LG Electronics Solidifies Second Place in Rental Accounts... Likely to Achieve This Year's Target

An LG Electronics Care Solution manager is inspecting an LG PuriCare water purifier.

[Asia Economy Reporter Ki-min Lee] LG Electronics secured its position as the second-largest player in the domestic rental market in the first half of this year by widening the gap with the third place. With a steady increase in rental subscriptions, it is expected that LG Electronics will have no difficulty achieving its annual target of 2.7 million accounts.

According to the rental industry on the 14th, LG Electronics increased its rental accounts by 350,000 in the first half of this year, reaching a total of 2.39 million accounts. Consequently, LG Electronics' rental business revenue is also experiencing rapid growth.

LG Electronics' rental business revenue grew from 113.1 billion KRW in 2016 to 160.5 billion KRW in 2017, 292.4 billion KRW in 2018, and 439.8 billion KRW last year. In the first quarter of this year, it recorded 131.7 billion KRW, exceeding 130 billion KRW for the first time in a quarter, and achieved a quarterly record high of 139.4 billion KRW in the second quarter.

The increase in LG Electronics' rental accounts shows a steep growth compared to competitors. LG Electronics has been competing with SK Magic for the second place in the industry, following Coway, which holds about half of the total domestic rental accounts at 6.33 million. SK Magic increased its rental accounts from 1.81 million at the end of last year to 1.94 million in the first half of this year. The gap between the two companies' accounts was 230,000 at the end of last year but widened to 450,000 in the first half of this year.

It is expected that LG Electronics will achieve its goal of securing 2.7 million rental accounts this year. In a conference call on second-quarter earnings last month, LG Electronics stated, "By the end of this year, we plan to secure more than 2.7 million accounts, continuing high growth of over 30% compared to the previous year," adding, "Sales are continuing beyond our initial internal targets and are on an upward trend. Profitability is also maintained at double-digit levels."

The rapid growth of LG Electronics, a latecomer in the rental business, is attributed to its diverse rental home appliance lineup and Care Solution services. In addition to the mainstay rental appliances in the existing market such as water purifiers, air purifiers, and bidets, LG Electronics has expanded its product range to include new appliances like dryers, stylers, and beer makers, attracting consumer interest.

LG Electronics has also differentiated itself from other companies by systematically managing customers through the Care Solution service, which has been in operation since 2018. Care Solution managers regularly replace key components and manage hygiene even in unseen areas. Earlier this year, LG Electronics introduced a visible Automated Response Service (ARS), allowing customers to use services 24/7 without speaking to a consultant, including ▲payment information and address changes ▲bill payments ▲requests for contact from Care Solution managers ▲A/S requests.

To sustain the rapid growth of its rental business, LG Electronics also reorganized its structure. Last month, LG Electronics established the 'Rental Caring Business Division' directly under the Korea Sales Headquarters and expanded it into a seven-team system. LG Electronics plans to entrust product planning and sales activities for rentals to the Rental Caring Business Division to expand account numbers and maximize sales.