Gen Z’s fashion power in China’s toy market: Who can become the next Pop Mart?
China’s toy market is experiencing a booming year with an overall growth rate of 35%, and it is expected to break through 150 billion RMB (23.56 billion USD) by 2025. Gen Z consumers are buying and collecting designer toys in more diverse styles and forms than ever before, and Pop mart’s “blind box” is no longer the only game in town. With China’s Gen Z population approaching 210 million, trendy toys represent a huge potential market for new kids on the blocks!
Image taken from global Pop Mart website.
Who is Pop Mart and why is it so popular?
Pop Mart is the leading brand in China’s designer toy industry with 2.2 million members in 2019 and 3.2 million as of May 2020. Its overall product repurchase rate of 58% bears witness to its humongous success in marketing and retention. In just 3 years, the initial “blind box” stock was launched where net profit soared 289 times, and went from a simple toy collection store into an IP brand with revenue of self-developed products accounting for 82.1%.
At its peak, Pop Mart’s listing on the Hong Kong stock exchange hit HK $107.6 per share, the highest price since its listing in Hong Kong- with a total market value of HK $147.2 billion. Since then their price has been choppy, hitting new lows and halving from its peak just 3 months after going public. They have opened an era of fierce competition for Chinese fashion toys with large retailers, traditional toy enterprises, Internet giants and other rivals entering the fashion toy market one after another (ie: TOP TOY, 52TOYS, X11, Alpha Group (奥飞娱乐), IPSTATION (IP小站), etc.).
There is still a lot of room for expansion in China’s trendy gaming market
This new culture and lifestyle of collecting designer toys is growing among young Chinese consumers. In 2019, after the initial launch into China’s design toy market, China’s per capita GDP exceeded $10,000. As the standard of living increases, consumers are more inclined to appreciate art and culture.
Which types of toys are Gen Z’s favourites?
The new forms of trendy toys range from building blocks, BJD (Ball Joint Doll), cotton dolls to action figures; pink and cutie styles have become less popular as other various aesthetic expressions including mysterious, mechanical hybrid, and dark style have become more fashionable. This is one of the reasons why various toy companies have increased the market supply of diversified trendy toy products starting in 2021. Including collectible toys, blind boxes, figures, assembled models, transforming Mechas, GK Statues and other diversified categories, these will be a new opportunity market of RMB 100 billion.
Image taken from 2B Art & Toys website
The sneaker market once fueled by Gen Z has lost some momentum in China since 2020, now they are shifting to collectible toys. The Bear Brick, made by Japanese Medicom Toy is becoming Gen Z’s next “hit”. Collaborations with fashion brands, cultural IP and visual artists induce Gen Z’s desire not only to dress fashionably but also to collect “trends”.
Image taken from FairytaleBJD Store
According to Mob Tech 2021 Generation Z “Fashion Power” insight report
Ball Jointed Dolls, also called “adopted babies” in Gen Z’s BJD fan group, are dolls that are joined together with ball and socket joints. They can be customised by painting, changing the eyes and wig, clothing and so on. The BJD style has been described as both realistic and artistic as it is influenced by Japanese animation. The city-level distribution of consumers of BJD dolls is as follows: first-tier cities accounted for 32.6%, new first-tier cities accounted for 27.7%, and second-tier cities accounted for 15.5%. A Gen Z BJD doll consumer spent on average more than RMB 3,000 (online and offline) on the dolls, and more than 30% spent more than RMB 1,000 for extra accessories.
Pop Mart, which sells “Blind boxes”, is a box containing a unique minifigure, designed by different designers or artists. Pop Mart has secured its place as the leader of the Chinese designer toy market in China. According to a survey of 500 Gen Zers, 86.5% preferred the Pop Mart blind box, followed by 52TOYS, accounting for 37.2%. The market sales share for 52TOYS ranks second in the blind box industry. The most popular series of blind box IP named CICI‘S LULU attracted more than 72,600 people to purchase in its flagship store on Tmall. It is also worth noting that 1983 Toys(19八3TOYS), a toy brand with a history of 10 years was also preferred by 32.4% of Gen Z in 2021.
