LG Places Major Program With Best Buy
By Alan Wolf -- TWICE, 4/7/2003
Englewood Cliffs, N.J. — In a major major appliance coup, Korean brown and white goods manufacturer LG Electronics will begin supplying a collection of refrigerators, washers, dryers and microwave ovens to Best Buy.
The assortment, which will include "many" exclusive SKUs, will be available at all 500-plus Best Buy stores nationwide beginning in May, the retailer said.
The move represents a significant market breakthrough for LG, which along with fellow Asian contenders Haier Group and Samsung, has been nipping at the heels of established U.S. majap brands Whirlpool, Maytag, Frigidaire and GE.
Samsung similarly placed a five-piece refrigeration program with Best Buy last fall.
A Best Buy spokesperson said the company wouldn't be dropping any current brands to make way for the LG line, but instead will be cutting back on existing SKUs.
"This is a great opportunity for our customers — more selection and more choice," said Mark Overgard, Best Buy senior VP of Home Essentials. "We continue to diversify our product offerings and strive to provide customers with unique appliances at great prices."
Best Buy's move into alternative appliance brands within the core refrigeration and laundry categories comes as its majap business continues to lose ground to the home improvement channel. Indeed, Home Depot claims to have unseated the CE chain as the No. 3 white goods retailer after Sears and Lowe's, while Sears too has seen its market share chipped away by the home improvement giants.
Besides serving as strategic response, Best Buy's willingness to embrace non-traditional white goods vendors also demonstrates its long-term commitment to the category, industry scuttlebutt notwithstanding.
"This is a space we need to be in," said the Best Buy spokesperson. "We're still committed to the category."
The LG line, which made its U.S. trade debut in 2001, is notable for its sleek appearance, high-tech innovations and mid- to upper-mid-tier pricing. At the time of the launch, the company said it planned to leverage its high-tech CE heritage to develop a full appliance platform for the U.S. market that would stand apart from its Goldstar brand of value-priced ACs, microwave ovens and floor care products.
"We are truly excited about this new partnership between LG and Best Buy, bringing to life a new consumer demographic for our company" said LG home appliance division president Simon Kang.
Technology-driven innovations include a door-vent cooling system for refrigerators that chills food fast and maintains stable temperatures, and a linear compressor that operates more quietly and efficiently than conventional reciprocating compressors and crankshafts.
LG was also first to win widespread placement of an Internet-ready refrigerator, which is carried by Conn's, Fry's, H.H. Gregg, American TV & Appliance and P.C. Richard & Son.
In laundry, LG's line is based on a direct drive system that reduces vibration by 60 percent and noise levels by 18 percent, and uses 38 percent less power and 17 percent less water than conventional belt-drive configurations, the company said.
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