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Panasonic prioritizes blow dryers over TVs in Europe

With help from Boots drugstores, Japanese electronics maker takes aim at Dyson

Panasonic showcased its beauty appliances at Europe's biggest electronics show in September as it began to pivot away from its focus on TVs.

BERLIN -- Panasonic has had a simple formula to build its consumer appliance business in Europe: sell TVs.

But with stiff price-cutting competition from South Korea's Samsung Electronics and other rivals, TVs have been unable to lead the way for Panasonic's cameras, stereo equipment and other electronics. In fact, Panasonic's European TV operations are mired in the red, and only 8% of the company's overall appliance business is transacted in Europe.

So what can rescue a failing television-focused strategy?

Panasonic believes it has hit on an answer -- beauty appliances.

A strategic shift away from flat-screen TVs to blow dryers and scalp massage gadgets was on display earlier this month at IFA, Europe's largest electronics expo. The fair took place in Berlin, and Panasonic showed off its beauty appliances right in the middle of its booth.

One of these appliances uses a sensor to determine a user's scalp condition and infrared rays to reduce damage. Another, an automatic facial steamer, has a sensor that determines when the user has fallen asleep.

Panasonic has the largest share of Japan's beauty appliance market, which includes blow dryers and electric razors. The brand's nanoe blow dryers, which also moisturize the hair while drying it, gained hit status in 2005, and their cumulative global sales topped 10 million units in 2018.

"Panasonic has changed a product that dries one's hair into a beauty appliance," said a representative of a rival electronics maker.

In the 57 years since Panasonic opened its first European sales office -- in the port city of Hamburg, in northern Germany -- TVs, cameras and other audiovisual gadgets have made up the core of its appliance business there. TVs have accounted for 40% of Panasonic's overall appliance sales in Europe and 70% of its audiovisual equipment sales in the region.

But in 2018, the company's European appliance business had sales of 2 billion euros ($2.19 billion), down more than 30% from the peak of 3 billion euros in fiscal 2010, when the company was mostly making expensive, power-gulping plasma TVs.

Now beauty gadgets that have gone over well in Japan are in charge of turning around Panasonic's European fortunes.

Panasonic will have to figure out how to compete against European electronics makers like Dyson now that it has determined there is little to gain from matching Samsung on prices in Europe's TV wars.

One challenge is that Panasonic remains relatively unknown in Europe compared to homegrown brands like Dyson and Philips. Another challenge is Dyson's rock-star power. At appliance retailers in Berlin, Dyson blow dryers priced at about 500 euros ($547) are selling well. Panasonic is competing in the same space with gadgets that go for half that at the most.

"Hair dryers used to be priced at no more than 100 euros in Europe," said Yosuke Matsunaga, managing director of Panasonic Appliances Europe. "But Dyson broke the mold."

To meet these challenges, Panasonic is unleashing its nanoe line of moisturizing blow dryers as well as other beauty appliances with unique functions, including facial rollers and steamers.

Panasonic will also review its European marketing playbook. Currently, the company's European unit makes nearly half of its sales at appliance retailers because of its focus on TVs and other audiovisual equipment. It now intends to sell more products via specialty stores like British drugstore chain Boots, which has begun carrying Panasonic blow dryers.

"It makes sense because the customers of Boots are mostly young women," Matsunaga said.

Another habit Panasonic is graduating from is tasking salespeople with covering a full gamut of products and then dispatching them to appliance stores. It now plans to have certain salespeople specialize in certain products so they can bring expertise to the retailers they visit.

Panasonic hopes to increase appliance sales in Europe by 20% by 2025. Although Europe accounts for about 8% of Panasonic's overall appliance business, it represents an important market, one that allows the company to experiment with its mix of specialty gadgets and high-value appliances.

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