[IFA 2023] Not 'Ultra-Premium' but 'Mass Market'... Why LG Electronics Changed Its Built-in Strategy in Europe

LG Electronics President Ryu Jae-cheol's Press Conference on the 2nd (Local Time)
First Reveal of Mass Premium Product Line
Taking a Step Back in Direct Competition with Traditional European Appliance Companies

LG Electronics has changed its strategy for the European built-in market. The company plans to compensate for the underperformance of its existing ultra-premium products by introducing a popular 'mass premium' product line. This means LG has chosen to take a step back from direct competition with established European traditional appliance makers such as Miele and Gaggenau, which have a strong foothold in the European ultra-premium built-in market.

On the 2nd (local time), Ryu Jae-chul, President of LG Electronics' H&A Business Division, held a press briefing in Berlin, Germany, to explain the European built-in strategy.

Ryu Jae-cheol, President of LG Electronics H&A Business Division, held a press conference in Berlin, Germany on the 2nd (local time) to explain the European built-in market strategy.
[Photo by Han Ye-joo]

At 'IFA 2023', LG Electronics unveiled its mass premium built-in product line for the first time, aiming to target the European volume zone (the area with the largest consumer demand). The new lineup optimized for the local market includes ▲ InstaView ovens with high energy efficiency ▲ dishwashers that are about 10% more efficient than energy efficiency grade A ▲ hood-integrated induction cooktops featuring a ventilation system with a hood located at the center of the induction.

President Ryu said, "We have been preparing products to achieve a second growth in the built-in market," adding, "As shown in the showroom, we have launched products tailored for Europe, and they have been released in Italy, a key market."

Built-in appliances are one of the core businesses promoted by the H&A Business Division. Since built-in appliances involve collaboration between furniture and appliance manufacturers, they carry a design premium, allowing for higher profits than regular appliances. They are mainly sold through business-to-business (B2B) channels, which also provides stable sales. The share of built-in appliances in the overall home appliance market is gradually increasing, as smart homes that control the entire household using appliances equipped with smart functions such as artificial intelligence (AI) are gaining attention.

The regions LG Electronics is focusing on in the built-in market are North America, Europe, and the Middle East. In February, LG launched customized built-in appliances in North America, including pro ranges equipped with gas ranges, induction, and sous-vide cooking functions, convertible refrigerators, and wine cellars, achieving satisfactory results, according to LG Electronics.

LG Electronics unveiled an induction cooktop integrated with a hood ventilation system positioned at the center of the induction at 'IFA 2023'. This is a new product aimed at targeting the mass premium built-in market.
[Photo by Han Yeju]

The problem lies in Europe. The strong presence of local appliance manufacturers makes business expansion difficult. However, since Europe is the largest market, capturing it is essential to dominate the built-in market. According to market research firm Euromonitor, the European built-in market was worth $24.4 billion last year, accounting for about 40% of the global built-in market.

This is why LG Electronics, which had insisted on ultra-premium products only, eventually unveiled a lower-tier mass premium product line. LG chose the mass market as its point of differentiation from other brands. President Ryu emphasized, "When entering a new market, securing differentiation in performance, functionality, and quality is the top priority," adding, "To secure performance superiority, we have established research organizations within Europe and are continuously conducting evaluations. We will strengthen differentiation by expanding Internet of Things (IoT) technology."

Meanwhile, on the same day, President Ryu presented a business strategy to change the global home appliance market landscape with LG Electronics' unique 'smart home solution' that goes beyond home appliances to encompass energy, heating, ventilation, and air conditioning (HVAC). In particular, based on high-efficiency inverter technology, LG aims to become a global top-tier comprehensive HVAC company by 2030 in both residential and commercial sectors.

President Ryu said, "We will provide smart home solutions that integrate innovative home appliance technologies including built-in appliances, advanced energy technologies, and next-level UP appliances," adding, "We will change the paradigm of the global home appliance market so that more customers can experience unprecedented convenience at home."