The Iron Fortress of the 'Ace Family'... Can Furniture and Rental Companies Overcome It?
Unshakable No.1 Ace, No.2 Simmons Faces Threat
Rental and Subscription, Coway and Hanssem Compete for 3rd Place
Premium Mattress Tempur Battles Sealy
A Coway employee, who caused a stir in the bed industry with mattress rentals, is introducing the Sleep Matching service. [Photo by Coway]
[Asia Economy Reporter Kim Jong-hwa] The dynamics of the bed industry are changing. Ace Bed, the current industry leader, is facing a threat to its "unshakable No. 1" position from Simmons Bed, which has long held the "perennial No. 2" spot, while the competition for the 3rd and 4th places is so fierce that it is difficult to clearly identify a single company. An industry insider said, "COVID-19 has ushered in a period akin to the Warring States era."
Ace Bed, the current No. 1 in the industry, recorded sales of 289.5 billion KRW last year, trailing Simmons Bed, which set a new record with 271.5 billion KRW during the same period, by just 18 billion KRW. The gap between the two companies, which was over 70 billion KRW in 2019 with sales of 277.4 billion KRW and 203.8 billion KRW respectively, has rapidly narrowed within a year.
Operating profit margin favors Ace at 17% (49.3 billion KRW) compared to Simmons' 5% (14.7 billion KRW). This is because Simmons has launched aggressive marketing efforts, such as expanding its consignment agency stores called 'Simmons Mansion,' which fully covers costs necessary for store operations including rent, management fees, interior expenses, and display products.
The battle for 3rd place is also intriguing. Coway, which pioneered mattress rental and care services, created a market sensation and exceeded 200 billion KRW in bed sales last year. While other rental sectors like water purifiers are stagnating, mattress sales are exploding.
Hanssem's progress is also remarkable. Hanssem's bed sales rose 27% last year compared to the previous year, and its sales in the first quarter of this year grew 26% year-on-year. Hanssem launched a furniture subscription service last year, with mattresses being a representative product. An industry insider analyzed, "Hanssem's bed sales are estimated to be in the low 200 billion KRW range, competing with Coway for 3rd place." A Hanssem official stated, "Although we lag behind Ace Bed and Simmons, we are not falling behind other furniture companies."
It is also of interest whether comprehensive furniture and home appliance companies can surpass the 'Ace family,' which dominates the domestic bed market with Ace Bed, Simmons Bed, and Daejin Serta Bed, by leveraging rental and subscription models.
Additionally, Denmark's premium mattress brand Tempur and Sealy Bed, which regained the No. 1 market share in the U.S. last year after eight years, are also fiercely competing. Tempur Korea recorded sales of 100 billion KRW last year, and Sealy Korea is gaining momentum with some premium bed sales skyrocketing.
Both companies are aggressively targeting the domestic market with marketing efforts. Currently, Tempur is reportedly slightly ahead in sales, but there are forecasts that Sealy Bed, which manufactures products domestically, will have an advantage over Tempur, which imports products from overseas, in the long term. Meanwhile, mid-tier competition is intense among comprehensive furniture companies and mattress latecomers such as Ilum, Hyundai Livart, Zinus, Slow, and Sono Season.
According to the Korea Sleep Industry Association, the domestic sleep market exceeded 3 trillion KRW last year. With the surge in people working, resting, and enjoying cultural activities at home due to COVID-19, consumers' demand for high-quality beds to ensure comfortable sleep is expected to continue this year.
An industry insider said, "Newlyweds who couldn't travel abroad due to COVID-19 are choosing more expensive, better beds with the money saved from travel, and more people are opting for rental and subscription services that allow mattress replacement at short intervals," adding, "The competition between Ace Bed, which has maintained the No. 1 position for a long time, and the companies closely chasing it is worth watching."
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