Furniture Industry Desperately Needs Performance Rebound
Expanding Profitability Through Premiumization Strategy
The furniture industry is seeking a rebound this year through a premiumization strategy. The domestic furniture industry has been experiencing poor performance due to reduced moving demand amid the real estate market downturn. Last year, major domestic furniture companies had to focus solely on tightening their belts to reduce losses. This year, to overcome this situation, they have all prominently launched premium products. It is interpreted that they have begun to strengthen profitability through a premiumization strategy. The premiumization strategy also has the effect of enhancing brand image. Through this, companies that recorded losses last year aim to achieve profitability this year.
On the 15th, Hanssem announced the release of its premium built-in wardrobe "Signature," which was developed over the course of 1 year and 3 months. It is characterized by being the first in Korea to apply folding doors to a 2m-wide wardrobe. As a premium product, Signature allows consumers to configure the built-in wardrobe as they desire. The internal partition positions can be adjusted to within 1mm.
For example, when choosing a pants hanger, consumers can select from various options such as shelf type, drawer type, or partition type. Those interested in accessories can choose the shelf type, while those interested in bags can select the partition type. The Signature built-in wardrobe offers a total of 94 internal configuration options.
Shinsegae Casa is also accelerating its attack on the premium furniture market. Shinsegae Casa has extensively reorganized the design and lineup of its premium furniture collection "La Maison." La Maison, introduced in 2019, has strengthened its main concept of ‘French Modern’ style through this reorganization. It minimizes decorative elements and uses the finest natural materials such as marble, ash wood, and premium oak dry veneer.
The entire lineup has also been reorganized and will be released in three series: ▲Raphael ▲Erne ▲Campo Lux. In May this year, new products will be added to the Raphael home office line to complete a comprehensive collection covering bedroom, living room, kitchen, and home office.
Hyundai Livart plans to improve profitability this year through its own premium furniture line, the ‘Livart Meister Collection,’ launched in October last year. It is notable for applying the finest natural woods rarely seen in the domestic furniture industry, such as walnut, ash, and birch. Prior to this, Hyundai Livart also introduced overseas luxury living brands such as Giorgetti and Valcucine as part of its brand premiumization efforts.
The reason the furniture industry is pursuing a premiumization strategy is due to poor performance. Hanssem succeeded in turning a profit with an operating profit of 1.9 billion KRW last year, but it still has a long way to go compared to the nearly 100 billion KRW operating profit in 2020. Hyundai Livart achieved its highest sales last year but recorded an operating loss of 19.9 billion KRW. Shinsegae Casa reduced its deficit but still recorded an operating loss of 10.8 billion KRW last year.
An industry insider explained, "Since the real estate market is expected to remain weak this year, we plan to focus on increasing profitability by targeting real demand groups such as newlyweds with premium furniture."
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