"Even If It's Several Times More Expensive, You Have to Buy This"... The 'Magic of Premium' Opening Wallets [Chosun Price Chronicles]

⑧ "The More Expensive, The Better It Sells" Premium Home Appliances Popular
Increased Demand for 'Jipbap' Boosts Sales of Small Kitchen Appliances Too

Domestic home appliance sales have been on a downward trend since 2021 as consumers close their wallets due to economic growth slowdown and high interest rates. However, small kitchen appliances are an exception. The demand for 'compact' products has grown with the increase in single-person households, and as more people prefer home-cooked meals over dining out, the demand for small kitchen appliances continues to rise. Despite tighter budgets, changing consumer trends have made expensive but 'premium' appliances popular.

According to the National Statistical Portal of Statistics Korea on the 24th, the retail sales of home appliances in 2023 (provisional) amounted to 33.9787 trillion KRW, the lowest figure in the past four years. Domestic sales of home appliances peaked at 38.208 trillion KRW in 2021, up from 35.4638 trillion KRW in 2020, but have been declining since 2022 (35.8073 trillion KRW). This is attributed to reduced consumer spending power due to prolonged high interest rates and inflation, as well as decreased demand for large appliances amid a sluggish real estate market.

The photo is not related to the specific content of the article. Photo by Pixabay

South Korea's two major home appliance companies, Samsung Electronics and LG Electronics, have also been affected. Samsung Electronics' Home Appliance and Visual Display (VD) division recorded an operating loss of 50 billion KRW in the fourth quarter of last year. LG Electronics' H&A Business Division, responsible for home appliances, posted a loss of 115.6 billion KRW during the same period, while the HE Business Division, which handles TVs, recorded an operating loss of 72.2 billion KRW.

However, small kitchen appliances have enjoyed a 'high inflation boom' despite the home appliance recession. As more people cook at home instead of dining out, demand for small kitchen appliances has steadily increased. For example, Cuckoo Electronics saw its Twin Pressure IH rice cooker product line grow by over 80% annually last year. Similarly, Cuchen's stainless steel rice cooker sales doubled compared to the previous year. The upward trend in demand for small kitchen appliances continues into the beginning of this year. According to Electronic Land, sales of electric ovens and electric ranges increased by 26% and 17%, respectively, in January compared to the same period last year. Dishwasher sales also rose by 11%.

Premium-labeled appliances remain popular even at higher prices. As consumer polarization intensifies, paradoxically, the trend of 'the more expensive, the better selling' has emerged. This is due to a growing tendency to view home appliances as part of interior design and a consumer trend that values quality, design, brand, differentiation, and product experience.

Samsung Electronics' AI-based all-in-one washer-dryer 'Bespoke AI Combo'
[Photo by Samsung Electronics]

Companies are stimulating consumer sentiment for higher-priced products by segmenting premium lines or launching new AI-based products. The 'all-in-one washer-dryer,' which costs more than twice as much as regular washing machines and dryers, is a newly introduced premium product line. Its key advantage is the ability to wash and dry clothes in one machine without the inconvenience of transferring laundry from the washer to the dryer.

However, as it is still in the early stages of release, the price is high. LG Electronics launched the premium version of the all-in-one washer-dryer, the ‘LG Signature Washer-Dryer,’ priced at 6.9 million KRW. This is higher than the official price (3.34 million KRW) or discounted price (2.5 million KRW) of the LG Tromm Objet Collection Wash Tower (washer + dryer) listed on LG Electronics' website. Samsung Electronics’ ‘Bespoke AI Combo’ has a retail price of 3.999 million KRW, also more expensive than the conventional washer and dryer combination.

Some express concerns that the AI-based premium strategy by the home appliance industry to secure profitability could drive up overall home appliance prices. This implies that the costs incurred from technological innovation may be passed on to consumers.