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Panasonic's Taylor Outlines Near Future

1/23/2012 12:01:00 AM Eastern
LAS VEGAS — Joe Taylor, Panasonic Corp. of North America chairman/CEO, outlined his company’s strategy to expand its role in electronics beyond the A/V business in the near future, plans for its TV business and industry profitability during a one-on-one interview with the TWICE during International CES.

Panasonic North America is projected to make a profit by the end of the fiscal year, ended March 31. It will happen with CE sales being lower, but with higher sales on its B-to-B side. Here is part of the conversation with Taylor we had at Panasonic’s CES booth.

How much of your business is consumer vs. B-to-B now, and where will it be in the future?

Taylor: Globally, consumer sales are 50 percent of our revenue. In North America we were close to that in revenue five years ago, and that was without major appliances. Today that ratio is significantly less [in CE] due to our focus on the B-to-B business.

What does that mean for Panasonic’s consumer business in North America?

That does not imply that we are walking away from the CE business, but sales there will lessen as we go into the near future. Also, we have no intention of bringing home appliances into the U.S. at this time. Those products [for Japan] are smaller than what would be needed in the U.S. and higher priced. The focus in the short term — the next two to three years — will be with the B-to-B side and then come back [with an emphasis on] the consumer side.

How do you calm fears on the part of retailers who think you are backing out of the CE business?

Taylor: Our core DNA as a company is in CE. Because of technology we developed on the B-to-B side we have more technology in CE. But we must be smarter in CE and not sell products that do not have value.

We will be in the TV business, but that doesn’t have to make all the components. We can source them less expensively. [And] you will see in 2011 a reduced portfolio of TVs, reduction of our SKUs in smaller plasma sizes, expansion in larger plasma and an expansion in LCD. Ninety percent of our line will feature 3D, 94 percent will feature smart TVs. We want profitable growth from value-added products.

How can manufacturers take control of MAP pricing? Offer different lines to different retail channels? Open boutiques within stores? Open your own stores?

Taylor: They are all valid points but represent a larger issue — there is a gap between consumers, retailers and manufacturers. And the gap concerns me the most the manufacturer and the retailer … sense that we are not in this together. When you talk MAP, what is the relationship between retailers and the manufacturer?

We have no intention to open up stores. Unless your name is Apple, it is crazy. But we do need to have a relationship with the ultimate customer, the consumer.

In the past five to seven years manufacturers [and retailers] feel all the industry’s problems were dumped on them. We intend to make money on everything we sell. We want it to be clearly understood that we want to make a profit and… we want our retail partners to make money.

I am pleased as we go into this new model year that meetings with our main retail partners that there is a real sense an understanding of this.

Some retailers complain that Panasonic has undercut its own MAP pricing on your sales site online. Has that happened?

Taylor: Our web sales, though improved with a new web site, are insignificant. If, and I mean if, a price of Panasonic product is lower by one day, is it affecting a retailer’s business? Our sales are 99.9 percent from our channel partners. Is the 0.1 percent affecting their business? I don’t think so. We want our sell more products and make a profit, and we want our retail partners to sell more and make a profit, and have consumers get excited because they have bought our products.
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