In 2025, the global toy and collectibles market is witnessing a seismic shift, driven by a pastel-hued, mischievous creature named Labubu. Created by Hong Kong-born artist Kasing Lung, this “ugly-cute” character has transcended its origins as a blind-box toy to become a cultural phenomenon, reshaping consumer behavior and redefining the boundaries of IP-driven commerce. At the heart of this revolution is Pop Mart, the Chinese company behind Labubu, which has leveraged cultural virality, digital engagement, and strategic retail innovation to unlock a multi-billion-dollar growth trajectory.
The Viral Engine: Labubu as a Cultural Currency
Labubu’s rise is not merely a product of design but a masterclass in leveraging digital virality. The character’s aesthetic—a blend of whimsical “ugliness” and soft pastel tones—resonates with Gen Z and millennial consumers who seek authenticity and self-expression. This demographic, often referred to as “kidults,” is driving a global shift in the toy industry, with projections suggesting they will account for one-third of EU toy sales by 2034.
Pop Mart’s strategy has been to weaponize social media and celebrity influence. Endorsements from global icons like BLACKPINK’s Lisa, Rihanna, and Kim Kardashian have transformed Labubu into a fashion accessory rather than a mere toy. On TikTok, the #Labubu hashtag has generated over 1.4 million posts, while Instagram showcases the character as a bag charm, paired with luxury brands. This crossover into high fashion has elevated Labubu’s cultural capital, making it a symbol of status and community.
The Psychology of Scarcity: Blind Boxes and Behavioral Economics
At the core of Labubu’s success is the blind-box model, a lottery-style retail format that taps into the human brain’s reward system. By creating an element of surprise and scarcity, Pop Mart has engineered a dopamine-driven purchasing cycle. Limited-edition drops, such as the lavender-colored Labubu plush, have sold for over 150 yuan on secondary markets, far exceeding their retail price of 99 yuan. This scarcity-driven frenzy has fueled a thriving resale economy on platforms like eBay and StockX, with over 450 hourly searches for “Labubu” in May 2025 alone.
The company’s ROBOSHOP network—2,597 automated kiosks operating 24/7—has further amplified this model. These low-cost, high-margin stores (accounting for 60% of Pop Mart’s retail footprint) enable rapid global expansion without the overhead of traditional retail. In the first half of 2025, overseas revenue surged 440% to 5.6 billion yuan, with the Americas leading the charge with a 1,000% growth rate.
Diversification and Long-Term Resilience
While Labubu dominates Pop Mart’s revenue (34.7% in H1 2025), the company is hedging against IP fatigue by diversifying its portfolio. New product lines, such as the POPOP jewelry brand and an upcoming animated series, aim to extend Labubu’s lifecycle into entertainment and lifestyle. This strategy mirrors the playbook of global giants like Sanrio and Mattel but with a digital-first twist.
Risks and Regulatory Headwinds
Despite its meteoric rise, Pop Mart faces challenges. Regulatory scrutiny over blind-box models—linked to gambling-like behavior—has already caused a 6.6% single-day stock drop in June 2025. Additionally, 43% of consumers have expressed concerns about design repetition and price sensitivity. However, the company’s agility in adapting to trends (e.g., localized pop-ups in the Louvre and Times Square) and its focus on high-margin digital sales (1,000% YoY growth on TikTok Shop) suggest a resilient business model.
Investment Outlook: A High-Growth Bet with Cultural Momentum
For investors, Pop Mart represents a compelling case study in leveraging cultural virality and behavioral economics. With a projected 30 billion yuan revenue in 2025 and a 66.8% gross margin, the company is outpacing traditional toy rivals. Its global expansion into the Middle East, Central Europe, and Latin America, coupled with plans to open 60+ international stores by year-end, signals untapped potential.
However, the key to sustained success lies in balancing innovation with IP longevity. Pop Mart’s recent foray into entertainment (e.g., an animated series) and its diversified product lines (jewelry, fashion) position it to weather market shifts. Investors should monitor regulatory developments and consumer sentiment but remain bullish on the company’s ability to adapt.
Conclusion
Labubu is more than a toy—it is a cultural and economic force. By harnessing the power of digital virality, emotional branding, and strategic retail innovation, Pop Mart has redefined the global toy industry. For investors, the company’s ability to turn a whimsical character into a multi-billion-dollar empire underscores the importance of aligning with cultural trends and behavioral insights. As the world continues to embrace the “kidult” demographic, Labubu’s story is far from over—it’s just beginning.