Furniture Industry's Varied Responses to Recession... From Surviving to Injecting Funds into Used Goods Business

Furniture Company Sales Decline and Operating Loss Expansion
Major Furniture Companies Focus on Platform Business
Restructuring and Launching New Businesses Previously Unexplored

The furniture industry received its worst-ever performance report last year due to the real estate market downturn. To overcome the recession, companies have entered fierce survival competition by reorganizing their businesses and raising funds.

Performance Clouds Over the Furniture Industry

Hansem, the nation's top furniture and interior company, recorded sales of 2.01 trillion KRW and an operating loss of 21.7 billion KRW last year. Sales decreased by 10.4% compared to the previous year, and operating profit turned into a loss. This is the first time Hansem has posted a loss since its listing in 2002.

Hyundai Livart posted sales of 1.4957 trillion KRW and an operating loss of 27.9 billion KRW last year. Sales increased by 6.3% compared to the previous year, but operating profit turned negative. This is Hyundai Department Store's first loss since acquiring Hyundai Livart in 2012.

Ace Bed recorded sales of 346.2 billion KRW and operating profit of 65.3 billion KRW last year. Sales decreased by 0.04% compared to the previous year, and operating profit fell by 15%. This is the first time in 10 years since 2013 that Ace Bed’s sales have shown negative growth.

Shinsegae Casa, a furniture brand operated by Shinsegae Group, also failed to escape the slump. Last year, it recorded sales of 268.1 billion KRW and an operating loss of 27.7 billion KRW. Sales increased by 16.5% year-on-year, but the deficit more than tripled. Since Shinsegae acquired Shinsegae Casa in 2018, it has posted losses for five consecutive years, with last year’s operating loss being the largest ever.

The furniture industry's downturn is mainly due to the sharp decline in demand for furniture and interiors caused by the real estate market slump, along with rising raw material prices. The Korea Housing Industry Research Institute estimated that last year’s housing sales transactions were about 540,000 units, roughly half of the previous year’s figure?the lowest since statistics began in 2006. On top of this, the price of sawn timber, the main material for furniture, surged, compounding the difficulties.

Large Companies Focus on 'Platform' Businesses

Major furniture companies are responding to the recession by creating or reorganizing platform businesses.

Hyundai Livart launched the used furniture trading platform 'Ogu Gagu' on the 5th. Hyundai Livart introduced it as part of an ESG (Environmental, Social, and Governance) initiative that does not charge brokerage fees, but if the platform’s community becomes active, it is highly likely to link it with its own sales channels. A Hyundai Livart official said, "We only charge moving and installation fees depending on distance and furniture size," adding, "In addition to the existing 300 installation teams, we have formed about 50 additional teams dedicated to moving and installing items that require separate handling."

Last month, Hansem launched 'Hansem Mall,' an integrated platform covering everything from home remodeling information search to consultation, estimation, contract, construction, and after-sales service (AS). It integrated 'Hansem.com,' which provides Hansem’s home remodeling and furniture products and store information, with 'Hansem Mall,' an online shopping mall specializing in furniture and household goods. This streamlined the platform by removing unnecessary excess and reducing its size. In December last year, Hansem also ended its mattress subscription service, which had been offered for 1 year and 9 months. Given the rental business’s nature, which requires a strong direct sales organization, it was judged difficult to compete with industry leaders like Coway.

Breakthrough Through Fundraising and New Businesses

Shinsegae Casa has sought capital injection from its parent company. Last month, Shinsegae Casa announced a paid-in capital increase plan of 41.4 billion KRW. Shinsegae plans to invest 40 billion KRW, increasing its stake to 96.6%. Shinsegae also invested 20 billion KRW in Shinsegae Casa’s capital increase in April last year. A Shinsegae Casa official said, "The funds raised will be used for renewing the online mall Good.com, developing new products, and expanding offline store openings."

IKEA, which experienced negative sales growth for the first time in eight years since entering the domestic market, is diversifying its sales channels by launching a 'space-customized interior design service' earlier this year. This service recommends furniture or suggests space utilization methods suitable for small business spaces such as homes, offices, cafes, and restaurants by professional designers. Recently, IKEA also introduced a free membership program for small businesses called 'IKEA Business Network.'

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