Furniture Industry Overcomes Recession with 'Jipkok-Match' Marketing Tailored for Staying Home

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[Asia Economy Reporter Kim Jong-hwa] Is there ever a time when the saying "There is opportunity in crisis" feels more real than now? While most companies are struggling due to the spread of the novel coronavirus infection (COVID-19), the furniture industry is quietly smiling.

According to the furniture industry on the 14th, the industry is experiencing a heyday as online sales continue to rise through April following an earnings surprise in the first quarter. The secret to the furniture industry's success during the crisis of "COVID-19" can be attributed to a bold strategy of "discarding what must be discarded and erasing what must be erased."

The furniture industry did not simply strengthen its non-face-to-face (untact) sales network through online channels, as is commonly known. They sold online but boldly abandoned existing marketing strategies and established new marketing strategies.

They first discarded the fixed notion that "furniture is an item purchased by visiting stores in person because it is expensive and used for a long time." They also erased the prejudice that "it is used for more than 10 years" from their minds. Although there was confidence that sales of furniture related to rest or work would increase as consumers spent more time at home due to social distancing, working from home, and delays in the opening of elementary, middle, and high schools, they had to overcome the wall of economic recession.

A strategy that also considered consumers' financial situations was necessary. After much deliberation, lifestyle accessories that could change the atmosphere at a low cost were placed at the forefront of online malls. They continuously released affordable yet well-designed and high-quality products in cooperation with small and medium-sized enterprises. Through steady events and promotions, they instilled the trend that furniture can be changed anytime according to fashion and necessity.

The strategy succeeded splendidly. Hanssem, the number one company in domestic sales scale, saw combined sales from February to April, when COVID-19 began to spread in earnest, increase by about 20% compared to the same period last year. Hanssem's online mall sales had peaked in 2017 by surpassing 200 billion KRW but recorded a decline during the recession in 2018 and 2019, yet it quickly overcame the slump.

Until January this year, sales had fallen by 19% compared to the same month last year. However, from February, things began to change, with sales increasing by 19% compared to the same period. In March, despite the disappearance of the peak season effect of the school admission season, sales jumped by 16%, and in April, they surged by 29%.

Hyundai Livart's online business sales in the first quarter of this year increased by 25% compared to the same period last year. In particular, Livart Kitchen, a kitchen furniture brand, surprised the industry by increasing sales by a whopping 45% in March compared to the same month last year, despite the necessity of on-site measurement and installation work.

Given this situation, Hyundai Livart advanced the operation of the 'Livart Smart Work Center' logistics center under construction in Yongin, Gyeonggi Province, from next year to the second half of this year with an investment of 139.5 billion KRW. Once the logistics center is additionally operated, Hyundai Livart's total logistics center area will double from the existing 72,000㎡ to 144,000㎡, and the average daily shipment capacity will increase by 2.3 times compared to before.

Shinsegae's living and lifestyle brand Casamia remains strong offline, with a high offline sales ratio, but this year its online sales growth is dazzling. Casamia's online sales in the first quarter increased by 36% compared to the same period last year. In March, sales surged by an impressive 78% compared to March last year.

Ilroom, the lifestyle furniture specialist brand and online mall of the Fursys Group, saw its first-quarter sales increase by 36%. In April, sales increased by 60% compared to the same month last year. Offline sales still account for a large portion. The online sales ratio increased from 13% last year to 18% currently.

A Hanssem official analyzed, "We will further strengthen the lineup of PB and PL products developed in collaboration with small and medium-sized enterprises to increase mutual growth and new product launches, and enhance mobile video shopping functions. It seems that the strategy of placing affordable yet well-designed and high-quality products at the forefront, understanding the psychology of consumers who have no choice but to stay at home due to COVID-19, was effective."

Um Ik-su, head of Hyundai Livart's B2C business division, said, "To target the explosively growing online furniture market, we will boldly invest in strengthening core competencies, including opening a new 'integrated online mall' as early as this year, which will significantly enhance convenience functions such as payment and product search compared to the existing online mall."

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