[People人] Ace 침대 Shines with 'Sangsaeng' Management Amid COVID Crisis

Ahn Seong-ho, CEO of Ace Bed. Photo by Ace Bed

[Asia Economy Reporter Moon Hyewon] "The headquarters will support you until the dealership management normalizes, so please maintain the employment of store staff as much as possible."

The spread of the novel coronavirus infection (COVID-19) has changed many aspects of daily life in South Korea. Reduced outdoor activities and consumption are noticeable changes. Ace Bed, which operates 240 stores nationwide through a dealership system, is no exception. The new semester and spring season are peak seasons for the bed industry due to moving and wedding demands, but like other industries, it is going through a difficult period.

To support struggling dealerships, Ace Bed rolled up its sleeves. CEO An Seong-ho, who has consistently emphasized 'coexistence,' has allocated 1.1 billion KRW to support the rent and employee wages of dealerships nationwide. With this fund, more than two-thirds of the rent for 240 stores nationwide, including 34 dealerships in the Daegu and Gyeongbuk regions severely affected by COVID-19, will be supported. Wages for each employee, including the business owner, will be supported with at least 1.5 million KRW. Different regions will receive support based on a differentiated standard according to the scale of damage.

The first phase of support is 1.1 billion KRW, but additional second and third phases are planned depending on the damage situation of the dealerships. CEO An's intention is not to stop supporting dealership management even after the COVID-19 crisis ends. He said, "With this measure, dealership owners can preserve the jobs of sales staff and reduce the monthly wage expenses, thereby easing the burden of store operations even a little."

Founded in 1963, Ace Bed has been led by Chairman An Yusu, the founder, and since 2002, CEO An Seong-ho, the eldest son, has been in charge. CEO An, who learned every step of the manufacturing process while working part-time at a mattress factory during his university days, has spent a long time in the factory since joining Ace Bed in 1992. He still frequently visits production sites to monitor factory automation work and diligently inspects facilities.

As much as the mattress process, CEO An shows special interest in relationships with dealership owners. He lamented that domestic furniture dealerships are being pushed to the outskirts due to high urban rental costs. Being pushed to the outskirts affects dealership sales. The headquarters cannot prosper while dealerships struggle.

Since 2016, CEO An has operated a major commercial district dealership rental system to maximize frontline sales power. The system selects key areas representing local commercial districts, where the headquarters directly purchases land and buildings to build large stores or renovates existing aging Ace stores, allowing excellent dealerships to move in at rents lower than the surrounding market rates. According to CEO An, this has prevented dealerships from being pushed out and helped protect neighborhood commercial districts.

They also operate a 'dealership deposit interest-free support program' to reduce the financial burden on dealership owners. Second-generation dealership owners receive management education and direct delivery services.

Recently, CEO An has been realizing large-scale expansion by expanding large stores such as 'Ace Square' and 'Ace Avenue' nationwide by key regions. These stores feature experience zones where customers can lie directly on mattresses, as well as curating services that recommend mattresses suited to individual body types through expert consultations.

CEO An believes that if the headquarters directly opens stores in areas where dealerships find it difficult to establish themselves and the dealerships operate the sales, it will create a win-win system between headquarters and dealership owners. They are increasing product experience opportunities for local consumers and analyzing market conditions and locations such as consumer distribution, mobility, and accessibility to open premium stores in representative local commercial districts. Ace Square has increased from 9 stores in early 2018 to 20 stores currently. They plan to open 7 to 8 additional stores this year as well.

CEO An said, "Dealership owners who find it burdensome to maintain large stores can enjoy customer attraction effects by entering Ace Square," adding, "We must first take care of the satisfaction of employees and dealership owners to lead customer satisfaction."

Although the bed industry has generally experienced poor performance since the 'radon incident' in 2018, Ace Bed's sales have actually increased. Last year, they recorded a record-high sales of 277.4 billion KRW, a 13% increase from the previous year. Operating profit rose 24% to 49.9 billion KRW. This is evaluated as a contribution from coexistence with dealerships. CEO An's generous support for dealerships struggling due to COVID-19 and the growth achieved despite the recession are ultimately seen as the result of a solid partnership.