Located in the furniture district of Nonhyeon, SKS Seoul showcases a luxurious living space adorned with high-end materials resembling marble. Upon entering, visitors are greeted by a touch-operated built-in refrigerator, a wine cellar installed along the wall, and a softly closing refrigerator door paired with an island kitchen. The showroom, spanning from the basement to the fifth floor, is designed not just to sell and display products like refrigerators and ovens, but to evoke a desire to live in such a home.
LG Electronics' SKS Seoul functions more as a consulting space where customers can plan their living environments. Experts participate in the interior design phase, offering suggestions for the layout of built-in appliances and furniture, and customizing combinations of refrigerators, wine cellars, and ovens to match customer preferences. An LG Electronics representative stated, "We are not just selling a single product like a refrigerator; we help design the entire kitchen," adding that they collaborate with construction companies from the design phase to propose seamlessly integrated built-in spaces.
The launch of LG Electronics' subscription service for its super premium built-in brand SKS in May aligns with this philosophy. The company aims to expand its reach beyond product sales to encompass installation, management, and replacement, offering a 'service-type premium appliance.' Notably, top-tier specialists handle delivery, installation, care, and removal, and during the subscription period, they also provide free replacements for refrigerator door panels and induction cooktops.
The super premium subscription service is set to be implemented in the country's most upscale residential complexes. In the redevelopment of Apgujeong, which includes over 7,000 units being constructed by Hyundai Engineering & Construction, penthouses in zones 3 and 5 will feature SKS and LG Signature appliances on a subscription basis. This marks the first instance of SKS applying a B2B subscription model. General units will include LG's Object Collection subscription appliances, while the penthouses will showcase the super premium lineup to enhance the quality of high-end living spaces.
Park Jae-sung, head of LG Electronics' Korean B2B group, remarked, "If subscriptions have established themselves as a consumer culture in the B2C market, the construction B2B market will follow the same trend. We are currently discussing collaborations with various construction companies for major redevelopment projects in areas like Yeouido and Mokdong, starting with Apgujeong."
Construction companies are increasingly adopting subscription models to enhance their competitive edge in securing contracts. As competition intensifies in the bidding for redevelopment and reconstruction projects, differentiating solely through branding, landscaping, and community facilities has become challenging. Offering a subscription service that includes specialized care for five years post-move-in has emerged as a new differentiating factor that can boost resident satisfaction. For manufacturers like LG Electronics, this approach allows them to create a sustainable revenue model beyond simple product sales, ensuring ongoing service revenue and customer engagement.
LG Electronics' appliance subscription business continues to experience rapid growth. Subscription revenue expanded from 110 billion won in 2016 to 2.48 trillion won last year, achieving an average annual growth rate of 38.8% over the past decade. In the first quarter of this year, the company reported 640 billion won in revenue, a 15% increase compared to the same period last year, and it is projected to surpass 3 trillion won in annual revenue for the first time this year. Currently, approximately 4,000 specialized care managers nationwide are responsible for the subscription services.
The plan is to extend the validated B2C subscription model into the B2B market, creating a new growth avenue. Park stated, "B2B appliance subscriptions will not merely be about supplying appliances but will establish a new paradigm for managing the overall living experience post-move-in. Based on successful domestic cases, there is ample potential for expansion into the overseas luxury housing market in the future."
* This article has been translated by AI.
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