Run on toilets leaves Japanese lavatory makers flush with orders

The early weeks of the coronavirus outbreak triggered twin bouts of panic buying in Japan — of toilet paper and of the toilets themselves as building wholesalers competed to secure the precious commodity.

The rapid rise in demand for lavatories and an accompanying sudden nationwide shortage of them from mid-March was the result of market participants attempting to “game” the system ahead of rivals as Chinese factories closed and supply chains dried up. 

The panic buying was prompted by a fear among housebuilders that they would be unable to declare any new property liveable without a secure supply of the vital equipment, said manufacturers.

At its peak, said Kinya Seto, the chief executive of the bathroom and building equipment maker Lixil, some wholesalers were placing orders for 10 times more product than they actually required — a tactic that spurred rivals to respond with even larger orders.

“When people began to realise that there might be a shortage, many of the customers began to order. Where they needed 100 toilets, next time they asked for 400,” Mr Seto said in an interview. “Whether it’s toilet paper or masks, it’s the same thing. People began to make bigger orders.” 

March is usually the busiest season for toilet demand in Japan with people moving houses ahead of the start of the new financial and school year. About 80 per cent of Japanese households use high-end “smart toilets” with auto-warming seats and bidet sprays, a market that generated about $790m in domestic sales in 2019, according to government data.

But this year, demand spiked as Toto, Japan’s biggest toilet maker with seven plants across China, became the first to flag potential shipment delays in mid-February, prompting some wholesalers to place large orders to secure the remaining inventory.

Global interest in Japan’s smart toilets, which have long struggled to catch on in western markets, has also increased in the coronavirus era as people seek higher standards of sanitation and hygiene.

With the shutdown of its plants, some Toto customers turned to Lixil, which was able to partially offset the disruptions in China with plants in other parts of Asia and existing inventory. Lixil boosted its manufacturing capacity by 10 to 20 per cent but it too stopped taking new orders in February till late March as production failed to meet demand. 

Toto said demand for its toilets had been particularly strong from before the outbreak due to a new product launch and it was unable to determine whether there were specific coronavirus-virus-related new orders.

Mr Seto acknowledged the coronavirus surge was a temporary phenomenon. “Once Toto comes back, all of that demand will evaporate. That’s where many manufacturers make a mistake. People tend to anticipate it’s going to last forever but it’s not going to,” he said.

Toto has already resumed production in China but capacity has not fully recovered due to declining demand.

Last week, the company reported an 82 per cent collapse in profits for the January to March quarter. Meanwhile, Lixil delayed its earnings release as it reported a 30 per cent year-on-year decline in product shipments on average for its international housing and water businesses in April.

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