LG Electronics plans to increase the number of its branded retail stores in emerging markets this year as part of an effort to boost its smartphone sales and market share amid intensifying competition.
In an interview with the Wall Street Journal, LG Executive Vice President Kim Ki-wan said the company will grow its retail stores beyond the 3,000 it currently has and will also open new stores in India, the Middle East and Africa. LG said the number of stores will likely grow by as much as 20 percent, or 600, this year, and will sell a variety of the conglomerate's products, including smartphones, TVs and home appliances.
The announcement comes days after larger rival Samsung Electronics announced a partnership with Best Buy to open 1,400 "Samsung Experience Shops" within Best Buy locations in the United States. Samsung said that by early May, 900 Best Buy and Best Buy Mobile stores will feature the new Samsung mini-stores, with the remainder launching by early summer.
For the full-year 2012 LG ranked as the No. 5 handset maker overall, according to IDC, with 3.3 percent global market share and 55.9 million shipments. However, those figures were down from 5.1 percent market share and 88.1 million unit shipments in 2011. In the fourth quarter of 2012 Chinese vendors ZTE and Huawei booted LG out of the top five handset rankings, behind Samsung, Apple (NASDAQ:AAPL) and Nokia (NYSE:NOK).
LG has been struggling to gain traction with its line of Optimus-branded smartphones, and has focused on LTE connections and screen technology to set itself apart. LG's business, while down in terms of unit shipments, is turning a profit--LG's mobile phone operation reported an operating-profit margin of 2 percent in the fourth quarter and 0.6 percent for all of 2012.
Kim told the Journal that LG's improving profitability will let it spend more on retail and marketing efforts to boost smartphone sales, though that could put pressure on the company's margins. "The increased marketing spending should have some benefit for LG Electronics' smartphone market share, especially in the mid to high end," Sanford C. Bernstein analyst Mark Newman told the Journal. "However, it will be tough to compete with Samsung and Apple."
- see this WSJ article (sub. req.)
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