Sonic: Navigating challenges and uncovering opportunities in the Stationery Industry

It is our view that Japan is at a very exciting time for manufacturing. On one hand, we have had major supply chain disruptions in the last three years, caused by the COVID-19 pandemic as well as tension from the China-US decoupling situation. As a result, we are seeing many multinational groups try to diversify their supply chains with a focus on reliability. This is where Japan can enter; a country known for decades of high reliability, trustworthiness, and short lead times when it comes to production. Now, with a depreciated JPY, it is our view that there’s never been a more opportune moment for Japanese manufacturers to meet the pressing needs of this macroeconomic environment. While it is true that this situation is bringing material costs up, at the same time it is making Japanese products more cost-competitive than they’ve been for the past 20-30 years. Do you believe the current environment to be more of a challenge or an opportunity for your company?

At the moment this is a challenge for us because the percentage of exports from us is actually lower than procurement imports. The majority of the products we handle right now are imported goods. However, this is also a chance for us, especially when we want to expand in overseas markets to sell. That is why we are trying to expand the distribution channels we have in overseas markets.

The field of school and office stationery is a very cost-competitive market where the price consumers are willing to pay for certain products is not going to be as high as more premium versions. As a result, over the last 30-40 years we’ve seen a lot of competition coming from Chinese brands and countries with lower costs of production. How does your company face the price competition both here and in your overseas ventures?

It is true that we have been exposed to very fierce price competition for the last 15 years or so but over the past 10 years we shifted our focus and tried to add more value to our products. Price competition is always going to be quite fierce for products that have large volumes, however, there are products that have smaller volumes and, in those cases, consumers and users tend to pursue added value. We are placing more importance on these niche fields.

Could you give us an example of a product that has carried the innovation that your company has developed and that your competitors don’t have?

Let's take a timer as an example. If you want to just measure time you can get a timer from the JPY 100 shop, but children as you know have less of a sense of time. We are trying to educate and stimulate children a little more using colors. With our product children can have a better sense of the remaining time left. This is a very niche product, but once parents see it in action they begin to understand the added value that a product like this can bring. The price of this product is JPY 2500 versus JPY 100 from the cheap store, but there are certain parents that really need this product for their children.

We call this type of product a support product that addresses problems with growing children. If we only focused on stationery or office supplies then we would only really care about volume, but instead, we take a different approach. We care more about addressing problems that users have which allows us to come up with more niche support products such as the jikkan-timer 3 2 1!

I feel that overseas countries have been much better at receiving these sorts of niche minority products, but finally, we are starting to see Japanese people appreciating minority people and minority products. We at Sonic are trying to address minority issues with the idea that once we do so those solutions could resonate with the majority as well.

With the appearance of digital products and computers, we’re increasingly seeing that the keyboard is replacing the pen across many schools. This is a challenge for stationery brands as we transition to this digital era, however, this is also an opportunity to develop smart products that can combine digital and analog technologies. From the point of view of your company, what are the challenges or opportunities this increased utilization of digital technology is creating?

Sales of analog stationery have been declining for some time now, so it does pose a challenge for us, however, we don’t really promote ourselves as a maker of stationery. We rather think of ourselves as a developer of tools and support products for the growth of children.

It is true however that as digital technology continues to proliferate in society there will be new demands surrounding that technology. You have to remember that we are not a PC, smartphone, or digital home appliance manufacturer; those are not our strong points. Once the primary platform changes there will be opportunities to provide products to enhance and support. This is how new needs are brought about.

For example, once you start carrying around a laptop then you need a bag for it. You also need a charger for the battery and perhaps some peripherals to use with the laptop such as an external hard drive or a mouse. These are all increased needs that surround the technology of a personal computer. On the other hand, there are growing concerns over the reliance on digital devices as well. I think that the “jikkan-timer 3 2 1!” is a good example of something that meets new needs while also allowing parents to limit their children’s screen time.

One big adverse effect we are seeing as a result of increased digital use among children is a decrease in attention spans. There are hundreds of studies that confirm that the more time kids spend looking at a screen, the harder it becomes for them to focus on simple tasks. This is a huge concern for companies like yours and educational institutions across the world. How do you expect the demand for your children’s support products to evolve in the years to come? What other solutions are you creating to support the learning process of children?

