Lotte Embraces 'Hanssem'... Will the Three Major Department Stores Intensify Competition in 'Furniture & Interior'?

Lotte Shopping Partners with Private Equity to Participate in Hanssem Management Acquisition
Hyundai Livart and Shinsegae Casa Target Market with Premium Strategy

Hanssem Design Park Lotte Maison Dongbusan Branch

[Asia Economy Reporter Jo In-kyung] As demand for household goods and interior design has significantly increased due to the prolonged COVID-19 pandemic, Lotte Shopping's move to acquire Hanssem, the industry leader, is setting the stage for fierce competition among the three major department stores in the related market.

Lotte expects synergy with department stores, Hi-Mart, Lotte Construction, and more

On the 10th, Lotte Shopping announced that it will participate as a strategic investor in IMM Private Equity (IMM PE), a private equity fund (PEF) management company acquiring management rights of Hanssem. This will be done by investing 299.5 billion KRW in IMM PE's management participation fund. Notably, Lotte is expected to secure a favorable position to acquire Hanssem's management rights in the future through holding a right of first refusal, rather than merely participating as a shareholder.

Lotte Shopping's active pursuit of Hanssem's acquisition is based on the judgment that there will be significant synergy effects not only through offline sales channels such as Lotte Department Store and Lotte Hi-Mart but also across group affiliates like Lotte Construction. Additionally, since Hanssem is expanding its business areas into smart homes, rental services, and brokerage platforms, Lotte anticipates even greater growth.

Already this year, several large stores collaborating with Hanssem have opened consecutively. These include Lotte Mart Busan Gwangbok Branch, Lotte Department Store Bucheon Jungdong Branch and Ulsan Branch, and Lotte Mall Dongbusan Branch, where consumers can experience and purchase kitchen, bathroom, furniture, household goods, and remodeling services all in one urban large-scale total home interior store.

The 'Hanssem Design Park Lotte Maison Dongbusan Branch,' opened in June at Osiria Theme Park in Gijang-gun, Busan, boasts a sales area of 2,960㎡ across the first and second floors and is the largest among 38 domestic and international furniture and home appliance brand stores located in Lotte Department Store.

A Lotte Shopping official stated, "Hanssem is the number one company in the home interior industry with abundant growth potential, so we decided to invest expecting synergy in various areas such as products, content, and customer attraction. We also expect this to help strengthen product competitiveness, differentiated space planning, and content development, and to create group-level synergy through collaboration with Hi-Mart, Construction, and others."

Hyundai Livart's 'Giorgetti' Showroom

Hyundai and Shinsegae add luxury and high-end lines

If Lotte Shopping completes the acquisition of Hanssem, all three major domestic department stores will have furniture and interior companies as affiliates. Previously, Hyundai Department Store acquired Livart in 2012 and operates it as Hyundai Livart, while Shinsegae Department Store acquired Casamia in 2018 and operates it as Shinsegae Casa.

Since COVID-19, with social distancing leading to longer stays at home and a sharp increase in sales in the home and living sectors, Hanssem recorded its highest-ever sales last year, reaching the 2 trillion KRW mark. Hyundai Livart also posted an operating profit of 37.2 billion KRW last year, growing 55.6% compared to 2019 before the pandemic. Shinsegae Casa is aiming to turn a profit three years after its acquisition.

Sales in the living sector within department stores have also surged. For Hyundai Department Store, living sales increased by nearly 40% compared to the same period last year through July this year, while Lotte Department Store and Shinsegae also recorded growth rates in the 30% range year-over-year.

Hyundai Livart recently added a high-end line to its kitchen and bathroom interior segment and introduced 'Giorgetti,' known as Italian royal furniture, as part of its premiumization efforts. Last year, it also entered the bathroom interior business by launching the 'Livart Bath' brand.

Shinsegae Casa has been focusing on market expansion by offering premium sleep furniture products, including exclusively importing the Swedish luxury bed brand 'Carpe Diem Bed' since May.

Shinsegae Casa 'Carpe Diem Bed'