This Year’s Target of 2.7 Million Accounts Expected to Be Surpassed
[Asia Economy Reporter Ki-min Lee] The rental business within LG Electronics is proving to be a significant profit driver, with its status rising steadily. It is expected to surpass this year's target number of accounts while also setting a new record for highest sales.
On the 29th, according to LG Electronics, the Rental Caring Business Division under the Korea Sales Headquarters has been upgraded to the Central Caring Business Center. Jo Hyup, head of business planning and support at the Korea Rental Caring Center, was promoted to Senior Vice President, and the vacant center director position is expected to be filled soon. Previously, in July, LG Electronics reorganized the 'Care Solution Division' from the B2C Group under the Korea Sales Headquarters to report directly to the Korea Sales Headquarters.
The industry views the rising importance and sales growth of the rental business as elevating its status within LG Electronics. LG Electronics has launched a wide range of new home appliances such as garment dryers and beer makers that align with the MZ generation's (born in the 1980s to 2000s) trend of valuing experience over ownership.
Moreover, due to the spread of the novel coronavirus disease (COVID-19), demand for hygiene appliance rentals has also increased. Additionally, LG Electronics' customized home appliance care service, Care Solution, is receiving positive responses from customers.
Thanks to this, the number of rental accounts in the first half of this year reached 2.39 million, an increase of 350,000 from the end of last year. It is expected to comfortably exceed the target of 2.7 million accounts announced by LG Electronics earlier this year.
Sales from the rental business are also expected to easily set a new record this year. LG Electronics' rental business sales for the third quarter reached 156.4 billion KRW, with cumulative sales for the first three quarters totaling 427.5 billion KRW. Last year, LG Electronics' rental business sales were around 439.8 billion KRW.
Previously, LG Electronics' rental business sales steadily grew from 113.1 billion KRW in 2016 to 160.5 billion KRW in 2017 and 292.4 billion KRW in 2018. In the first quarter of this year, quarterly sales exceeded 130 billion KRW for the first time, recording 131.7 billion KRW, and in the second quarter, it achieved the highest quarterly sales of 139.4 billion KRW.
An industry insider said, "The retention period for home appliance rental accounts often exceeds 2 to 3 years," adding, "LG Electronics is receiving strong customer responses by leading hygiene and new appliances suited to the COVID-19 pandemic and the subscription economy trend, so it will continue to be a significant profit driver in future performance."
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