As the construction industry's recession continues, the two major players in the domestic furniture industry, HANSSEM and Hyundai LIVART, are fiercely competing for the top spot this year as well. HANSSEM has maintained a B2C (business-to-consumer) centered business strategy, while Hyundai LIVART has focused on B2B (business-to-business). However, as the recent economic downturn continues, both companies are putting more effort into the B2C market as B2B sales have stagnated.
According to the Financial Supervisory Service's electronic disclosure system, HANSSEM recorded a consolidated sales amount of 443.4 billion won and an operating profit of 6.4 billion won in the first quarter of this year. These figures represent a decrease of 8.7% and 50.4%, respectively, compared to the same period last year. During the same period, Hyundai LIVART recorded sales of 437.8 billion won and an operating profit of 9.5 billion won. While sales decreased by 13.3% compared to the same period last year, operating profit increased by 39.9%. Both companies faced a direct hit from the decline in B2B sales due to the construction industry recession. HANSSEM's B2B sales in the first quarter were 110.6 billion won, down 21.8% from the same period last year, while Hyundai LIVART's B2B furniture sales decreased by 17.2% to 157.1 billion won.
A HANSSEM official noted that the decrease in sales and operating profit was attributed to consumer sentiment weakening due to uncertainties in the domestic and international economy, the reduction in large-scale move-in volumes, and the impact of exchange rate increases. Hyundai LIVART also stated that sales decreased due to a reduction in the supply of built-in furniture as a result of the construction industry recession. Built-in furniture refers to furniture installed in kitchens and closets during apartment sales. Specifically, Hyundai LIVART has been increasing market share by supplying built-in furniture to large construction companies, deriving more than 70% of its sales from B2B.
Park Se-ra, a researcher at Shinyoung Securities, related to the first-quarter performance of Hyundai LIVART, stated that "sales of built-in furniture plummeted due to a drop in apartment move-in volumes," predicting that built-in furniture sales, which peaked at 515.3 billion won in 2024, would fall by 25% to 386.5 billion won this year, and that poor sales in the mid-3 billion won range would continue until 2027.
In the last first quarter, HANSSEM's sales exceeded that of Hyundai LIVART by 5.6 billion won. Operating profit was greater for Hyundai LIVART by 3.1 billion won. Even in last year’s annual sales, the gap between the two companies was minimal. HANSSEM recorded 1.9 trillion won in sales while Hyundai LIVART recorded 1.87 trillion won. Hyundai LIVART had outpaced HANSSEM's sales until the third quarter last year, supported by a temporary bounce in housing sales, but faced a reduction in sales in the fourth quarter due to disruptions in built-in supplies.
Since more than half of HANSSEM's sales come from B2C, it is analyzed that the company has been relatively less affected by the construction industry. B2C is less influenced by the economy due to the consistent demand for moving and remodeling.
This year, both companies are expected to focus on reducing dependence on B2B and strengthening their targeting of the B2C market. Industry perspectives strongly suggest that the construction industry will struggle to rebound until next year. In fact, Hyundai LIVART’s increase in operating profit despite a decrease in first-quarter sales was the result of an increased share of profitable B2C. Hyundai LIVART explained that they have increased the share of B2C furniture sales through portfolio improvements and improved the raw material costs for built-in orders, leading to increased operating profit.
Hyundai LIVART has expanded its excellent agency "Jipterrier" and opened a LIVART section within Coupang to increase online touchpoints. Additionally, they are focusing on a premium line, the "LIVART MEISTER COLLECTION," as part of their quality enhancement strategy. The goal is to improve revenue by reducing the cost ratio in the B2B furniture sector. Their strategy involves increasing office furniture profitability through space consulting and differentiating lounge spaces.
HANSSEM is also concentrating on the B2C sector. In the home furnishing sector, the goal is to accelerate sales growth through tailored product planning and optimizing distribution channels. The company plans to strengthen the competitiveness of key product categories such as signature storage, hotel beds, and student rooms, while continuously expanding touchpoints with consumers through various distribution channels, including their own mall, affiliated malls, and offline stores.
An industry official noted that this year's competition for the top spot between HANSSEM and Hyundai LIVART will hinge on performance in the B2C market, stating that "the efforts to expand consumer touchpoints through each company's premium strategy and diversification of distribution channels are expected to intensify."