The Baby Bust

World birthrates are declining and shifting. Those that market to kids could be dramatically affected if we don't pay attention and plan ahead.

Europe has a dramatically declining childhood population. So does Japan. The U.S. birthrate is rising, but in a patchwork fashion. Some American metropolitan areas report more deaths than births.

In a July 3 article, “As the Birthrate Drops, A Doll Is Born in Japan,” China Daily reports that “Japan is the first developed country to register more annual deaths than births and the elderly will outnumber children two to one within five years.”

The lack of children even impacted the doll industry. The same article reports that Bandai's most popular doll in Japan is targeted to those who are old enough to be, but aren't, grandparents. Called Purimopueru, “It's now Bandai's best-selling doll with more than a million bought.”

Japan is not alone. The New York Times Magazine reported in its June 29 issue that in the 1990s, demographers noticed a sharply declining birthrate across Europe. Since then, it's declined even more.

The article states: “The figure of 2.1 [births] is widely considered to be the “replacement rate” — the average number of births per woman that will maintain a country's current population level. . . For the first time on record, birthrates in southern and Eastern Europe had dropped below 1.3. . . At that rate, a country's population would be cut in half in 45 years. Demographers have invented an ominous new term for the phenomenon: “lowest-low fertility.”

The global birthrate is declining as well. Again, according to the Times, “… birthrates have plummeted — from 6 globally in 1972 to 2.9 today.”

The U.S. is experiencing a different phenomenon. America has a fertility rate of 2.1, the highest since the 1960s. But population growth is uneven. According to a May 18 New York Times article entitled “As Deaths Outpace Births, Cities Adjust,” there are more people dying than being born in “the Northeast, the Rust Belt of the Middle West and Appalachia.”

What Goes Around the World…

Companies that market to children will need to shift how, where and to whom they market. Companies will have to look for markets wherever there are children. This will mean products flowing the other way: Not just from China but to China. Markets will be exploited in India, Russia, Vietnam and any other country with a large population. This “gold rush” will spark intense competition among the developed world's manufacturers.

U.S. companies have talked global, but in general stayed home. They may still be able to afford to, but their European and Japanese counterparts will need to open new markets or go out of business.

American companies should not feel too smug about their advantage in birthrates. If Japanese and European companies open new markets successfully, they will be more sophisticated, robust and richer. American companies could find themselves struggling on their own turf with these companies. What Toyota and Honda did to the U.S. automobile business shows what happens when U.S. companies get complacent.

Retailers in regions with negative birthrates are also going to have to adjust or go out of business. The smart ones will drive competitors out of business and corral whatever market share is available or shift their product selection to appeal to adults.

The coming fight for market share is going to be tough. The winners will be those who take action now to determine what their products and strategies will look like in three, five and ten years.