Declining birth rates: Toys R Us Asia shifts focus to ‘Kidults’

BEIJING: Toys R Us Asia is shifting its strategy this Christmas to adapt to declining birth rates across the region and to engage with the expanding “kidult” market by capitalizing on cultural trends. In a recent interview with the Financial Times, Leo Tsoi, the company’s chief executive, acknowledged that the decreasing number of infants is a significant societal issue that cannot be quickly addressed, prompting the company to focus on growth through the Gen Z kidult demographic.

Toys R Us Asia operates in ten Asian markets, with eight experiencing birth rates below two, which falls short of the 2.1 replacement rate needed for a stable population. Tsoi, who joined the company last year, noted that adult spending currently constitutes about 12.5% of revenue, but that figure is increasing rapidly, particularly in China and Japan. “The market may well be larger than that of children’s toys, given the steep decline in birth rates in recent years,” he stated.

To attract Gen Z consumers, Toys R Us Asia is offering nostalgic products like Hello Kitty merchandise and items related to popular cultural phenomena, including the gaming sensation Genshin Impact and the highly anticipated movie Jurassic World Rebirth.

In 2018, Toys R Us Asia became independent from its US counterpart, with the support of the Hong Kong-based Fung Group and other investors, reaching a valuation of $900 million.

By focusing on an older audience, the company is also appealing more to female consumers. This year, Hello Kitty plastic flowers have emerged as a popular gift among women, according to Tsoi. He noted that women tend to spend more on toys than men, often choosing cute accessories like badges and keychains, while the children’s segment sees higher sales of boys’ toys. “Boys are often more demanding, and they tend to damage toys more quickly. In contrast, girls usually have a longer attention span and engage with a single toy for extended periods,” he explained.

Pop Mart, a Chinese toymaker specializing in collectible toys sold through vending machines, has similarly capitalized on the expanding kidult market. The company has witnessed a surge in demand for its characters packaged in “blind boxes” and has expanded its presence to over 30 countries.

The significant drop in birth rates across Asia, particularly in key consumer markets such as South Korea, Japan, and China, is prompting businesses across various sectors—including education, food and beverage, healthcare, and entertainment—to broaden their target audiences and reach out to older consumers.