Stay informed with free updates
Simply sign up to the Asia-Pacific companies myFT Digest — delivered directly to your inbox.
Toys R Us Asia is looking beyond children’s toys this Christmas as it adjusts to dwindling numbers of infants in the region and addresses a growing “kidult” market by tapping into cultural trends.
“Falling birth rates is a big social phenomenon that we cannot reverse in the short term . . . so we are shifting focus for growth to come from Gen Z kidults,” said Leo Tsoi, chief executive, in a Financial Times interview.
The company, independent of the US toy retailer of the same name, operates in 10 Asian markets, eight of which have a birth rate of less than two, said Tsoi. That is below the average replacement rate of 2.1 children per family needed for a stable population.
Tsoi, who joined the toymaker last year, said spending by adults currently accounts for about one-eighth of the company’s revenue, but sales were “growing really fast”, especially in China and Japan.
“The market might arguably be bigger than kids’ toys given that birth rates have been dropping very significantly in the past few years,” he said.
Toys R Us Asia has sought to boost its appeal with Gen Zs with nostalgic goods such as Hello Kitty toys or ones that tap into current cultural trends, such as gaming hit Genshin Impact and Hollywood movies such as the upcoming Jurassic World Rebirth.
“The young generation is living in the social media and gaming world, where this intellectual property and characters are very sticky because it’s part of their daily entertainment,” he said.
In 2018, Toys R Us Asia separated from its US parent company, with the backing of Hong Kong conglomerate Fung Group and other investors in a deal that valued it at $900mn.
The group has adapted its sales channels for adult shoppers who are less likely to venture into one of the around 500 stores across the continent. It has partnerships with food delivery platforms Meituan and Ele.me, catering for the rise of consumers who spot products on social media and expect same-day delivery.
By targeting an older demographic, Toys R Us Asia is also catering more to females. This year, Hello Kitty plastic flowers have been a popular gift for women, the chief executive said.
While women spend more on toys than men, opting for cute accessories such as badges and key chains, Tsoi said more toys are sold for boys in the children segment. “Boys are a lot more demanding, and they damage toys faster. At that age, girls have a longer attention span and tend to play with one toy for longer,” he said.
Chinese toymaker Pop Mart, which makes collectible toys sold in vending machines, has also tapped into the growing kidult economy. The company has seen demand grow for its characters sold in “blind boxes” in vending machines in China and has expanded to more than 30 countries.
The dramatic decline in births in the world’s most populous continent — especially in the major consumer markets of South Korea, Japan and China — is forcing companies across swaths of industries, from education, food and beverage, and healthcare to entertainment, to broaden their audience and target older consumers.
In other examples, dairy companies such as China’s Yili Dairy have launched a selection of calcium-rich milk products for the fracture-prone elderly alongside their baby formulas. Meanwhile, diaper makers such as China Hangzhou Coco Healthcare products have seen adult demand rising, balancing falling sales for baby products.
