Forget the 58-inch flat-panel TV, the new domestic status symbol for Japan’s rich is a cooker.
Housewife Yasuyo Takizawa, whose husband runs a public relations company, spent as much as ¥4 million on systems that combine solar power with energy-efficient water and room heaters and induction cookers that heat pots with a magnetic field, boosting her green credentials and swelling earnings for manufacturer Panasonic Corp.
“I’m not normally big on the environment, but I feel good that I’m using eco-friendly products,” said Takizawa, 63, who installed the system after seeing it at her sister’s house. “Now my friends who visit my place say they also want them.” She’s buying the same units for a house being built for her son.
Turning its white goods business green may help Panasonic double sales from home products in a decade, said Kazuharu Miura, an analyst at Daiwa Institute of Research Ltd. The Osaka-based company, the nation’s biggest maker of home appliances, is blitzing magazines and Web sites with recruitment ads to staff its 18,000 branded neighborhood stores — key to providing the technical support the solar systems require.
Panasonic’s home-products unit earned ¥49 billion last year, outdoing divisions making televisions and stereos, electrical components and homes. Revenue at the unit was ¥1.2 trillion, 15 percent of the company’s overall sales. The company is also seeking to buy Sanyo Electric Co., a maker of solar panels and rechargeable batteries, for $9 billion.
Panasonic and its store managers marketed energy-efficient products to 800,000 customers in 2,800 seminars in the five months to Aug. 31, according to Mitsuo Osawa, a director at Panasonic’s electric works unit. Sales of such appliances for households in Japan will rise to ¥2.75 trillion in the two years to March 2011, from ¥2.13 trillion in the previous two years, according to data provided by Osawa and the Agency for Natural Resources and Energy.
“Energy-saving products cannot only stimulate consumer demand but also boost the overall appliance market, as they are generally sold at a higher price,” said Kazunori Takami, president of Panasonic’s home appliance firm.
The backbone of Panasonic’s plan is its chain of own-brand, shopping-street stores. Set up more than half a century ago to sell the company’s TVs, washing machines and air conditioners, the stores have been in decline since peaking at about 27,000 in 1980, as warehouse chains like Yamada Denki Co. captured customers with discounts. The local shops now account for about 30 percent of Panasonic’s sales in Japan.
“The shops are a fortune to us,” Takami said. “They can offer the maintenance services that will be crucial to expand this business.”
Panasonic has the largest network of consumer electronics shops in Japan. There are about 1,000 Sony-branded shops and 2,700 for Sanyo Electric Co., the companies said.
“Panasonic is eyeing expansion of the appliance business as its next growth driver, as the audiovisual equipment market starts to saturate,” said Daiwa’s Miura. The company doubled TV sales in the past 10 years with the switch to more expensive flat-panel screens, he said. “That situation can be re-created with environmentally friendly home appliances.”
Panasonic’s EcoCute, a water heater that extracts heat from the air, costs around ¥800,000, four times more than a conventional gas boiler. Panasonic’s induction cooking range costs about ¥400,000, double that of a typical gas system.
Most of Japan’s 50 million households use gas for cooking and warming water. The number using only electricity will likely increase by 1.5 million to 5 million in the two years to March 2011, Osawa said. Those with solar systems will probably increase by at least 200,000, to 660,000, in the same time, each spending about ¥2.5 million for the equipment, he said.
Panasonic will likely start a major campaign for its “Panasonic for the entire house” strategy after completing the Sanyo acquisition, Miura said.
The acquisition will help combine appliances with solar cells, fuel cells and rechargeable batteries “to offer a unique service that no other rival can replicate,” President Fumio Ohtsubo said at the annual shareholder meeting on June 25.
Electronics retailers like Yamada Denki, Japan’s biggest by revenue, are fighting back. In December, the company increased its stake to 100 percent from 51 percent in Cosmos Berry’s Co., a franchise of 1,014 local electric-goods outlets. In August, the retailer teamed up with Hiroshima-based contractor West Holdings Corp. to offer solar power installation.
“We are aiming to expand our coverage to areas and consumers that large outlets cannot reach,” said Hisashi Yamada, a spokesman for the Gunma-based retailer.
Sales of solar cells, fuel cells, energy-saving lighting and energy-efficient heating systems will probably more than double to ¥1.4 trillion in the nine years to 2017, Fuji Keizai Co., a private researcher, said in a June 9 statement.
Consumers are being encouraged to invest in solar power because they can then force utilities to buy surplus domestic electricity at above-market rates. Government incentives for renewable energy may boost solar sales in Japan 20-fold by 2020, Goldman Sachs Group Inc. analysts Hiroyuki Sakaida and Ikuo Matsuhashi said in August.