Hyundai Department stores will lease goodsBY PARK JUNG-YOUN
Hyundai Department Store is entering the consumer leasing business to diversify its business portfolio as the local retail industry continues to struggle with anemic consumer demand in Asia’s fourth-largest economy.
Hyundai will invest 60 billion won ($55 million) to set up a new leasing company, which will be named Hyundai Rental Care. The department store operator will control 100 percent of the company. It will lease home appliances.
This is the latest addition to the new moves Hyundai has been making in recent years. In 2012, Hyundai acquired furniture manufacturer Livart and women’s fashion designer Handsome.
Both companies have seen solid growth since their purchase by the department store chain. Hyundai Livart’s sales and operating profits for fiscal 2014 jumped 15.9 percent and 166.7 percent, respectively, compared with a year before. Hansome’s sales last year rose 11.5 percent year-on-year.
And earlier this year, Hyundai said it plans to submit a bid for a Seoul duty-free business license. The duty-free business has been enjoying healthy growth thanks to double-digit growth in the number of Chinese tourists coming to Korea.
The leasing business has been expanding robustly as local consumers look to cheaper ways to enjoy the conveniences of home electronics and appliances.
“Concepts have changed,” a company spokesman said. “Consumers’ interest has shifted from ownership to usage.”
The leasing market was worth only 1 trillion won in 2004, but grew to 12 trillion won by 2013.
Central to the leasing businesses are water purifiers, bidets and air purifiers. Hyundai will start the business with water purifiers, but plans to eventually expand to air purifiers, bidets, furniture and kitchen appliances.
Coway and Chungho Nais are major players in the leasing market, with electronics manufacturers like Cuchen and LG Electronics also joining the field.
“We expect great synergies with our home shopping business in particular,” the spokesman said.