MILLENNIAL-TARGETED FRIDGES ARE SAMSUNG’S NEXT BET

After a boom in sales of refrigerators and cleaners during COVID-19, Samsung Electronics’ home appliance business is looking ahead to the post-pandemic era by focusing on offering personalized devices to younger customers.

The South Korean giant’s home appliance business, which accounts for almost 10 percent of total revenue, should report a 10 percent increase in sales for 2020, said Jaeseung Lee, president and head of digital appliances business. Demand will continue through the first six months of this year, but sales will start to weaken in the second half once the economic effect of subsidies wane and people start getting back to normal life after vaccines roll out, according to Lee.

“We are drawing up contingency plans as we expect a sales slowdown in the second half,” he said.

Spurred by stay-at-home demand, the world’s largest memory chip and electronics maker has benefited from strong sales of semiconductors that go into everything from PCs and TVs to data centers and digital appliances. Samsung ’s home appliance business initially suffered from plant closures when COVID-19 spread to Europe and the U.S. last year, but the company swiftly adjusted its global supply chain to meet increased demand for larger fridges to store food and for vacuum cleaners and washing machines.

Looking beyond to the post-COVID era, Samsung plans to target millennial customers who shop online and prefer personalized designs, Lee said. Online sales rose 67 percent globally in the third quarter, while bespoke refrigerators that can be customized according to size, material and color — specialty fridges for kimchi are a popular option — accounted for more than 67 percent of the Korean market last year.

“Customers had few options among products made by a tailored manufacturing system,” said Lee. “Our way of manufacturing has to be changed for the personalization of appliances. And that’s a big transition.”

While the shift to orderbased production will increase costs, the company is betting that the strategy will create sales opportunities. Samsung, whose bespoke lineup also includes wine coolers and dishwashers, is seeking to open up its production ecosystem to suppliers and furniture studios so that clients can have more design options.