LG Electronics North America Head: "208% Sales Growth in One Year... Will Invest to Target Ultra-Premium Market"

[Orlando, USA = Asia Economy Correspondent Seulgina Cho] “To maintain the global No.1 position in home appliances, it is essential to target the ultra-luxury market. We will continue to invest in building the brand without rushing.”

LG Electronics is making aggressive investments by adopting its ultra-premium built-in appliance brand, ‘Signature Kitchen Suite,’ as a new growth engine in the U.S. market. This decision is based on the judgment that dominating the rapidly growing ultra-premium and ultra-luxury built-in market is essential to maintaining the top spot in global home appliance sales.

Yoon Taebong, President of LG Electronics North America and Vice President of the U.S. subsidiary, met with correspondents on the opening day of the largest kitchen and bath exhibition in North America, ‘KBIS 2022,’ on the 8th (local time) in Orlando, Florida, and said, “Last year, sales related to Signature Kitchen Suite in the U.S. market grew more than threefold compared to the previous year,” adding, “We will continue to invest in the ultra-luxury and ultra-premium markets.”

As of 2020, the U.S. home appliance market size was approximately $41.5 billion, of which the ultra-premium market accounted for 7.2% ($3 billion). Although the share of ultra-premium appliances is still in the single digits, its growth rate is by no means negligible. Last year, LG Electronics’ ultra-premium built-in appliance brand, Signature Kitchen Suite, recorded a sales growth rate of 208% year-over-year in the U.S. market. Considering the overall home appliance market growth rate is around 14% annually, this is an explosive growth rate.

President Yoon noted, “As prices of single-family homes in the U.S. rise, demand for ultra-luxury built-in appliances is increasing,” and predicted, “The (ultra-premium) market will grow significantly in the future.” Although LG Electronics topped the global home appliance market last year, surpassing Whirlpool, it still lags behind existing brands such as Sub-Zero in the built-in market rather than the freestanding segment. He emphasized the differentiation as a latecomer by saying, “If existing brands targeted baby boomers, we are targeting new segments like Gen X and Millennials,” and “By entering the market with innovation, we will offer things that existing brands have not experienced.”

LG Electronics has been launching new Signature Kitchen Suite products every year since the brand’s launch in 2016 for this very reason. At this year’s KBIS, LG Electronics attracted industry attention by unveiling a 48-inch built-in French door refrigerator. While most products in the U.S. typically have side-by-side freezer and refrigerator compartments, this product features six doors with a top refrigerator and bottom freezer configuration. It also includes an ice-making drawer that produces craft ice, the round ice cubes used in high-end bars, and a temperature-controlled drawer that can be set to various modes from refrigeration and freezing to wine storage.

Vice President Yoon described it as “a differentiated strategy offering functions consumers never knew about.” This product is scheduled to launch in the U.S. in the first quarter of next year at around $15,000. Although it exceeds the price of an average car, it has already received rave reviews from the local industry for fully meeting the expectations of consumers seeking both ultra-premium functionality and design.

Going forward, LG Electronics plans to take a more aggressive approach to grow the Signature Kitchen Suite brand.

First, Vice President Yoon confirmed that despite the high entry barriers in the built-in market, the company is not currently considering additional mergers and acquisitions (M&A). He explained, “LG Electronics specializes in mass production of a small number of product types, but we are building organizations and facilities for small-volume production of many product types,” adding, “Since the business model needs to change significantly, we are investing heavily in this area.”

In particular, Vice President Yoon emphasized, “Ultimately, it’s about brand building. Without brand positioning, it is difficult to sell high-priced products. We will focus on marketing investment, innovation, and effectively communicating value to consumers.”

Due to the nature of built-in appliances, collaboration with architects, kitchen designers, and interior experts is essential. Customized built-in appliances optimized for luxury homes are produced from the housing construction stage. It is important to garner positive feedback from stakeholders during this process so that the product’s advantages are conveyed to the end consumers. Vice President Yoon added, “(The LG brand and Signature Kitchen Suite brand) target different consumers,” and “Signature Kitchen Suite is turnkey-based, designed directly by experts and fully integrated into homes.”

Regarding pricing strategy, he said, “We will compete on equal footing with existing companies like Sub-Zero,” and “We will build the brand without rushing.” Currently, Signature Kitchen Suite provides solutions to end consumers within five days. There are more than 500 direct-employed technicians. Among foreign brands entering the U.S. home appliance market, LG Electronics is virtually the only one operating direct-employed technicians and actively implementing after-sales service solutions.

One of the biggest concerns for Vice President Yoon this year is supply chain issues. He expressed concern, saying, “I do not believe the current supply chain situation will be resolved in the short term,” and “It will not be resolved even by next year.” He pointed out, “The key is how to organically create production and product strategies within the supply chain to provide products to the market in a timely manner.”

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