From stock shortages, counterfeit goods to competition, this is POP MART's "top-tier anxiety"

POP MART is expanding into Europe, Labubu has become popular, but challenges have also arisen.

According to news from the Wind Trading Desk, on June 11, an industry expert with 20 years of experience in the European toy market, who is currently a distributor for POP MART, shared his observations on the European trendy toy market in Goldman Sachs' latest research report.

The expert stated that the European trendy toy market started about ten years ago and is now growing rapidly, with POP MART riding this wave, and the hottest IP is undoubtedly Labubu.

Initially, POP MART spread in Europe through the Asian community, but with the promotion of celebrities, TikTok influencers, and the opening of stores, it has gained popularity among local young people in Europe, primarily targeting females aged 15 to 25.

However, the expert also warned that while becoming popular is quick, maintaining that popularity is more challenging. The biggest challenge currently facing POP MART is insufficient supply, which not only deteriorates the experience for consumers and distributors but may also lead to the proliferation of counterfeit products and allow competitors to take advantage of the situation.

From an industry perspective, trendy toys are essentially a "supply-driven" market, and continuous product innovation is the core driving force for growth. Although POP MART has performed excellently in expanding its IP matrix, to maintain momentum, it needs not only to continue "launching new products" but also to increase investment in content ecosystem development to establish a deeper emotional connection with users.

After all, an IP supported by stories, films, and books is more likely to keep users engaged long-term, thereby extending the IP's lifecycle.

Currently, Goldman Sachs rates POP MART as "neutral" and gives it a 12-month target price of HKD 151.

From "niche circles" to the public eye

Trendy toys are not new in Europe; brands like Funko and Sonny Angel have already enlightened users' understanding of trendy toys a decade ago, but the real explosive growth has occurred in recent years.

Especially during the pandemic, as people stayed at home, the focus of consumption gradually shifted from travel and entertainment to "self-pleasure," and high-priced designer trendy toys became the new favorites. Currently, the European trendy toy market maintains strong growth momentum, and POP MART is riding this wave.

POP MART's recognition in Europe initially stemmed from natural dissemination within the Asian community. With TikTok influencers and celebrities (like Lisa from Black Pink) frequently sharing images on social platforms, the brand's popularity has significantly increased.

Moreover, the offline experience brought by POP MART's local store openings and collaborations with local IPs has quickly elevated the brand's profile, igniting interest among local young people in Europe.

Currently, POP MART's main consumer group is females aged 15-25, while the penetration rate among male consumers is relatively low.

The expert pointed out that the first country where POP MART became popular in Europe was Spain, due to Lisa from Black Pink showcasing POP MART's products. Now, countries including Germany and the Netherlands have shown strong interest.

The hottest IP is Labubu, but supply shortages are a challenge

Among all the series, the hottest IP is undoubtedly Labubu, followed by Skullpanda, Crybaby, and Hirono. Despite POP MART investing significant resources in Molly, this IP is still less popular in the European market compared to the Asian market But currently, the biggest problem for Pop Mart, especially the Labubu IP series products in Europe, is—supply cannot meet demand.

According to The Paper, insiders say that Pop Mart expanded its production capacity at the beginning of the year, but demand far exceeds the supply chain's response speed, even pushing the sewing machines to smoke but still unable to keep up with demand.

Experts believe that this issue is partly due to the unpredictable demand for trendy toys, and partly because Pop Mart is simultaneously expanding into multiple large overseas markets such as the United States and Europe, leading to tight production capacity.

However, insufficient supply may not only worsen the experience for consumers and distributors but also lead to the proliferation of counterfeit products and allow competitors to take advantage of the situation.

Currently, Pop Mart faces competitors in Europe, including international brands like be@rbrick and Tokidoki, as well as Chinese competitors like 52TOYS and Funism.

Here are some classic toys from these companies:

be@rbrick Bear Series:

Tokidoki Four Seasons Classic Reissue Series:

52TOYS Strawberry Bear Series:

Funism Flying Dog MOCO Professional Series

They are also selling IP-based blind boxes and plush toys, but experts point out that these players face challenges in scaling up in the short term due to a lack of experience operating in the European market and restrictions on IP licensing.

Goldman Sachs highlighted a key case in its report—Sonny Angel. This IP has been sold in the European market for 15 years, but it only became popular in November 2023 when a certain influencer showcased their Sonny Angel collection. Subsequently, due to supply shortages and rampant counterfeiting, the popularity of this IP quickly diminished.

So, while it can become popular quickly, maintaining that popularity is more difficult. Abroad, counterfeit products similar to LABUBU LAFUFU debuted directly on social media, being referred to by netizens as LABUBU's "ugly stepsister." Amidst the unstable quality of genuine products and the sudden influx of counterfeits, some consumers have begun to lose their admiration for LABUBU

Some netizens said: I couldn't buy labubu, so I bought a lafufu first. (The picture below is lafufu)

Continuously launching new products and telling good IP stories is the key to traffic

Experts point out that the trendy toy market is essentially a "supply-driven market," and product innovation will become a key driving force. Whoever can continuously launch new series will win topics and sales.

In addition to "new arrivals," content linkage and cultural connections are also crucial for the sustained popularity of trendy toys. For example, if an IP has a story, films, and books behind it, it will be easier for users to stay engaged long-term and extend the IP's lifecycle.

Experts say that although POP MART has done well in expanding its IP series, it still needs to invest resources to produce more content to establish a deeper emotional connection with users.

Moreover, the secondary market is also an important support point for popularity. For example, about 30% of be@rbrick's sales in Europe come from the secondary market.

The secondary market refers to the resale market between players (such as Xianyu, eBay, StockX, etc.). In the trendy toy field, this is not only a trading market but also a value discovery mechanism that can reflect whether an IP has collectible value. However, it is currently difficult to accurately measure the scale of POP MART in the secondary market