Provisional sales reached 326 billion KRW last year
Sofa direct purchase strategy deemed effective
Attention on whether Ace Bed will reclaim the top spot
Ace Bed succeeded in reversing its sales decline last year by changing the sales method of its main products.
According to Ace Bed on the 6th, last year's provisional sales are expected to reach 326 billion KRW, up about 6.4% from the previous year, and operating profit is projected to be 66.2 billion KRW, up about 16%. After recording sales of 346.4 billion KRW in 2021, the company had shown a downward trend every year but succeeded in rebounding after three years.
It is analyzed that the change in the sales method of the sofa brands Jacomo and Essa from 'consignment sales' to 'direct purchase' in August last year led to the sales rebound. Under the previous consignment sales method, only sales commissions were reflected in sales, but by switching to direct purchase, the entire consumer sales of sofas were included in sales.
In the case of the direct purchase method, actual profit is made by subtracting the purchase price from the sales price. Therefore, the switch to direct purchase can be seen as a strategy to expand sales scale. Ace Bed's quarterly sales fell from 83.7 billion KRW to 77.4 billion KRW in the first to third quarters of last year, but after changing the sales strategy, sales jumped to 86.6 billion KRW in the fourth quarter.
The background behind Ace Bed's move to expand sales by even changing the sofa sales method is also interpreted as an intention to reduce the sales gap with its competitor Simmons. In 2023, Ace Bed fell to second place in sales for the first time since its founding. At that time, the sales difference between Ace Bed and Simmons was only 7.4 billion KRW.
Ace Bed claimed that the difference in the sales aggregation methods of the two companies had an impact. Simmons operates all stores as direct management stores, so sales are recorded based on consumer prices, whereas Ace Bed, which is centered on dealerships, aggregates sales based on wholesale prices.
Although Ace Bed achieved sales growth last year, it is still uncertain which company will take the top spot in the industry. There are forecasts that Simmons also increased its sales scale last year by focusing on premium product lines.
Simmons newly launched the vegan mattress brand 'N32' and is expanding its presence in the foam mattress market. N32, targeting consumers who pursue value consumption, reportedly saw sales in the first half of last year increase by 40% compared to the same period the previous year.
An industry official said, "As consumers tighten their wallets during the economic downturn, the furniture industry is facing a major crisis," adding, "They are exploring various ways to survive."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
