LG Rental Business Growing 30% Annually... Smooth Sailing with 700 Billion Won Annual Sales

An LG Electronics Care Solution manager is inspecting an LG PuriCare water purifier.
[Photo by LG Electronics]

[Asia Economy Reporter Kim Heung-soon] LG Electronics' rental business, a key pillar of its home appliances division, is steadily progressing toward an annual sales target of 700 billion KRW.

According to industry sources on the 2nd, LG Electronics' rental business is estimated to have grown nearly 30% in sales in the second quarter compared to the same period last year. Previously, LG Electronics' rental business recorded sales of 170.8 billion KRW in the first quarter of this year, representing about a 30% increase from 131.7 billion KRW in the same period last year. Based on last year's second quarter sales (139.4 billion KRW), the second quarter sales this year are expected to exceed 180 billion KRW. In this case, with sales surpassing 350 billion KRW in the first half alone, it is considered likely that the annual target of 700 billion KRW will be easily surpassed. Specific figures related to the second quarter rental business sales will be announced through the business report around the 17th.

Since entering the rental business in 2009, LG Electronics has been providing care solution services for a total of nine types of rental home appliances, including eight categories?water purifiers, beer makers, air purifiers, dryers, stylers, electric ranges, dishwashers, massage chairs?and ice water purifier refrigerators that require continuous maintenance.

Among these, sales have grown at an average annual rate of about 37%, centered on the direct water type water purifier launched in 2014. Sales, which were 77 billion KRW in 2013, increased to 591.1 billion KRW last year. The number of accounts, representing the total number of managed products, exceeded 2.7 million at the end of last year, and the company expects to surpass 3.3 million accounts this year.

Rental home appliances are gaining attention as a sector benefiting from the expansion of the subscription economy, where customers pay a fixed monthly fee to use products or services, and from increased time spent at home due to COVID-19. According to estimates by the KT Management & Economic Research Institute, the domestic rental market size last year was 40.1 trillion KRW, with the ‘personal and household goods’ category, which includes home appliances, accounting for 10.7 trillion KRW.

Although LG Electronics' rental business accounts for only 2.6% of the total sales (6.8149 trillion KRW) of the Home Appliance & Air Solution (H&A) business division in the second quarter, the company believes there is significant growth potential as it can expand customer demand through a diverse product lineup.

An LG Electronics official said, "Rental appliance users generally show high loyalty to LG Electronics products and often manage multiple products simultaneously. Increasing touchpoints with these customers and enhancing their usage experience and satisfaction will help strengthen the market competitiveness of related products."