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Offshore Majap Makers Making Major U.S. Inroads

The Asian white goods invasion gained momentum this month when Samsung and Korea’s LG Electronics announced the placement of major refrigeration programs with, respectively, Best Buy and a half dozen dominant regional chains.

For Samsung, which introduced its first full-size refrigeration line only months ago at the Kitchen/Bath Industry Show in Chicago, the Best Buy placement is something of a coup (see TWICE, April 15, p. 1). The No. 3 appliance chain will be the first retailer to launch the high-end platform this week with a nationwide rollout that will encompass virtually all of its 500-plus stores.

According to Best Buy merchandise manager/appliances Dave Kielly, the Samsung display will include five pieces: two bottom mounts and three side-by-sides, all manufactured off shore. The bottom mounts will retail for $799 for the 18-cubic-foot model and $949 for the 20-cubic-foot version, while the side-by-sides will range from $1,099 to $1,699 depending on finish and features.

All of the refrigerators are available in either white or stainless, and feature multi-air flow technology, a patented twin cooling system and digital temperature controls to ensure fresher food and superior energy savings. In addition, the side-by-sides will also offer instant system readouts, quick-freezing and cooling controls, and tall-glass water and ice dispensers.

Kielly said the units will be presented with “traditional signing” and accompanied by promotional pamphlets. He declined to comment on which products were being edged out to make room for the new refrigerators.

But why choose Samsung, which is better known for its consumer electronics and microwave ovens, to supply a core appliance category? Chuck Conrad, VP/appliances and home essentials, acknowledged the company’s limited consumer connection in the kitchen. “It was a small concern going in,” he conceded, “but it’s a solid, well-known brand name, and we see an opportunity to leverage Samsung’s CE reputation.”

Industry observers contend that the Samsung platform will allow Best Buy to avoid head-to-head competition with Lowe’s, Home Depot and independent dealers on traditional domestic majap brands as those channels continue to gain market share. Indeed, Best Buy vice chairman/CEO Brad Anderson noted that his company’s most recent appliance efforts have faltered (see Best Buy story, p. 1), renewing rumors that the retailer, like Circuit City, may eventually abandon the business.

But Conrad said the company remained committed to the category, at least for the short term. “We have a very specific commitment for today to major appliances,” he said. “We’re always re-evaluating our businesses. But all of the numbers we get say customers want to buy appliances at Best Buy, and no data suggests otherwise to get out. So we are very actively looking at appliances from every angle and are working closely with our vendor partners to provide a shopping experience that will garner more and more people.”

Meanwhile, LG, which has been nipping at the heels of U.S. white goods manufacturers, has become the first majap vendor to win widespread placement of an Internet-ready refrigerator. Beginning in October, regional powerhouses Fry’s Electronics, P.C. Richard & Son, Nationwide member Warner’s Stellian and NATM’s American TV & Appliance, Conn’s and H.H. Gregg will begin showing LG’s 26-cubic-foot Multimedia Refrigerator. The unit features a high-quality 15.1-inch TFT-LCD and its own LAN port, enabling the refrigerator to act as a residential gateway and provide Web access.

“LG is the first company to bring to reality the ‘smart’ appliances that have been fantasized by futurists for some time,” said LG Electronics U.S.A. president Simon Kang. “Until now the kitchen and home computer were kept in separate rooms in most households. While the Multimedia Refrigerator is not meant to take the place of the home computer, it does bring multimedia technology and Internet connectivity into the kitchen — the center of home and family activity.”

In addition to surfing the Web, the unit will allow consumers to watch TV, leave video messages and monitor grocery inventory without opening the door. The refrigerator also features a fingerprint-resistant Titanium finish, and received the Good Housekeeping Institute’s Good Housekeeping Seal of approval in July. It carries a suggested retail of $7,999, although P.C. Richard director and general merchandise manager Doug Kelly expects the price point to eventually settle to $2,495.

“Do we expect to sell boatloads?” Kelly asked. “No, but we’re seeding for the future, when there’s a universal backend to support its capabilities. We have other LG products that we’ve been successful in, and this will make us look different.”

Kelly said he is placing the refrigerator in 10 of the chain’s 44 stores that also feature plasma TVs and other hi-tech products. “We’ll see what the reaction is,” he said.