Laying a solid base
Flooring products manufacturer sees potential in new retail concept
LAMINATE flooring has come a long way from the cheap, synthetic product it once was. While the types and quality of some of the laminate flooring out there are still less than eco-friendly, it is clear that they are now part and parcel of the trend in modern living.
For Inovar Resources Sdn Bhd, who pioneered the use of laminated flooring in Malaysian market more than 20 years ago, the longterm potential of the industry is the catalyst for the company to continue to invest as it explores new growth avenues. This includes diversifying into different wooden flooring segments, says executive director Jason Tan.
The story of Inovar’s rise to a market leader in laminated flooring began with Tam Pak Cheong, Inovar’s managing director, who started the business back in 1996. In its initial years, Inovar Contract, as the company was known then, was focused on original equipment manufacturing (OEM) and paid little attention to the development of its own brand name.
As a OEM manufacturer of laminated flooring products, up to 95% of its business volume relied on exports. China used to be the largest export market for the company where it exported around 20 to 30 containers per month.
However, being a regional champion in the manufacturing sector wasn’t easy in the face of China’s rise as the world’s factory. The proliferation of manufacturers from China since 2007 – with more than 1,000 companies supplying to the domestic and international markets at one point – resulted in the dumping of sub-quality wooden flooring products in various markets where Inovar operates in, shares Tan.
Concerns over unsafe formaldehyde levels in its Chinese-made wood flooring also shook home owners and builders alike. But Tan notes that lumber liquidators claim the dangers are overstated and the cancer-causing chemical is safely contained by lamination.
“This gave laminated flooring a bad reputation and greatly affected consumer confidence. We have to slowly educate and carry out campaigns to explain the real situation to the public,” he recalls.
Due to the competition from China, the company was forced to take on a new business direction that relied on its own brand of products, which it manufactures, distributes, and installs.
The company invested in building its brand presence in the market, and today, Inovar has managed to stamp its flooring mark regionally while remaining the market leader back home.
Inovar is backed by around 25 supporting staff and has more than 200 skilled and semi-skilled installers.
The manufacturer and retailer has established an extensive network in the Asean markets, including the Philippines, Indonesia, Thailand and Vietnam. These markets are potential markets for Malaysian timber products as they do not have a vibrant timber-based manufacturing expertise, says Tan.
Inovar’s regional business currently makes up around 70% of the company’s business volume. Vietnam and Indonesia are its best performing markets, adds Tan.
At the moment, the Ng Lu Siong family is the largest shareholder in Inovar with a stake of around 75%, while a partner from Australia holds 15%. The remaining 10% is held by its management team including Tam and Tan.
The Ng family is also the controlling shareholder of tiles manufacturer and retailer Niro Ceramic Group.
Growing projects
The growth in urban population and increasing industrialisation accelerate the growth of the wood and laminate flooring market. New structures, renovation, and remodelling of existing buildings primarily drive the growth of the wood and laminate flooring market, says Tan.
Inovar has supplied and installed laminated flooring in more than 300 housing projects across the country in the last 10 years, counting almost all the big developers as its customers. Tan says having control over the entire supply chain also gives the company an added advantage when working with developers and commercial project owners.
Laminate flooring installation has become popular among home-owners over the past few years, particularly because it offers the look of hardwood flooring at a relatively lower cost. It is also easy to install, easy to clean and it does not require expensive maintenance.
An added bonus is that the floating nature of a click-lock floor means that it doesn’t require any glue to hold it down, says Tan.
“One advantage is its interlocking planks, laminate flooring can be easily installed by an amateur and it can be removed without damaging the laminate or the existing flooring. The hard transparent protective provides a scratch-resistant layer to ensure the flooring does not get spoilt by high traffic or pets. It also makes it easy to clean with just a dust mop or a mop soaked with water,” says Tan.
Some of the newer segments of flooring that Inovar wants to add
to its product line include carpet tiles and vinyl flooring, which would allow the company to penetrate the commercial market
Currently, Inovar controls around 60% of the local property project market for laminated or wooden flooring.
Inovar recorded a revenue of RM210mil in 2017 and is expecting to continue the 10% to 15% growth in its topline this year.
Tan, who is responsible for the company’s business development and marketing strategies, says Inovar has taken the lead in setting the trends in the industry. It is also looking at marketing its latest breakthrough product from its innovation drive, the Nano Shield anti bacteria flooring.
Small Partner Outlets
Over the years, Inovar has invested more than RM50mil in its factory and production facility located in Bestari Jaya since it started manufacturing activities in 1998. The factory, which also serves as the company’s headquarter, currently has a capacity to produce up to 5 million sqm of laminated flooring per annum, Tan says.
Keeping the growth momentum going amid the challenging real estate market and slowdown in property projects, Inovar is turning its attention to expanding its local retail reach. The company currently has five showrooms within Klang Valley, namely Petaling Jaya, Subang USJ, Melawati, Kepong and Shah Alam.
Moving forward, Tan says Inovar will be taking its marketing effort to markets that are largely untapped, particularly smaller towns in other states.
Inovar is expanding its market- ing reach to small town through smart collaborations with its Small Partner Outlets or SPO concept.
A combination of franchise and partnership, the SPO concept aims to provide opportunities to budding entrepreneurs looking to start their own business. Inovar will provide the products and help out with the renovation and display of showrooms, partly to maintain uniformity and branding purposes.
The aim is to eventually have at least one Inovar SPO outlet in every state, before taking the new franchise concept to the regional market.
“They could present the customers a vision of how the new floor would fit in with their customers’ existing décor and furnishings. The market for laminated flooring used to grow at a very rapid pace and has witnessed entrance of many local and regional vendors offering specific application products for multiple end-users.
“But this new entrants are faced with cut throat competition due to innovative technology, quality services and diligence of international vendors. The three main pillars to maintaining the status as a reliable manufacturer in the wooden floor market are brand profiling, pricing, and service quality,” says Tan.
As a business with products that rely on the style, design and decoration of a home, it would indeed make sense that Inovar’s marketing outreach is led by its owners who can be most effective in interacting with the customers.
After marking the 22nd year of the company, Inovar has certainly stamped a mark in the flooring industry, being the regional champion that, Tan notes, the country can be proud of.