MILAN, ITALY – LG Electronics Inc. eyes 1 trillion won ($722 million) in global built-in appliance sales in three years by winning the hearts of consumers in Europe, the world’s largest built-in kitchen appliance market, with both premium and midrange products, said the company’s president.
“The company will rake in more than 1 trillion won in global sales of built-in appliances by 2027 with our proprietary AI technology, as well as distinguished product quality and design,” Lyu Jae-cheol, president of LG Electronics Home Appliance & Air Solution division, told reporters at Milan Design Week 2024 in Milan, Italy on Tuesday.
Its global built-in appliance sales were estimated at 500 billion won in 2023.
Europe is the world’s largest built-in kitchen appliance market dominated by well-known regional brands Miele, Boscha and Electrolux, and the total sales in the European built-in kitchen appliance market stood at $21.2 billion in 2023, controlling 42% of the global built-in appliance market, according to Euromonitor.
The South Korean electronics giant, which is also the world's No. 1 home appliance maker, will strive to meet its goal with aggressive marketing in Europe with both premium Signature Kitchen Suite built-in appliances and LG-branded mass-market built-in lineups, said Lyu.
Lyu Jae-cheol, president of LG Electronics Home Appliance & Air Solution division, at a meeting with reporters at Milan Design Week 2024 TWO-TRACK STRATEGY
LG Electronics first tapped the European built-in appliance market in 2018 with its premium Signature Kitchen Suite portfolio and introduced LG-branded "masstige" built-in kitchen appliance lines in the region last year. Also called "Prestige for the masses," masstige products are those considered premium but mass-produced and relatively inexpensive.
In the long run, it is easier and faster to penetrate a new market with high-end products and premium brand image first, which can create a trickle-down effect leading to a growth in mass-market product sales later, said Lyu.
“Sales of the Signature Kitchen Suite lines so far this year jumped two to threefold from last year while LG-branded mass-market product sales are projected to grow more rapidly,” said Lyu. “At the current pace, the (built-in business) is expected to develop into our new growth engine.”
The Korean appliance company is actively seeking to expand its presence in the business-to-business (B2B) built-in market in Europe despite the market’s high entry barrier.
“Due to the high entry barrier, it takes longer to make profits in the B2B built-in market compared to the B2C market but once our B2B business settles into a new market, we are expected to enjoy steady sales and profits,” said Lyu.
LG built-in appliances (Courtesy of LG Electronics) For a successful landing in the B2B market, LG Electronics has been actively building a distribution network, Lyu said, adding that the company is expected to sell its built-in appliances through more than 1,000 retailers mainly in Italy, Spain and France this year.
“We will build on the success of our built-in business in North America to speed up our expansion in Europe,” Lyu said as he expected the European built-in appliance market to take another leap with new growth momentum driven by artificial intelligence technology.
At EuroCucina 2024, one of the world’s largest kitchen goods events held on the sidelines of Milan Design Week between April 16 and 21, LG Electronics is showcasing its new Signature Kitchen Suite lineup powered by AI technology.
The Gourmet AI technology of its new built-in oven suggests the optimal cooking mode after identifying the main ingredient inside the oven.
The Signature Kitchen Suite free zone induction hob, also powered with AI, can detect and track the position of cookware.
LG Signature Kitchen Suite under-counter drawer fridge designed by internationally acclaimed designer Patricia Urquiola (Courtesy of LG Electronics) The company also displayed LG-branded InstaView appliances at the show across the Signature Kitchen Suite showroom.
LG Electronics expects its premium built-in appliance sales in Europe will more than triple this year from last year through partnerships with premium kitchen furniture brands in the region, such as SieMatic, and numerous dealers.
It also expects sales of its LG-branded masstige built-in appliances in the region to more than double this year from last through active partnerships with interior designers and construction companies, said Lyu.
“Chinese players are faster in rolling out high-quality products than competitors,” said Lyu. “Our most apparent top rivals in the future are Chinese companies, of them Haier is the most prominent.”
Write to Chae-Yeon Kim at why29@hankyung.com Sookyung Seo edited this article.
