Historically known as the third largest toy market, Japan has been witnessing a decline in toy sales for several years, making it exceedingly difficult for toy firms such as Takaratomy, Bandai and Mattel to compete.
According to a recent article on Seeking Alpha, the population is aging and the 0 to 14 age group is ‘falling off a cliff’.
It is also a notoriously difficult place to do business, for example it offers a difficult distribution infrastructure for fast moving products, such as toys, compared to other companies.
“Toy manufacturers have to enter into an alliance with a well-reputed distributor who has been in business for a rather long time and this successfully so,” reads a statement from a wholesaler in Japan.
“This gives us an assurance that the company is solid and their products well made and in line with market needs. We would not deal with them otherwise and we could not in all conscience take their products into our assortment.”
In addition, the Japanese population is starting to decline, with the National Institute of Population and Social Research predicting that kids aged from 0 to 14 will decline from 15,827 in 2015 to 14,568 in 2020. This gradual decline is making a striking impact on toy sales throughout the country, with many manufacturers suffering.
The report continued: “With shrinking population, there is a shrinking of the pie that is available for manufacturers and retailers, and this is leading to increasingly cutthroat competition.”
Despite this shift in the Japanese market, the report offers some reassurance for toy firms who are looking to expand into the market.
For example, hit toys such as Shopkins and Hatchimals, which were a triumph during their original launch, will of course always find a place within the toy market in Japan.
“If you have a truly breakthrough product such as Hatchimals, then you will always have a shot in Japan like anywhere else. If you do, your best bet is do what Spin Master did – go to the top and talk to either Takaratomy or Happinet or alternatively to Sega Toys,” the report added.