Unlocking Growth in Korea

When Martin Runschke was appointed General Manager Korea at Electrolux in 2022, he saw it not only as an exciting opportunity, but as the completion of a full circle journey that took him back to a country with which he had always had a deep bond.

During his university years, German-born Runschke had visited South Korea as an exchange student. He then returned as a fresh graduate to take up his first role in the country.

“I’ve been here at least once a year this entire time since university,” he tells The CEO Magazine. “Now, I’m super excited to be leading the Electrolux team and the business here. It all came full circle.”

“We’re now at a point where we can focus again on growing the business in a healthy and profitable way in Korea.”

Once on the ground in Seoul, the first task on his agenda when stepping into the role was to embark on a comprehensive turnaround program.

“We decided to quickly move towards a business that generates demand and pull from consumers in a profitable way rather than a push model,” he explains.

The broad scope of the turnaround strategy looked at every aspect of the business including organizational setup, product lineup, pricing structure, sales and channel strategy, as well as the team culture.

Broad-reaching

“We’ve been on this journey for the past almost 18 months and we have focused on, first of all, delivering a step-change in profitability, reducing cost, simplifying the entire business,” Runschke says.

“We’re now at a point where we can focus again on growing the business in a healthy and profitable way in Korea.”

While Electrolux has traditionally been known for its vacuum cleaners in the local market, it has started to shift awareness towards its major appliances such as induction hobs, ovens and dishwashers.

“At the same time we’ve also premiumized our floor care and air care product ranges with very positive and encouraging responses from consumers and retail partners,” Runschke expands. “Our go-to-market approach specifically underwent a lot of change.”

“We continue to transform our presence here with our strategic partners in retail, opening new shops that not only sell product, but really bring the brand to life.”

In the last year, Electrolux has tripled its direct-to-consumer sales in Korea and has also ventured further into the world of B2B construction projects.

“These are two completely different business models at opposite ends of the sales channel spectrum, but both are critically important for us,” he says.

Physical retail remains an important touchpoint for Electrolux consumers which has led Runschke and his team to overhaul the bricks and mortar experience.

“We continue to transform our presence here with our strategic partners in retail, opening new shops that not only sell product, but really bring the brand to life,” he says.

The next 18–24 months will see the company continue on this path, Runschke reveals.

“The whole team is very clear about our strategy and our direction. So now it’s just a matter of how fast we can run,” he says.

The Upside

With the entire industry in a state of flux at the hands of the COVID-19 pandemic, such a plan is crucial to secure the company’s future locally.

“The pandemic had a big impact on the demand side – with people staying home more,” Runschke says.

But while the business saw exceptional growth in demand, supply chain issues rendered the situation a delicate balancing act, thanks to long lead times and missing parts, ranging from semiconductors to screws.

“The way the team came together and especially the way that Electrolux managed that period was very strong,” Runschke reflects. “ It was an unprecedented experience for everyone in the industry, but the feedback that we got from our customers and partners, was that we handled it very well.”

Now, as global markets have shown significant drops in demand, Korea is experiencing the same trend, albeit on a lesser scale than many other markets. But Runschke is optimistic.

“We’re taking a very long-term perspective,” he says. “The opportunities that we have in the industry are great, and particularly with what we see in markets like Korea, we feel we have enormous upside to grow here.”

“We keep delivering new and better consumer experiences within the areas of taste, care and wellbeing.”

That’s not to say that there isn’t intense competition in the Korean market. Having worked in Germany, an extremely competitive market, Runschke places Korea “one step above”.

“Korea is a highly competitive market, with big local players,” he says. “The world has really changed over the last couple of years, because we see local players launching innovation into the market here very quickly and very early, and then later expanding and bringing it to Europe, not the other way around.”

This has led to a more discerning Korean consumer, and to a market in which the premium segment makes up the largest portion.

“For us, that means our product portfolio and every consumer touchpoint needs to be set perfectly in a way that captures Korean consumer needs,” he says. “And I think we’re doing quite good job there.”

Even as competition intensifies further, Runschke remains confident.

“We know that our value chain here is now set up in a way that generates value for us and also for our partners. At the same time, we keep delivering new and better consumer experiences within the areas of taste, care and wellbeing,” he reflects.

“So now it’s about unlocking the full potential of the Electrolux brand step-by-step in Korea.”