LG Electronics is set to expand its home appliance subscription service, initially developed for the business-to-consumer (B2C) market, into the business-to-business (B2B) residential sector, starting with a major redevelopment project in Apgujeong, Seoul. The company will supply subscription-based appliances to over 7,000 units in collaboration with Hyundai Construction, integrating ongoing management services and an artificial intelligence (AI) home platform into its future residential offerings.
According to LG Electronics, the partnership with Hyundai Construction will provide a customized subscription model that combines premium built-in appliances with specialized care services for the 2nd, 3rd, and 5th redevelopment areas in Apgujeong. Residents moving into these areas will have the option to select from 5 to 7 types of appliances, including refrigerators, washing machines, dryers, stylers, and dishwashers. Notably, the penthouses in the 3rd and 5th areas will feature ultra-premium brands 'SKS' and 'LG Signature'.
A key aspect of this initiative is the subscription-based residential model, which offers management services beyond the initial delivery of appliances. Residents will receive complimentary premium care services for five years, including product disassembly cleaning, performance checks, and consumable replacements, through visits from specialized managers. After the complimentary period, residents can continue to receive management services by subscribing to a separate care plan.
The B2B appliance subscription model creates a win-win situation for residents, construction companies, and manufacturers. The subscription service is included in the shared costs, allowing residents to receive ongoing care services without additional expenses, while construction companies can enhance their competitive edge by offering differentiated post-management services. Manufacturers can establish a sustainable revenue model with recurring income over five years, rather than relying on one-time sales.
LG Electronics has seen rapid growth in its appliance subscription business. The company reported that its subscription revenue reached 640 billion won in the first quarter of this year, a 15% increase compared to the same period last year, and annual revenue is expected to exceed 3 trillion won for the first time this year. Subscription revenue, which was around 110 billion won in 2016, grew to 590 billion won in 2020 and expanded to 2.48 trillion won last year, achieving an average annual growth rate of 38.8% over the past decade.
Building on this success, LG Electronics aims to develop the B2B market for appliance subscriptions. The current domestic built-in subscription B2B market is estimated to be worth 1 trillion won annually. Given that the share of redevelopment projects has recently increased by nearly 50%, the market outlook appears promising. The company is currently in discussions with several construction firms and plans to prioritize regions with high redevelopment demand, such as Apgujeong, Seongsu, and Yeouido, before expanding to overseas markets like North America.
In addition to the appliance subscription service, LG Electronics is also accelerating the expansion of its AI home ecosystem. The company has recently begun developing a next-generation AI home solution using the AI home hub 'ThinQ ON' in collaboration with GS Construction. The two companies will co-develop an AI home solution specifically for multi-family housing, which will be gradually implemented in Xi apartments. With the introduction of AI, residents will be able to control appliances within their units, as well as access building infrastructure such as elevator calls and community facility reservations through a single system.
Park Jae-sung, head of LG Electronics' Korean B2B Group, emphasized, "We will successfully establish an appliance subscription solution optimized for apartment living, providing customers with a stress-free and convenient daily life while solidifying our next growth engine in the B2B market."
* This article has been translated by AI.
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