Samsung moving to enter appliance rental business
Chances are growing that Samsung Electronics may enter the rapidly growing appliance rental business to diversify its business portfolio in the stagnant home appliance market, industry officials said Wednesday.
Given Samsung’s arch rival LG Electronics is making good money in the rental market, they presumed Samsung could start a business-to-consumer (B2C) rental business for its piece of the growing pie, which is expected to reach about 18.5 trillion won ($15.7 billion).
Samsung has been offering a business-to-business (B2B) rental business since 2018 as it has been supplying its home appliances to rental business companies Kyowon Wells, Chungho Nais and others.
The company will install an independent promotional booth at the Korea Rental Show, which will take place at the KINTEX exhibition hall in Goyang, Gyeonggi Province, for four days from Thursday to Sunday. For the business fair of the country’s rental business, Samsung will display its air conditioners, steam closets and air purifiers.
A Samsung official said the firm is joining the rental business fair to promote their home appliances to rental business companies, adding it doesn’t have any plans to start a B2C rental business.
“Samsung is taking part in the Korean Rental Show because customer companies that lend oue home appliance products are joining the fair. We are not signaling that we are kicking off a B2C rental business,” the official said.
Instead of chasing new business opportunities, Samsung confirmed it will keep expanding its home appliances lineup for the B2B rental market. “We are planning to sell refrigerators, dishwashers and electric stoves to rental companies,” Song Myeong-ju, vice president of the firm’s consumer electronics division, said Tuesday.
The rental business has been a market for mid-tier companies such as Woongjin Coway, Kyowon Wells and Chungho Nais but a growing number of large companies are joining the market to take advantage of the soaring demand for rental products.
“The rental business has been emerging as consumers can save the initial costs of purchasing home appliances. Also an increasing number of single-person households has made more firms kick off the rental business,” an industry official in the rental business said.
According to report from KT Economics & Management Research Institute, the country’s B2C rental business market is expected to grow to 18.5 trillion won in 2020, a tremendous growth from 4.6 trillion won in 2012. The entire rental market is expected to be at 40 trillion won by 2020.
LG, which entered the rental business in 2009, has seen constant growth in the sector. Consumers can rent LG’s air purifiers, water purifiers, dryers, steam closets and massage chairs.
Its rental business recorded 292.4 billion won in sales in 2018, almost double compared to its sales of 160.5 billion won in 2017. The firm has seen continuing growth in 2019 as well, recording 96.3 billion won in the first quarter. This is a 61 percent increase year-on-year.
SK Magic had record sales of 659.1 billion won in 2018, a 20.3 percent increase year-on-year. It said it secured 500,000 new subscribers last year. Hyundai Rental Care, a subsidiary of Hyundai Home Shopping, also saw its sales in 2018 nearly double, recording 45.3 billion won.