Pop Mart, a Chinese retailer toy company known for its ‘blind box’ idea, was launched with a toy store the year 2010 by the founder Wang Ning. What started as a simple store inside the Beijing mall has now grown into an extremely successful business that is close to becoming a global phenomenon.
But the journey hasn’t always been all roses for the company. The company, which is now public, has experienced a plunge in its share price of by more than 87% when compared to its high (HK$99.40) on February 20, 2021. On the 20th of October, on a Thursday the share price hit another record low, which was HK$12.06.
So how did a well-loved brand come to the point it is today?
The company Pop Mart released interim reports which revealed unaudited gross profit margins dropping from 63 58% to 63.9 percent, Chinese media attributed it to the disruption of the supply chain in the world caused by the pandemic which led to an increase of 15% in raw materials, and an increase of 10% in the amount of wages.
However in China the decline in profit isn’t the only issue for the company. In the first place, younger Chinese consumers are tired of blind packaging and the frenzied marketing tactics and, as a result, the trend of excessive consumption has subsided. Additionally there was a report from the China Consumer Association criticised KFC and Pop Mart’s partnership with mystery boxes, which has led to food wasted. One person was reported to have spent more than 10,000 yuan (over $1500 USD) for 106 meals in order to get Dimoo’s Dimoo unique toy collection.
Chinese media have analyzed the slump in sales at brick-and-mortar stores as a result of the ban on stores due to the outbreak. However, a dramatic drop in sales was also reported on its most popular online Tmall channel, which saw a drop of 35% YoY in June. For Chinese Gen Zs their repurchase price is expected to continue falling when the toy brand has lost its novelty and freshness.
Molly was the most popular IP persona in the history of Pop Mart and was practically an automated money printing machine for the brand over the last few years. Pop Mart sets Molly as an iconic fashion model, but she does not have any background information. Molly has contributed more than 40% of revenue in 2018, however the figure has fallen to 11.5 percent by 2021.
In late 2020 MediaCom published a whitepaper which suggested that “Chinese consumers will be spending more money playing and longer time playing and creating entertaining content”. Due to lockdowns and travel restrictions and travel restrictions, the Chinese market saw a booming of content for virtual play and a significant increase in adults who purchase brands such as Lego and other toys, however, brands like Pop Mart seemed to have lost their appeal.
Pop Mart began to explore new ways to make money, and thus escaping its dark box dilemma when the collectibles craze that was sweeping China was fading. In 2022, the company opened its first store outside of London and hopes to expand its markets to the West. In the last week of August the interim results of Pop Mart show that the revenues from the markets that are not in the mainland of China was 157 million Yuan (US23 million dollars) approximately 6.6 percent of the company’s total revenues, and grew by 161.7 percent year-on-year.
Also, will the sun rise in international markets for Pop Mart? What should the company do to adjust its strategy? What is the best way to rethink the toy and game category in China? Campaign asked branding experts.
There is opportunity for Pop Mart to move into the virtual play, NFT/metaverse/cartoon animation territories to ignite new interest on their offering. I would suggest Pop Mart move into this area to gain some of the expansion for themselves on the internet. As an example, Lego toys get into animation, gaming, movies, IP collaboration in merchandise in order to tap into a the market for growth.
Some brands may not be able to survive the pressures of international markets since every country is facing a tough economic time that are characterized by high inflation and the cost of living. Brands that are planning to expand internationally also have to determine the potential of the market prior to entry and determine if consumers have more budgets or willingness to invest. In an economic downturn consumers are seeking return on investment and value. In our report , ‘The The Future of Play’ we referred to ‘novelty’ as one of the primary reasons for playing and this may provide an ideal opportunity to Pop Mart to consider limited editions or high-value products in order to fulfill this need that consumers purchase in order to sell. Maybe even do more unorthodox brand or IP collaborations.
As time passes, companies and products will need to depend on the virtual world to bypass physical limitations–through the virtual reality or the metaverse.
Pop Mart has done a great job with its marketing efforts, driving excitement, engagement, and conversion, however it’s not been able to have managed the brand as an strategic asset that can sustain growth. This has led to the design of the product that is reactive instead of leading, and the value consumers can see in the ‘one more set’ diminishes.
Some things Pop Mart could consider on the future growth strategy of its brand and strategies:
Create a clear and concise purpose that will guide the design of products and marketing. Why do you think Pop Mart exist? What is the main benefit that is relevant to consumers’ lives? What effect does it have beyond just’simply enjoyable for the individual or communities, as well as society and the environment?
Create clear concepts and a clear navigation for the retail and product portfolios What role will each IP perform in Pop Mart’s marketplace? Does each series offer a distinctive value propositions?
The most important thing to consider on the path of Pop Mart’s international markets is a Web3 strategy and the steps. Pop Mart has great potential to develop immersive experiences by making the physical set accessible to a whole new level, and leveraging its NFT ecosystem.
Pop Mart became a massive success due to its capacity to design and create stunning collectible characters that are delivered through the element of surprise in the blind box. As a result of this blind boxes began popping everywhere. Not only snacks, toys fast food establishments as well as jewelery and expensive products. Blind boxes became so popular that they began to be referred to as the “blind box economy” (Mang He Jiang Ji ) Then, Chinese people became tired of them.
The public also became tired of Pop Mart’s Pop Mart cast of characters which included the adorable Molly. In addition to her design as well as aesthetics Molly did not have a strong emotional story that could keep the audience interested with the plaything.
Pop Mart can no longer depend on the blind boxes and has to utilize its own unique vending machine model of distribution to introduce new products to the market. I would recommend following this Lego IP model but work with popular anime comic stories featuring enduring and solid characters that can keep customers in a state of constant emotional engagement for a long the course of time.
Pop Mart could also consider developing different play scenarios for its current models, either in the physical world or in the metaverse. In the physical world doll houses, as an instance, are a popular trend for girls on the social media platform RED (Xiao Hong Shu ). Pop Mart could create doll houses for your office or home space.
It’s not the case that all Chinese brand in the world will have more chances, however I’m certain Pop Mart will do well. Chinese popular culture companies that are able to take advantage of the K-Pop bubble-tea Asian hipster trend will definitely reach their audience outside of. Visit the nearest Miniso (Ming Chuang You Pin ) retailer in America where you’ll find the place packed with shoppers and the typical wait for Miniso’s San Diego Haidilao (Hai Di Lao ) hot pot restaurant ranges from 30 mins to over an hour. To stay trendy with Western GenZ nowadays it is essential to appear nice on TikTok.
As with many categories of products as well, the lockdowns have affected the main retail channels due to the fact that fewer customers have visited retail stores, which has forced manufacturers of toys to become more creative on their online commerce sites. If things improve and people return to shops, I believe the market will rebound as collectible toys are extremely sought-after. But they’ll need to be reintroduced with newer models of toys as well as new ways to get consumers involved with them.
