The pandemic accelerated the digital transformation of K-FAB Scandinavia, a traditional white label company manufacturing and selling lamps around the world. During the COVID-19-crisis K-FAB equipped their office with digital tools, saved resources on business travels while boosting their sales in the Scandinavian market.
Swedish white label company successfully endures the pandemic and turns their office digital
Abstract
Background
K-FAB is a traditional white label company. Founded in Sundsvall, Sweden in 1974, it produces lamps that that they sell under retailers’ own names. On its second business track the company also sells under K-FAB’s own brand name. The company employs 10 people in total, 5 in its head office in Sundsvall focusing on sales and accounting and 5 in its office in the South of China specialized in the production of the lamps.
Challenge
K-FAB’s biggest challenge consisted in finding new customers during the pandemic. While the company usually met their customers at fairs or in their office in Sundsvall, the pandemic put an end to that practise. CEO Helene Romby explains that in pre-pandemic times K-FAB also exposed their products at fairs in Europe, Scandinavia or China to spark buyer’s curiosity. For example, guests of the China Canton Fair from different corners of the world would enter K-FAB’s booth – curious about the Scandinavian design that was unusual among local and regional exhibitors. During the pandemic this was no longer possible. With the start of the war in Ukraine the company faces additional challenges resulting in an overall drop of orders.
Digitalisation Path
In spring 2020, they shifted from physical meetings to using digital communication applications. Moreover, they fully equipped their office for digital work buying items such as a camera, a TV screen, speakers, a backdrop, chairs to sit in video meetings and a door to the showroom to separate the talking area from the rest of the office. Furthermore, they redesigned their website to increase revenues through digital marketing, implemented social media and visited digital fairs to expose their products to customers online.
Approach
K-FAB faced the pandemic boosting their digital marketing efforts by contacting already existing customers as well as new contacts via email and by participating in digital fairs in China to explore the market. Although they learned a lot on these events, it did not result in the attraction of new clients. To find new clients, the company redesigned their website and increased their social media activity. Despite these efforts, revenues from customers in New Zealand, Chile, China and southern Europe decreased.
However, in the years 2020 and 2021 K-FAB could grow its business due the customers in Sweden and Scandinavia. Because people followed little other activities during the pandemic, they spend more time renovating their homes and buying new interior design objects. This consumer demand shift towards higher investments for interior design could be observed in many countries (Forbes, 2021[1]). Another reason for the heightened interest in interior design could be the shift to more hybrid working. 66% of businesses were considering redesigning their working spaces to better adapt to hybrid work according to the Microsoft 2021 Work Trend Index (Microsoft, 2021[2]).
Although K-FAB employees still prefer to meet their customers in person, the introduction of digital tools enabled them to meet more customers online, especially because the company is located in the sparsely populated north of Sweden. Moreover, the company could save a sizeable amount of money and GHG emissions by replacing some business trips with online meetings. Following the CEO Helene Romby, the time saved for business trips provides the company with extra working time in office. However, it cannot fully compensate for the reduced number of real-life meetings through which K-FAB gains input and new inspirations.
Government Support
To counteract the missing revenues during the pandemic K-FAB received a government grant of SEK 250 000 (around EUR 23 000) in April 2020 for a period of 4 month. The government support enabled the company to keep their employees who received almost 100% of the salary while working 40%. Because many companies in Sweden benefited from this government support, new home workers possessed more time and full salaries to redecorate their homes, which in turn increased K-FAB’s revenues in 2020 and 2021. Besides being able to pay their employees’ salaries, the government support also enabled K-FAB to build up their digital infrastructure with purchasing the aforementioned items such as the TV screen and equipment for the digital office.
To learn more about SMEs digital transformation
OECD (2021), The Digital Transformation of SMEs, OECD Studies on SMEs and Entrepreneurship, https://dx.doi.org/10.1787/bdb9256a-en.
OECD (2021), SME Digitalisation to Build Back Better, https://doi.org/10.1787/f493861e-en
References
[1] Forbes (2021), Three Ways Covid-19 Has Affected The Interior Design Market, https://www.forbes.com/sites/forbestechcouncil/2021/12/03/three-ways-covid-19-has-affected-the-interior-design-market/?sh=7513432c53c4 (accessed on 14 November 2022).
[2] Microsoft (2021), 2021 Work Trend Index: Annual Report, https://www.microsoft.com/en-us/worklab/work-trend-index/hybrid-work (accessed on 14 November 2022).
