[Agile Electronics Story] The Paradox of COVID-19... Home Appliance Rental Business Thrives

[Asia Economy Reporter Ki-min Lee]‘Agile Electronics Stories’ is a column that keenly examines small details about electronic and mechanical products and devices. We kindly cover everything from hot new products frequently appearing in advertisements and news, nostalgic items, to puzzling products and industry terms, all with the heart of a beginner.

As consumption declines due to the ongoing COVID-19 pandemic with no signs of ending, companies are facing difficulties, but the home appliance rental business is showing even more remarkable growth.

In fact, the domestic home appliance rental market has grown over the past few years due to prolonged recession and a consumer trend that prioritizes experience over ownership. This is because consumers can use expensive home appliances, which are costly to purchase outright or on installment, at relatively affordable prices and receive consistent maintenance.

Especially this year, consumer interest in hygiene and cleanliness has surged due to the impact of COVID-19, accelerating growth in the rental market. According to the rental industry, not only traditional rental sectors like water purifiers and bidets but also new hygiene-related home appliances such as clothing care devices and dryers are seeing increased rentals.

According to a recent report by KT Economic Management Research Institute, the size of the domestic business-to-consumer (B2C) rental market is expected to grow from 12 trillion won last year to 18.5 trillion won this year. Including the business-to-business (B2B) rental market, the scale is projected to reach around 40 trillion won. The number of rental accounts has also surpassed 12 million this year.

The number one player in the rental market is Coway, which holds about half of the domestic rental accounts. Coway recorded 6.28 million accounts last year and surpassed 3 trillion won in sales for the first time since its founding. Coway’s sales in the first quarter of this year increased by 8.4% compared to the same period last year. Additionally, SK Magic and Cuckoo Homesys saw their sales increase by 28.7% and 26.4%, respectively, compared to the first quarter of last year.

LG Electronics Clothing Care System Styler

Attention is also focused on major home appliance companies entering the rental market. In particular, LG Electronics, which started its rental business with water purifiers in 2009, has expanded rental sales by leveraging its home appliance management service Care Solution launched in November 2018. Currently, LG Electronics rents out a total of eight products including water purifiers, beer makers (HomeBrew), air purifiers, dryers, clothing care devices (Styler), electric ranges, dishwashers, and massage chairs. LG Electronics’ rental sales, which were 100 billion won in 2015, increased to 439.8 billion won last year. Rental business sales in the first quarter of this year reached 131.7 billion won, achieving over 100 billion won in quarterly sales and setting a new record for the first time.

The rental industry is also interested in whether another giant in the home appliance sector, Samsung Electronics, will directly enter the rental market. Currently, Samsung Electronics has entered the market in a B2B format by supplying products to rental service providers such as Kyowon. Samsung Electronics maintains that it has no plans to directly enter the rental market. However, Samsung attracted industry attention by operating a solo booth at last year’s Korea Rental Show and re-releasing popular rental-demand products such as side-by-side water purifier refrigerators this year.

Rental companies plan to resume sales activities tailored to the situations and conditions of countries where COVID-19 is showing signs of subsiding, preparing for the post-COVID era not only domestically but also internationally. In line with this, rental companies are diversifying sales strategies by conducting not only door-to-door sales but also online and home shopping broadcasts. Especially as people are reluctant to have visitors due to COVID-19, online care formats have emerged where demonstrations are conducted via video or video calls to help customers follow along directly.

This content was produced with the assistance of AI translation services.