In regards to shorter attention spans due to increased screen time, at this time we don’t have a direct solution or product. However, I would like to talk a bit about the background behind how we developed the “jikkan-timer 3 2 1!”  This is something we feel is increasingly needed by school children. We understand that they are able to check the time or set a timer on their smartphones, but the drawback is that they may receive a notification or a message when doing so. This behavior is destructive. I liken it to being on a diet with a plate filled with candy in front of you.

A lot of schools tell the children to give their smartphones to the homeroom teacher when they are in the classroom, meaning that their smartphone is not on their desk. During these learning sessions, they don’t know what time it is and they don’t have the ability to measure time. That is why they have an increasing need for a timer.

Another example is the battery charger. Normally when you want to charge the battery on your devices you can find an outlet, usually low to the ground in a house. Unfortunately, with the outlets being so low and the cords running across the ground, people tend to step on the cord which could cause accidents, fires, or electrical failures. We want to bring those outlets up to a desk level so that users can easily charge their devices on their desks. Unfortunately, however, this doesn’t always appear that nice, so we have released a product to improve the appearance of cords and outlets on a desk.

Times are changing but the platform, and the houses that we live in, are not always catching up with those changing times. Something that we focus on is addressing these small needs rather than trying to bring about radical solutions for everything.

It’s very clear that Sonic is the kind of company that observes small annoying things that we all have and then tries to solve them. We’ve talked about school supplies, so if we talk about office supplies now. Could you run us through your portfolio and the best-selling products you have? What are some of the synergies you are able to create by catering to both the office and school markets?

Basically, the problems that adults are facing are the same ones that children are facing. As digital technology advances the environment we live in will also change, and that is no different for adults and children. Adults used to use a lot of paper to work, however nowadays people can work without paper thanks to smart devices and PCs. The same goes for children who no longer need physical textbooks.

When an environment changes new needs arise and those will be the same across all ages. Take for example when you use a PC on a desk and that PC takes up a lot of space on the desk. This leads to you not having enough space to put your notebook or other stationery items on the desk. We offer a solution to this issue called Utlim, and this is a need that has arisen due to the increased use of digital technologies.

utlim hanging cable pocket

Where do you get all your engineering ideas from?

We have about 10 engineers who discuss and develop potential ideas.

You mentioned at the beginning of the interview that with the low valuation of the JPY, there are opportunities for export. Are there any particular markets that you believe are most interesting for overseas expansion?

The main market is China, our neighboring country. We’ve had production there for some time now, but for the last five years, we have tried to focus on sales in the area as well. We would like to shift the weight there from production to sales.

Beyond China are there any other markets that you’ve identified as a potential target?

Beyond China, I believe there is high potential in Asia. Of course, it would be great if we could have a distribution channel in Europe and the US, especially for office supplies, but at the moment we don’t have any viable partners in those regions. For that reason, instead, we are focusing on China and Asia because we have some long-term partnerships in those countries and there are a lot of similarities between our cultures.

In Asia, there is still a culture for school entrance exams and children start taking those exams at a relatively young age. In these cases parents tend to spend a lot of money to support their children’s exams so we feel there is a lot of potential for our products in those markets.

During the COVID-19 pandemic, we saw a very big boom in the utilization of e-commerce platforms, especially for consumer goods. This also changes the relationship between brands and consumers as the in-store experience is harder to replicate. How is your company adapting to this trend of more digital marketing channels?

We set up a team to manage our social media and we are experimenting with ways to communicate our products and solutions to the customers. It is not just about sending out all the information rather it is about enabling consumers to better understand our products. With this endeavor, I think it is very important to have good partnerships with influencers who are great at communicating with their audiences. We want them to explain about our products and solutions on our behalf. I think these kinds of relationships are going to be more and more important going forward.

Imagine that we come back in six years and have this interview all over again. What goals or dreams do you hope to have achieved by the time we come back for that new interview?

For my company, I want to continue providing support products that address many of our everyday social needs. End users will face many changes in their environment in the years to come and we want to be the kind of company that consistently comes up with new solutions to new problems. We want to establish a relationship with our customers where they feel like their problems are heard and that Sonic has the capacity to create solutions that really make a difference in their lives.