Furniture Industry Struggles to Survive the Winter

Hanssem Ends Furniture Subscription Service
Hanssem Mall and Hanssem.com Integration Planned
Focus Likely on Home Remodeling

Hyundai Livart Focuses on Interior
Livart Home Interior Sales Network Expansion

Due to Raw Material Price Surge
Price Increase Also to Defend Performance

Hanssem held the 'Leaders Day' event to announce next year's business strategy on the 21st and 22nd at the Hanssem headquarters in Sangam-dong, Seoul.

[Asia Economy Reporter Choi Dong-hyun] Signs of change are emerging in the furniture industry, which has seen its performance sharply deteriorate this year due to the housing market slump and weak consumption. The atmosphere is one of desperate efforts to overcome the crisis by boldly shutting down underperforming existing businesses and focusing on profitability with new year management strategies.

According to the furniture industry on the 29th, Hanssem ended its furniture subscription service at the end of last month. It was 1 year and 10 months since the business started in January last year. Hanssem had been providing the first furniture subscription service in the furniture industry through the KakaoTalk 'Hanssem Mall' channel. This was a strategy to secure a stable source of revenue by applying a business model that rental companies like Coway had successfully used to furniture as well. However, it was understood that subscription revenue from the mattress 'EAZY8', which was promoted as the main product, did not meet expectations. A Hanssem official explained, "Considering the characteristics of mattresses, we judged that a sales model fits better than rental," adding, "We will not continue the service further, but the existing subscription subscribers' service will be maintained."

Hanssem’s plan to operate an integrated platform combining Hanssem Mall and Hanssem.com as a business plan for next year is interpreted in the same context. The strategy is to reduce unnecessary size and strengthen core businesses that have been done well. Hanssem has shown strengths in furniture sales through offline stores and remodeling rather than rental. Hanssem plans to load home remodeling specialized content onto the integrated platform and organically combine it with offline infrastructure such as stores and dealerships.

Hyundai Livart plans to focus on expanding the sales network of its comprehensive interior brand 'Livart Jipterior' next year. Launched this year, Livart Jipterior is a service that provides one-stop consultation, space consulting, purchase, construction, and A/S for Livart interior products such as kitchen furniture, bathrooms, windows, flooring, and wallpaper. After opening the first store at Hyundai Department Store Cheonho branch in July, six Livart Total stores were opened this year at Hyundai Department Stores and outlets in Pangyo, Mokdong, Songdo, Daegu, and the Chungcheong region. A Hyundai Livart official emphasized, "We are also operating 12 nationwide Hyundai Livart direct showrooms in Busan, Daejeon, and Gwangju as flagship stores after full renovation," adding, "We are also expanding the nationwide sales network by increasing dealerships to about 300."

Price increases to defend performance will also be implemented. Hyundai Livart plans to raise prices of home furniture such as beds and sofas by an average of 5% starting January 2 next year, and Hanssem will increase prices of major products such as kitchens, storage, and panels by about 0.5 to 2.7% next year.

The furniture industry’s move to raise prices from the new year is due to the sharp rise in raw material prices caused by the prolonged Ukraine crisis. The main raw material for furniture and interiors is particleboard (PB), a building material made by chopping wood into small pieces and bonding them with adhesive. Furniture companies import about 80% of PB from overseas, with a high dependence on Russia, the world’s fifth-largest wood exporter. Due to trade sanctions on Russia following the Ukraine crisis, it has become difficult to procure supplies, causing PB import prices to skyrocket. The price of Russian sawn timber, which was around 570,000 won at the end of last year, surged to 900,000 won in April and was traded at about 615,000 won as of September. In this situation, Hanssem and Hyundai Livart struggled this year. Hanssem posted an operating loss of 13.6 billion won in the third quarter this year. During the same period, Hyundai Livart’s operating profit plunged 87% year-on-year to 500 million won. According to financial information company FnGuide, the securities industry's estimated operating profit for Hanssem this year is expected to be 6.8 billion won, down 90.1% from the previous year. During the same period, Hyundai Livart is expected to decrease by 78.7% to 4.3 billion won.

An industry official said, "Furniture industry performance improves only when many new houses are built or moving demand is revived through active housing transactions, but difficulties are expected to continue for the time being due to the real estate market slump," adding, "There is also a possibility that cutthroat competition among companies will intensify further."

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