Hanssem Builds Business Models Unrelated to Moving Demand Including Partial Construction Product Diversification
Hyundai Livart Increases Sales with Office Furniture Sales Growth and Overseas Temporary Construction
Shinsegae Casa Expands Import and Distribution of Various Overseas Premium Brands
[Asia Economy Reporter Kim Jong-hwa] As the housing market slump is followed by a freeze in consumer sentiment, leading to a prolonged economic recession, the furniture and interior industries are making desperate efforts to overcome the downturn.
According to the industry and the Ministry of Land, Infrastructure and Transport on the 21st, the nationwide housing sales volume from January to September this year was 417,794 units, which is about half of the same period last year (818,948 units). The housing transaction volume for September alone was 32,403 units, a 60.3% decrease compared to a year ago.
Various consumer sentiments are also at rock bottom. According to the 'October 2022 Consumer Sentiment Survey Results' recently released by the Bank of Korea, the Consumer Confidence Index (CCSI) in October fell by 2.6 points (p) from the previous month to 88.8. The CCSI is a composite index reflecting consumers' perceptions of the economic situation, and a value below the baseline of 100 indicates pessimism. The Housing Price Outlook CSI dropped 3 points from the previous month to 64, marking the lowest level for four consecutive months. The Housing Industry Research Institute's November housing business outlook index also fell 7.3 points from last month (47.8) to 40.5. The domestic shipment index for household manufacturing, compiled by Statistics Korea, was 88.2, the lowest since September 2018 (87.8).
An industry insider said, "Demand for furniture and interior is proportional to housing transaction volume and the number of moves, but with the cliff in housing sales transactions, the furniture industry’s slump is expected to continue," emphasizing, "Government-level special measures are needed to overcome the housing market slump and domestic economic downturn."
Following a decline in sales and a turnaround to operating losses in the third quarter, Hanssem, the No. 1 furniture and interior company pushing for the sale of its headquarters in Sangam-dong and Bangbae-dong, Seoul, is trying to reverse the mood with 'partial renovation' that changes only desired parts of the current home. Recently, ahead of winter, windows and interior doors that create warm living spaces have been popular partial renovation items. Last month, Hanssem’s window sales increased by about 12% compared to the previous month, and interior doors rose by about 22%, striving to build a business model independent of moving demand.
Instead of the consumer-to-consumer (B2C) business sector, which had expanded over the past two to three years but has recently contracted, Hanssem is also focusing on expanding its business-to-business (B2B) sector. Hanssem operates the premium special sales brand 'Bachhaus,' which handles interior material sales and construction for new premium residential buildings such as townhouses and officetels. Next year, it plans to launch the small-scale complex housing special sales brand 'Eurohouse' and the officetel special sales brand 'Eurocity.' A Hanssem official said, "Through the small-scale complex housing business, we will provide interior products and services to enhance consumer convenience, and by diversifying partial renovation products and strengthening differentiated partial construction services, we will establish a business model independent of moving demand."
Hyundai Livart, which recorded an 87.3% decrease in operating profit compared to the same period last year in the third quarter, is targeting the market with its interior door 'G Series' and Korea’s first aluminum material colored windows. In June, it signed a 35 billion KRW comprehensive interior service supply contract with Inspire Entertainment Resort for the Yeongjongdo complex resort, supplying furniture, lighting, and comprehensive living accessories. This aims to strengthen its premium B2B market approach by building a high-end image.
A Hyundai Livart official explained, "Although operating profit decreased due to the decline in housing transactions and raw material price increases, sales increased due to higher office furniture sales and overseas temporary construction projects," adding, "The core functions of windows and interior doors, such as insulation and airtightness, are maximized, and customized orders according to customer preferences are possible, so sales of interior doors and windows, which have high consumer satisfaction, are strong, and the situation is gradually improving."
Shinsegae Casa also recorded an operating loss of 5.8 billion KRW in the third quarter due to the contraction of the home furnishing market, but plans to overcome the recession by expanding its star product lineup, including the mega-hit 'Campo Sofa,' and investing in nurturing new brands. Shinsegae Casa is renovating its two main stores, Apgujeong and Seorae Village, into specialized shopping spaces to differentiate offline stores, and plans to expand product development and marketing through collaborations with global artists such as Richard Woods from the UK, Christian Lemieux from the US, Patricia Urquiola from Spain, and Mikiya Kobayashi from Japan. A Shinsegae Casa official said, "Carpe Diem Bed’s sales in May increased by 240% compared to the first month of launch, successfully establishing itself in the market in a short period solely based on product quality without special advertising or marketing," adding, "We will expand the market through the import and distribution of various overseas luxury and premium brands."
Enex plans to strengthen its B2C business competitiveness by expanding online channels and experiential offline stores, enhancing its omni-channel distribution network. An Enex official said, "We plan to continuously expand our product lineup, including strengthening the premium kitchen furniture lineup and launching new products."
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