Japan is one of the leading markets for home appliances. Improvement in economic conditions and an increase in disposable income are substantial factors that propel the Japanese household appliance market growth. Improved lifestyles and a rise in the buying power of consumers are the major impacts of high disposable income. Household appliances have become an integral part of their daily chores.
Revenue in the Household Appliances segment is projected to reach US$3,965m in 2020. Revenue is expected to show an annual growth rate (CAGR 2020-2025) of 5.9%, resulting in a projected market volume of US$5,270m by 2025. User penetration will be 31.1% in 2020 and is expected to hit 48.6% by 2025. The average revenue per user (ARPU) is expected to amount to US$100.75.
A substantial number of consumers have been spending on household appliances including premium & smart appliances. An increase in a technologically advanced, rapid urbanization, growth of the housing sector, improvement in living standard, a surge in need for comfort in household chores, changes in consumer lifestyle, and escalation in a number of smaller households are the key factors that drive the growth of the Japan household appliance market.
The increasing demand for convenient consumer appliances that ease the time pressures on busy modern consumers, especially women engaging in paid employment, is providing a boost to interest in connectivity. While Japan is a technologically sophisticated market, consumers have been relatively reluctant to adopt connected consumer appliances compared with those in other markets in the region, such as China and South Korea.
Major home appliances include appliances such as refrigerators, washing machines, dishwashers, and air conditioners. These are generally provided with special connections such as electrical, gas, plumbing, and ventilation arrangement, and thus limits the mobility of appliances around the house. The demand for major home appliances has increased among urban households, as household appliances help save time, simplify the work, and increase the comfort level.
The refrigerator market is the major contributor to Japan’s major home appliance market. Refrigerators are used to preserve edible items at a range of different temperatures and the introduction of advanced refrigerators provided with smart technologies is expected to drive the market in the future. Consumers are giving much importance to home-cooked food to cut on their sugar, salt, and fat consumption. Consumers preferring healthy eating habits and hygienic environment conditions have led to the sale of more advanced and large volume refrigerators.
Smart home appliances incorporating AI and internet of things (IoT) technology which promise to slash time spent on household chores are flying off the shelves in Japan, propelled by the needs of double-income families. The surge began in 2019 that saw the total value of domestic shipments of refrigerators, washing machines, and the like blast past 2.5 trillion yen (about $23.3 billion) for the first time in 23 years.
Home appliances available in the market are already smart in a way as they are being controlled through microcontrollers; however, the ability to connect to the Internet makes them smarter.
Smart appliances are designed in such a way that they can communicate information directly to the service operator for efficient and productive use of electricity. These appliances are also known as intelligent appliances as they can measure and control their energy usage. IoT (Internet of Things) is an emerging trend in the market and smart appliances are a subset of IoT. The IoT helps integrate digital and wireless technologies in-home or kitchen appliances.
The trend of smart offices and smart homes, where consumer electronics is an important part of it is boosting the demand for consumer electronic products. Rising disposable income of the people of consumer electronics and their shift in preferences towards smart homes and smart offices environment are thus majorly driving the growth of the industry.
One major factor in the shift to more expensive home appliances is Japanese people’s changing lifestyles. Japanese government data shows that households with two working parents have outnumbered those with stay-at-home wives since 1997, and the trend has only intensified. In 2018, there were some 12.19 million double-income families in Japan or more than twice around 6 million households with the wife at home. Meanwhile, there are also increasing numbers of people living alone. The government estimates that single elderly people will make up more than 30% of all Japanese households in 2040.
One strong runner in the time-saving appliances market over recent years has been automatic cooking pots. The chef in a hurry only has to put the ingredients into the machine, select the desired stewed dish from the menu display, and the pot does the rest. It even stirs itself. Models with AI technology can also suggest dishes based on analysis of the user’s eating habits and the day’s weather. There is no need to tend to the pot once it has been turned on, leaving time for other chores or activities while meals are being prepared. The machines are apparently especially popular among couples in their 20s and 30s.
A number of makers are now in on the automatic cooking pot market, including Japan’s own Sharp Corp. and Panasonic Corp., as well as Tefal of France. Betting on demand not just among families with children but also single-person households and couples with no children, In the Household Appliances segment, the number of users is expected to amount to 60.2m by 2025.
Domestic manufacturers continue to dominate consumer appliances in Japan, with seven of the top 10 companies being Japanese, while the Chinese players, Hon Hai and Midea, retaining Japanese brand identities for their operations in the market having, respectively, acquired the consumer appliances operations of Sharp and Toshiba. Japanese brands have established high levels of recognition and trust amongst local consumers.
Electronics and appliance specialist retailers remained the dominant distribution channel in consumer appliances in 2020, though it saw its share of sales eroded annually throughout the period. Meanwhile, internet retailing saw continued expansion, overtaking mass merchandisers to become the second-largest distribution channel in consumer appliances in the recent period. In the Household Appliances segment, 30% of the total market revenue will be generated through online sales by 2023.
Of the total electronic industry in Japan, consumer electronics have around 48.6% market share, with major adoption among the middle and high-income group population. Japan is the brain country behind consumer electronics but the rising competition from China, Taiwan, and South Korea has decreased the global and local presence of Japanese companies. The innovation in consumer electronic products and targeting the younger generation is the opportunity for growth in sales of consumer electronic products in Japan such as smart TV and smart refrigerators.
A shrinking consumer base and already deep penetration in key categories militate against volume growth in the Japanese consumer appliances market. Consequently, there is a growing pressure on manufacturers to generate value through the development of more sophisticated, higher-end products. However, busy lifestyles, made more hectic by an increase in the number of households in which people live alone or in which all the adults are in paid employment, is boosting demand for appliances that reduce the time spent on household chores.