So it may seem that in an already matured market, newcomer Katta Kayu could be a little late to the game.
But Fazli Shah Simpon begs to differ. The self-taught carpenter believes there is still room for the new kid on the block to carve a niche for itself.
“It’s never too late for any entrepreneur to venture into any industry as long as they are passionate about what they do and have a proven product,” he says.
Katta Kayu came onto the retail scene about four years ago after Fazli and his wife, Ilmi Shukri Khodori, spent a few years learning up the trade and making nameless pieces for friends and private customers under their company FS Design Furniture Sdn Bhd, which was founded in 2012.
“We were from the events industry. We did a lot of events construction work like building booths and props. We were already making things, so I decided to go into making furniture, where we can play around with the product design and materials,” he says.
Fazli professes his interest in drawing up designs and bringing them to life. But woodwork was new to him. He looked up books and online videos to get him started, then he looked up other furniture makers who would be willing to teach him a thing or two.
“You need a teacher when you are doing something out of your scope.”
Through his learning, he started carving up simple pieces in his backyard and took orders from family and friends. With a little more business, they were able to move their operations into a workshop.
One of the platforms that helped launch Fazli and Ilmi into the furniture making trade is social media. They started drawing the attention of F&B and boutique hotel operators looking for unique designs.
The growing orders gave them more confidence to expand their manufacturing operations and they took on whatever projects that came their way to expand their range.
However, their eagerness also came at a price.
“We needed to do a lot of R&D work for our furniture pieces within a very tight timeline to meet their deadlines. And because of our inexperience, we underquoted a lot of our projects and made losses,” Fazli shares.
The losses hounded them and they were tempted to focus on trading furniture instead.
“It would have been much easier,” he adds.
But Fazli reckons they’d invested too much to back away. Hence, they pivoted and diversified into the retail market with ready-made furniture where they would be able to better manage the pricing of their products. After all, they already had designs from their projects that they could tweak and mass-produce at their 6,000 sq ft production facility in Hulu Langat, Selangor.
“We still do project-based customised furniture. That’s where the margins are. But in the longer-run, ready-made furniture is a more sustainable business for us so this is what we want to focus on,” he says.
Going into the retail market would also enable them to build their own brand in Katta Kayu.
From the outset, Fazli wanted to do something different with their products. Inspired by western concepts of using waste materials, he sourced for waste wood to make Katta Kayu’s furniture.
This, he notes, is one of the brand’s differentiating factors in the market.
About 70% of the materials used in its pieces are reclaimed wood.
“Apart from making money, we also want to be able to conserve the environment through our products, which is why we wanted to use waste wood in our furniture. We also try to design our furniture around some of the waste materials that we can get like old gas tanks.
“We have our own identity of furniture. Ours is eco-friendly, Malaysian-made, handcrafted, industrial-design furniture. And from our earlier experience, we now know what types of material are durable and what makes a good finish. This helps us make better products for Katta Kayu,” he says.
The group gets its waste materials directly from factories as they require specific types of wood and steel to make furniture. The materials are mostly treated beforehand at the factories but waste materials, he adds, are harder to process. For example, the nails need to be taken out and wood pieces need to be cut to size, which requires more machinery.
However, Fazli remarks that it is getting harder to obtain waste wood as more manufacturers are now jumping on the green bandwagon. Suppliers are also looking at more ways to reuse and recycle their waste.
So the company has had to source for more new wood to complete its production.
But its environmentally-friendly strategy has helped boost Katta Kayu’s branding among consumers. It currently has three outlets in the central region and will be opening another one in Cheras this month.
Coping with marketing trends
Since its early days, Katta Kayu has used social media to grow its reach and customer base. But as more businesses turn to social media as a marketing and engagement platform, Fazli notes that it is becoming harder to get good leads from these sites.
“The cost of marketing has gone up. And furniture sales have been quite stagnant these few years so we have to work harder and spend more on customer acquisition. This pushes up our operating cost.
“So we have to be more creative in the way we sell our products in this harsh retail environment. We have to leverage everything we have to optimise operations and market our products,” he says.
One of its core marketing strategies, says Ilmi, is to focus on the value of its products to distinguish Katta Kayu from its competitors. They’d rather not engage in price wars as is common in the industry.
“People will keep buying furniture. But you have to distinguish yourself from others because other players have the scale and probably lower cost. So we must have a different marketing strategy. We need to do what other players are not doing and we can’t cater to everyone, so we need to produce for a targeted market,” she explains.
The company is aiming for the mid- to upper-mid-segments.
It also participates in exhibitions to get exposure with different types of customers.
Katta Kayu is also looking to increase its exports. At the moment, its products are shipped to countries like the US, Australia and New Zealand as unfinished goods through third-party retailers.
While this means the products will not be marketed under the Katta Kayu brand overseas, Fazli says this is an easier route to bring its products abroad.
“We do want to bring the Katta Kayu brand international, but we want to do it gradually. If we export our products directly to the market, we need to ensure that we have good quality control and are able to deal with logistics. We will also need to get ourselves certified and have enough volume.
“For now, that is a challenge so we are just supplying our products to other manufacturers for them to put in the finishing touches,” he says.
Fazli and Ilmi are optimistic about their growth prospects this year. While the retail market has been languishing over the past few years, they opine that the worst is likely behind them.
The company turned in average revenue of about RM1mil in the last two years. Currently, its projects division still contributes the bulk of its sales, but Fazli expects contribution from its retail arm to grow as the market improves.
“When we first started, our objective was to learn. We took on every project. But now, we want to maximise profits and manage our losses. So we are more selective in the types of projects that we do so that we don’t make losses.
“We are learning to perfect our processes, reduce wastage and increase our volume to grow. I think in the last few years, we’ve mainly been paying dearly for our mistakes. But things are better now,” he says.
Fazli hopes that his efforts will also inspire more Malays to go into the furniture making industry. He notes that the Malays have a long history in woodwork but it is becoming a lost art as these skills have not been picked up by the next generation.
“I myself had to learn from a Chinese sifu. But they are very helpful. They taught me about scaling the business, distribution networks and they shared their knowledge.
“We should revive this skill. It is a part of our culture. We hope to also encourage more local designers to look at the local furniture market,” he says.