April 23, 2016 08:08
The Western home decoration boom is sweeping across Korea as the nation settles into more leisurely first-world consumption patterns. Companies in the business have seen sales surge even as revenues in other sectors are stagnating or falling. Home decor products also account for an ever greater share of lineups at retailers.
◆ High Growth
The market for furniture and household goods has been growing rapidly. Last year, the top 10 furniture makers made W3.7 trillion in combined revenues, up 18.5 percent compared to 2014 (US$1=W1,144). Among the most popular items on home shopping channels are deals offering to remodel kitchens and bathrooms.
CJ O Shopping said sales of home decor products surged 67 percent last year. Hanssem, which sells kitchen shelves and other home products, saw sales surge 29 percent to post record-high revenues.
Other home products such as pillows, beds and armchairs are also posting phenomenal sales growth. And small high-end hipster brands like Smeg, De'Longhi and Balmuda posted sales increases of 67 percent last year.
But fashion brands have tanked as consumption becomes gradually less conspicuous. Samsung's fashion division saw revenues drop 6.1 percent last year and posted an operating loss of W9 billion. Sales at No. 2 apparel maker LF dropped 22.6 percent, and at third-ranked FnC Kolon's sales and operating profit fell 7.8 and 4.6 percent.
And food companies' sales are stagnant as the stay-at-homes put their money into durables. The food halls of major department stores had seen double-digit growth in in 2012, but growth slowed to the single-digit range last year.
At Lotte Department Store, sales of clothes accounted for 77 percent last year, down five percent, while the proportion of household goods rose from eight to 11 percent.
◆ New Product Lineups
The trend has prompted retailers to revamp their floors. Lotte Department Store changed two floors at its Jamsil branch to sell premium furniture and household goods, and Hyundai and Shinsegae are following suit.
Premium foreign brands are eyeing the burgeoning Korean market, including companies that sell beds costing more than W10 million each. They include Sweden's Hästens, Vispring and Savoir Beds of the U.K.
Business insiders say the trend stems from a shift in mentality among Koreans, who now favor better quality of life at home rather than conspicuous displays of wealth and ostentatious bling.
Ahn Seung-ho at Soongsil University cited research showing that Koreans spend 20 minutes longer at home on average than 10 years ago. "Korea is in the process of becoming an advanced economy and we will see a rising inclination toward home improvement," Ahn added.
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