The percentage of Gen Z women who purchase blind boxes is nearly twice that of men, with 64.7% women and 35.5% men. Pucky, Dimoo, Molly, etc. are their favourite blind box IPs.
Gen Z in the sinking market offers new expansion opportunities for the toy market
Second-tier and third-tier cities in China may also obtain the latest trendy toy information online. With the increase of user groups, not only the Z generation in first-tier cities have purchasing power, but young groups in second and third-tier cities have also begun to attract the attention of brands, and the trend market still shows a lot of room for development. What promotes the growth and changes of the group is that trendy games are no longer a niche, but have become a popular culture. It’s the same as the coffee market. Decades ago, only a minority of Chinese people drank coffee,but now no one thinks that drinking coffee is a habit that belongs to only a small group.
Brands are also actively developing user groups in second, third, and fourth-tier cities to expand their markets. According to the 2021 PopMart semi-annual report, their retail stores maintain a relatively synchronised store opening pace in first-tier cities, new first-tier cities, second-tier cities and other cities, without focusing on first-tier cities with stronger consumption ability. 52TOYS and TOP TOY are also distributed in various cities.
Image taken from Guruclub webiste
Moreover, many brands are also expanding through online channels, so local youth can become aware of the new culture and trends. In April 2021, the new toy brand TOP TOY quickly opened 14 stores, while 52TOYS, which had been focusing on online channels, also actively invested in offline channels and opened about 20 stores in 2021.
What can we learn from Chinese toy designer brands in the post-blind box era?
In terms of marketing strategies, all the brands in the industry show a common platform, but the emphasis is different: Boomart, 52TOYS and TOP TOY are more prominent in the development of original products, while Qiandao, for example, focuses on marketing on online fashion interest community platforms.
Screenshots taken form Qiandao(千岛) platform
Brand IP development
In 2021, TOP TOY launched 6 original IPs, and they have continuously upgraded and optimised their IPs. Other specific methods include crossover IP joint names and taking advantage of TOP TOY’s offline channels to carry out extensive signing and increase the activity opportunities of artists, IP and users’ fans, and integrate the fans behind each IP into TOP TOY’s private domain traffic.
Image taken from Miniso website
52TOYS uses different product IP lines. The original IP is mainly used for blind box products, while the IP developed with other brands focused on model toys. The collectible toys are in the form of limited editions and crossovers with artists.
52TOYS regards “product strength” as the core of the company. According to the external introduction of 52TOYS, a set of “721 rules” has been listed in terms of product strength building. The so-called 721 means that 70% of the energy is put into developing products to meet the market, 20% is for designers to reserve forward-looking design capacity for the next two to three years, and 10% is used to meet designers’ imagination and explore new experimental boundaries, so as to ensure the innovation of 52TOYS to meet the preferences of the rapidly changing Gen Z.
In order to expand and enrich creative products in the design area, 52TOYS shows off a prototype creation every year at the Competition and Dream Fair International Original Art and Designer Toy Exhibition. 52TOYS also started the Designer Growth Cooperation Plan from last year, and set up a special fund of RMB 50 million to support young Chinese designers and artists as a dream incubator base for original designers.
Gen Z is the main consumer of the trendy toy market, their purchasing ability and the improvement of product design requirements offer opportunities and challenges to the brand. We see a lot of prospects in this market. The increase in the number of enterprises in the designer toy market has put more importance on brand recognition. New Chinese fashion toy brands want to tell a new story to become the next market leader. However, for any industry, “respect time, respect management” is not just a saying.
In terms of the current trends in the toy market, how to create an industrial chain system, build brand IP, and obtain the first advantage in the industry have become the necessary conditions for brands to establish a long-term foothold in the market and achieve success.
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