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Mar. 10, 2015 - Updated 04:16 UTC



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Reaching Japan's Youngest Consumers

May 19, 2016

Japan's population is continuing to decline and there are fewer births every year, so competition between companies that cater to children is heating up.

There are now 40 percent fewer children in the country compared to 30 years ago.

One company runs 9 small zoos in Japan, and rents its animals out. Since it was founded 2 years ago, the zoo in Kobe has become very popular.

The company’s zoos are unusual as they keep the cages and fences to a minimum so visitors can pat the animals and see them up close.

Tetsuya Sato is the company president.

"I want the children to touch the animals and see them up close in their natural environment. I want them to have a moving experience," says Tetsuya Sato, President of Animal Escort Service.

However, it was not easy to turn his dream of a zoo without cages or fences into reality. Staff trained the animals daily so that they would get used to being around humans and not feel too stressed or aggressive.

They had an especially difficult time training a shoebill stork -- a large gray bird that is an endangered species. When surrounded by a crowd, the stork can panic and attack.

The bird was put in a special shed and trained for a long time, step by step, until it was accustomed to humans.

At first, the windows were covered with leaves, and the bird was only able to see humans through the gaps. The leaves were gradually removed until finally, there were almost no barriers between it and humans.

The caretakers gave the bird constant attention for about 3 months to get it used to contact with humans. Thanks to their efforts, people can now approach it.

The zoo also holds bird shows. Owls are enjoying a surge in popularity in Japan. People can also see a northern goshawk catching its prey in close quarters.

Staff prepare carefully for the show by keeping a close eye on the bird's weight. The bird's food is controlled every day to make sure it's hungry before the show. Otherwise, it won't be interested in the prey, and it will not fly.

"It was exciting because the bird was bigger than I expected," says one young spectator.

Some families visit the zoo twice a month, because each time offers a different experience.

Another company in Osaka has a long history of selling products for infants and children, as well as maternity supplies. It operates 105 shops in Japan.

But its sales have declined over the past 20 years, because of Japan's shrinking birthrate. In 2011, they fell to the lowest ever, and the company was forced to drastically alter its business strategy.

First, it changed the way its products were displayed in stores. Instead of being grouped by the manufacturer, products are now displayed according to the baby’s age ― for instance, products for 5- or 7-month-olds.

"It’s easier to choose because there are products by many different companies, all organized by age," says one mother in the shop.

The change has led to a 10 percent increase in sales.

The company also tried to attract fathers, who have become more active in raising their children. In 2014, it launched free parenting classes at every store.

Participants can learn skills like dressing babies by practicing on dolls.

"If it was a real baby, I’d be more nervous doing this," one father says.

"If you can talk while you do it, the baby will stay calm," a staff member tells him.

Class participants are given a tour of the store, visiting various sections, including those for bottles and blankets.

Not only does that teach fathers necessary information on how to care for a baby -- the company hopes it will also encourage more men to start shopping at their stores.

The company also opened public spaces in their stores to attract customers from various age groups. There is a crawling race for babies who are less than a year old.

Before the company made these changes, its main target demographic was parents.

But by hosting events, it hopes to attract grandparents who want to spend more time with their grandchildren.

"Events like this give me an opportunity to see my grandchildren. I enjoyed it," says a grandmother in the shop.

Also, customers can rent spaces in-store to host birthday parties. Each store hosts about 200 of these events a year.

Family members shop at the store after an event.

"Providing an experience that creates memories is the key to attracting more customers, and selling more products," says Yoshiyuki Sato, president of the company, Akachan Honpo.

The new strategy to attract all members of the family is bearing fruit, and customers are increasing.

Satoshi Oka, a consultant specializing in businesses that cater to children at Funai Soken Holdings, joined anchor Kyoko Tashiro in the Osaka studio.

Tashiro: These new styles of child-focused businesses, are they growing?

Oka: Yes. As we saw in the video, there are more and more experienced-based service facilities and they're gaining popularity. Especially recently, we have facilities where kids can touch and play with animals, or an interactive park using the latest virtual reality technology to offer realistic experience.

Tashiro: Why are these experience-based businesses succeeding?

Oka: Well, when a business tries to sell products -- let's take clothes for kids as an example. There are already high-quality and inexpensive kids clothes in the market, so it's very difficult to sell them, so more and more companies are trying to offer experience-based services to grow their business. The key here is safety -- for example, using safe material in case kids put something in their mouth, or that don't cause allergies on their skin. But also staff service to customers is critical too. Babies and kids must be treated with respect, as individual customers. That's important.

Tashiro: So there are safety-related challenges?

Oka: Yes, ordinary products do not require this level of consideration. They may contain preservatives, which may be dangerous for kids to put into their mouth. But in these facilities, the risks have to be eliminated.

Tashiro: Are there advantages unique to Japan?

Oka: Yes, the spirit of Japanese hospitality is clearly seen in these kids businesses. For example, they provide excitement and fun to the customers, and at the same time they make sure that parents enjoy themselves watching their children play.

Tashiro: The domestic market is shrinking due to the declining birth rate. Are there any signs of overseas expansion?

Oka: Yes, already in other countries there are so-called play-lands, which we used to have in Japan. These are basically large game arcades for children. These facilities for sure will grow into experienced-based service facilities. And because, when a market matures, people start focusing on service rather than material products, they have enough material goods now, and what they want is experience and memories for their children. And that's the same in other countries as well.

Tashiro: Is the overseas market trending like ours?

Oka: Yes, already in countries like Malaysia or Indonesia, where there is a large population, so called edutainment, playing and learning at the same time, is gaining a lot of attention.

Tashiro: So consumers are provided with play facilities as well as immersive experiences?

Oka: Yes. Play and learn at the same time. That's good for nurturing the body and mind of children. The scientific benefits have been proven.

Tashiro: It sounds like there will be more growth.