Originally published on metropolis.co.jp on January 2004

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Born in 1974, the furry feline turns the big 3-0 in November. That’s an eternity in show business and puts Kitty alongside other global cartoon stalwarts like Snoopy, Mickey Mouse and Winnie the Pooh. Year in and year out, she nets her owners at Sanrio about $500 million in revenue and helps generate billions more for those who license her image.

But while Kitty and her forever-innocent face still sell well, she’s starting to show her age. The shrinking teenage population in Japan, a flurry of rip-offs and just plain old brand fatigue are all chewing away at Sanrio’s sales. Some also worry about the company’s leadership as Sanrio’s founder and president, Shintaro Tsuji, is now 76.

While all legitimate concerns, don’t bet on Kitty heading over the hill into cartoon heaven any time soon. Tsuji has built a formidable marketing machine that is bent on ensuring that Kitty remains a favorite of young girls for years to come. Sanrio is also rapidly expanding in faster-growing markets in the US, Europe, China and Russia to offset weaker sales at home. And it’s adapting to the times by plastering Kitty on an ever-wider range of products-22,000 in all.

Trend watching

513-F-2Sanrio, which introduces and removes about 600 items a month to keep Kitty’s lineup fresh, still does this with almost no advertising, movies, television shows or comics-an amazing feat in this media-saturated world. By designing a wide enough array of products, Sanrio can also reach different age groups simultaneously. Many products are collectible and priced cheap enough so fans need to spend only a modest sum to buy all the items in a series.

Of course, at least in Asia, the Kitty craze seems to have worn thin. She is not causing stampedes the way she did in 1999 and 2000, when McDonald’s gave away Kitty dolls with its Happy Meals. As is their wont, teens in Harajuku have moved on from adorning everything in pink to newer looks. Winnie the Pooh recently became Japan’s most popular character for girls, unseating Kitty for the first time, according to a Character Databank survey.

Still, Sanrio is not unhappy the Kitty craze has died down. Fads come and go and leave companies with warehouses full of unwanted inventory. While surges in popularity certainly help, Kitty is now pretty much a fixture in Taiwan, Hong Kong, Singapore and other Asian markets where she was all the rage just a few years ago. That’s OK with Sanrio, which seems focused on steady, predictable growth.

“It’s like a balloon,” says founder Tsuji, said, referring to Kitty’s stardom. “If you keep blowing it up, eventually it will pop.”

Tsuji should know. Kitty has gone through several boom-and-bust periods before-most notably in the late ’70s and in the ’90s-and each time, Sanrio has managed to bring her back for encores. That’s a testament to Sanrio’s knack for churning out a line of creative products and remarkable given how fickle Japanese consumers are.

It is also a sign of Tsuji’s ability to sustain Sanrio during the rough patches. By bucking the trends over the years, he has moved into areas others were slow to reach. At the same time, Sanrio’s more than 400 different characters allow the company to develop and market an almost infinite line of goods.

This has taken pluck, something Tsuji, born in Yamanashi in 1927, has in spades, at least by Japanese standards. His first real job was selling black-market booze and other items in the chaos following World War II. Seeing his wayward tendencies, his family helped him land a job in the prefectural government, a much coveted job back then.

Tsuji was soon bored with his job, started playing pachinko and reading newspapers upside down for fun and was fired after less than a year. Before he was sacked, though, he passed an exam to join the commercial department as an instructor. Eventually, he parlayed this into a project promoting Yamanashi-grown produce.

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He tired of this, too, and resigned in 1960 to start the Yamanashi Silk Center Co, Sanrio’s original name. Ever the entrepreneur, Tsuji convinced several politicians to invest in the new company. Tsuji later bought back all their shares, which would be worth ¥2.5 billion now, by his estimates.

The first few years were tough. The company almost went belly up when a client defaulted on a ¥5 million payment. But Tsuji hit it big selling rubber beach sandals that he embellished with small flowers. The “oriental sandals” even attracted attention from overseas. Tsuji did not miss the message: By tweaking the design, he turned an everyday item into a branded one and boosted sales.

“If you attach added value or design to the product, they sell in a completely different way,” he wrote in his autobiography, The Secrets of Sanrio.

Soon, he repeated the process with wallets, slippers and other goods, this time adding strawberries and other fruit. By the end of the ’60s, Tsuji set up an in-house design team to pump out new creations that would yield royalties when they were licensed out.

Tsuji also hit it off with Charles Schulz, the creator of the Peanuts comic strip, and won one of the three licenses to sell Snoopy goods in Japan. With far less success, Tsuji also sold Hallmark greeting cards and Mattel’s Barbie doll. Both flopped because the faces on the cards and Barbie dolls were Western. Sanrio ended up losing ¥700 million on the dolls.

Queen of cute

513-F-4Tsuji learned one key lesson from J.C. Hall, Hallmark’s founder, though: Japan’s gift market was wide open, especially for items cheap enough for kids to buy. So Tsuji pumped out notebooks, pens and coin purses that students could afford.

