturer of bedroom furnishings and mattresses, has
brushed off the softening retail climate, stepping out of its comfort zone
and taking on its first international franchise.
 Intercoil
supplies 10 international hotel groups across the region.
It has also applied for its first international patent in its nascent steps
to become a global brand.
The company presently employs about 500 staff with 23 retail outlets and
plans for 12 more to open before the end of the year.
"2015 was a slower year for us," says Hassan Abbas Al Hazeem, the managing
director of Intercoil International. He said 2015 saw growth but not at the
20 per cent rate of previous years that had enabled the company to double in
size every five years.
"In terms of units, we sold 300,000 mattresses in 2015. Of our total sales,
around 25 per cent is to domestic customers [B2C], and the remaining 75 per
cent driven by a burgeoning hospitality industry, selling to business
[B2B]."
The move towards franchising its "The Bedroom by Intercoil" concept, which
will become "The Bedroom", and the new patent application for its Evolution
mattress, are a part of a maturing brand.
Intercoil started life in 1974, just after the formation of the UAE, as a
polyurethane manufacturer, called International Foam Factory. It was not
until 1999, when Mr Al Hazeem succeeded his father, that the company decided
to push into the retail space.
"When I took over in ‘99 we had a factory showroom," says Mr Al Hazeem. "We
had less than 80 people working for us. Intercoil was not really known, it
was not present anywhere."
He says with 75 per cent of the business catering to B2B, Intercoil supplies
10 international hotel groups across the region, who change mattresses every
five to seven years, meaning it is an important and lucrative sector for the
company and brand.
"However, retail is where you build a brand and slowly we have developed our
presence and products to incorporate being the exclusive licensee of US-made
mattresses Simmons.
"We fully expect to continue on the growth trajectory of previous years so
by 2020 we expect to be twice the size we were last year. We expect our
patent application for the Evolution mattress to be issued late 2017," says
Mr Al Hazeem.
The new retail strategy, "The Bedroom by Intercoil" that was introduced at
the beginning of the year is a brave move encompassing an A to Z offer on
everything that is found in one’s personal boudoir – from lamps, to rugs, to
sheets, to pillows and beds, of course.
Its first franchisee, Bobmil Group, which will exclusively manufacture and
sell Intercoil’s bedding products in Kenya, marks one of the first
manufacturing licensee agreements by a UAE-based business to other countries
in the world.
According to Euromonitor the move to a customer-focused business makes
sense.
Its research shows the market for bedroom furniture in the UAE grew to Dh1.8
billion during 2015, forming 37 per cent of indoor furniture value sales.
The Ace Consumer Survey, meanwhile, showed 46 per cent of its respondents
intended to add new furniture to their living rooms and/or bedrooms this
year.
The trend can be explained by the replacement cycle of furniture in this
country as well as people moving to newer residences.
As well as its new facility in Kenya, Intercoil has also opened a
manufacturing centre in Dammam in Saudi Arabia fulfilling the needs of its
five showrooms in the kingdom with an eye on the burgeoning tourist
industry.
However, when a company moves its operations to satellite manufacturing
sites and neighbouring countries, quality, logistics and further cost become
an integral factor in the production. The costs of production and the time
scale for delivery can often be compromised.
"The biggest differences between GCC countries revolve around the ease of
doing business and variations in cost," says Mr Al Hazeem.
"As far as management of factories go it is about organisational structure
and having the right people and systems in place.
"Ensuring best practices are carried out across all factories, instilling
accountability, having strong and open communication and frequent reporting
between the factory and head office, and the best software which can provide
real time data."
Conquering the logistical and production challenges of manufacture in a
foreign country is an organisational problem but changing the personality of
a company to a more retail led, customer focused operation is arguably a
bigger hurdle.
But just how brave is it moving into an already crowded living-solutions
space?
"I am not taking on Ikea because what they sell is simply ‘acceptable’ –
what we sell is quality and luxury," Mr Al Hazeem says. "Dubai is now a
brand as aspirational as any other and that is why we are proud to have the
Made In the UAE tag on our wares.
"It is definitely a strong selling point for us as both retailers and
suppliers to the hospitality industry. Not only are we helping to stimulate
the regional economy with job creation and spending, but having UAE-based
manufacturing facilities also reduces the likelihood of supply chain delays
caused by shipping, while allowing for faster response time, customisation
and flexibility that imported brands simply cannot offer."
Sept 21, 2016
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Courtesy The National
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