This was in the early ’70s, when unicorns, giraffes and anything animal-like was all the rage. Tsuji, according to his telling, told his design department to come up with a range of animal designs. One designer, Yuko Shimizu, began working on cats, inspired by Lewis Carroll’s Through the Looking Glass. She played with her designs a bit, turning the cat sideways to show its profile, then turning it again to show it looking straight ahead.

She later added a dash of Western appeal by naming her Kitty White, later shortened to Kitty. Her official birthday was November 1, 1974, and the first Sanrio product was a small vinyl see-through change purse. The small keepsake cost ¥240 (less than $1 at the time, but about $2.25 today).

Sales quickly took off and other products were added, including futons, stationery and dolls. Sales doubled in 1975 and again in 1976, when Sanrio started licensing Hello Kitty’s image. Profits more than quadrupled between 1974 and 1976, hitting $44.9 million, a level not reached again for eight years.

There is no single reason why Kitty became so popular, but rather a series of events working together. Kitty hit the market in the ’70s when Japan’s economy was booming and the country’s growing middle class had more disposable income to spend on frivolities. Tsuji also played with Japan’s obsession with all things Western, framing Kitty as English (she was “born” in suburban London).

Kitty also came of age just as a generation of young girls went gaga over anything cute, or kawaii. By most reckoning, teenagers acting childish was a form of rebellion, a way to snub your nose at your parents who pressure you to study hard and get married. To others, it is a devious plot by companies like Sanrio to enfeeble girls and keep them forever young and submissive.

Whatever your view, one thing is clear: Japan’s kawaii bunka (culture)has stuck and inspired waves of other companies to jump on the bandwagon. Selling to the cute set, the Shibuya crowd or whatever you want to call it, is a multibillion-dollar enterprise that shows little signs of slowing. It has also brought a rush of advertisers, marketers and product designers to Tokyo for a look-see at what makes the Japanese teenager tick.

Many of these pros inevitably look to Kitty, the queen of cute, for answers. There are many explanations for her success. The first and perhaps most obvious is her visual appeal. White, red and pink are naturals with girls, being safe and warm. Kitty’s features-eyes wide apart and a flat, expressionless face-are easy and non-threatening to tots.

Hello Kitty’s story line is also decidedly open-ended. Unlike Snoopy, for instance, Kitty does not evolve or mature with her audience or, in fact, do much of anything. Her deepest thought might be about whether to eat ice cream or cookies as a snack.

“We work very hard to avoid things that would define the character,” says Bruce Giuliano, vice president of the licensing division at Sanrio Inc. in Los Angeles. “All of Sanrio’s characters are very minimalist, at least from its back story, and they are also minimalist in a graphic sense.”

This minimalist approach, Giuliano says, allows viewers to reflect onto Kitty whatever they want. Since she basically lacks a personality, she can be anything to anyone. In this sense, she is a pure character, an image without much of a story. This, not unintentionally from Sanrio’s point of view, is what makes her a character suitable not only for children, but for adults who may see Kitty as an escape back to childhood or a fashion statement.

The new generation

513-F-5While this formula will likely work well for generations of young girls, Sanrio faces several daunting challenges keeping Kitty’s flame glowing. The number of youngsters in Japan is falling fast, and in the cool logic of the toy industry, that means fewer kids to buy Kitty cell phones, Kitty dolls and Kitty boomboxes.

Kitty is also under attack from legions of rip-off artists, particularly in China, the world capital of fake goods. Sanrio has a team of ten lawyers working around the clock to ferret out fakes. As any brand goods maker knows, the battle is never won. The sad fact is that the company loses an estimated ¥100 billion ($910 million) because of fake Kitty goods, according to Sanrio’s legal beagles.

Her designers and product planners must wrestle with another undeniable fact: She’s plastered on so many products already that there are limits to where else you can plant her face. Kitty is already on surfboards, minicars and toasters. What else can a fan possibly buy?

The answer, it seems, is everywhere else. Sanrio is stepping up its efforts overseas, particularly in the United States, where a new generation of pop singers have latched on to Kitty for her kitsch value. Sanrio has also started opening stores in China and Russia, and is targeting Britain, Germany and Italy, countries that are also getting bombarded with Japanese television cartoons.

Tsuji, who turned 76 in December, shows few signs of slowing down. That’s good and bad news for those trying to handicap Kitty’s health. On the one hand, Tsuji was the driving force behind the company’s good fortune. He not only steered Sanrio towards animals and toys in the ’60s, but he is one of the first Japanese businessmen to realize the value in selling “cute” to adults. Having run Sanrio since its inception in 1960, his loss would leave a void.

On the other hand, every company needs new energy and new ideas. Sanrio has only a limited presence on the Internet and its two theme parks are small and dated. The need for the company to pump up sales overseas also requires a president who has their pulse on trends outside Japan and can speak to investors in a language they understand.

For now, kids seem to have no trouble understanding Kitty, which should for a decent 30th birthday for the furry one. After that, we’ll have to see if Kitty has nine lives.

Ken Belson and Brian Bremner are co-authors of Hello Kitty: The Remarkable Story of Sanrio and the Billion Dollar Feline Phenomenon (John Wiley & Sons Inc, ¥2,252 from Amazon Japan
and Amazon US). Visit www.hellokittythebook.com for more information.