Capsule toys are seeing a massive surge in sales,

and are proving popular with both Japanese consumers and foreign tourists.

And towns and cities accross the country are creating new capsule toys based off of local places and products.

Today's On-Site Report features businesses that are capitalizing on these trending tiny toys.

This mall is located in the heart of Shibuya, one of Tokyo's best known shopping and entertainment districts.

Nearly two-thirds of the 5th floor are now home to over 600 capsule-toy machines.

Each month, it attracts nearly 100,000 customers, and averages about $120,000 in sales.

"I got a sloth."

"It's the one I wanted the most!"

With 50 locations across Japan, Tsuzuki Yusuke is continuing to look for new spots to place his machines.

"As you can see, we have lots of people coming in even on weekday afternoons, so we're doing quite well."

The company's Shibuya location opened in July of 2020.

At the time, the pandemic had caused customers to disappear, and many tenants were forced to close-up shop and leave.

Since shopping there didn't require any close contact with store staff or other customers, people felt more comfortable coming in.

"I think the capsule toy store really helped bring shoppers into our building, that otherwise wouldn't have come during the pandemic."

By offering a variety of different products the shop is able to attract a broad range of customers.

For example, currently, these $2.00 octopus-leg earplugs are among the store's best-selling products.

A vast range of toys, including characters from comics and anime, means there's something for people of all ages.

Each month, 450 new brands of toy arrive.

With the chance of getting something different every time, some regular customers visit the store on a daily basis.

"Since we offer toys that appeal to nearly all types of people and to almost any age group,

retail space owners have realized that this type of product has great potential for yielding high sales per square meter."

Since travel restrictions were lifted, foreign tourists now make up half of the store's foot traffic.

"So cute and squishy!"

"Picking ones that you like, but you don't know which one you're going to get still..."

"And... that the surprise of it is a lot of fun."

The Shibuya store overlooks the busiest crosswalk in the world.

Customers find it the perfect background for taking photos of their toy-capsule trophies...

many of which end up catching the eyes of social media users from all over the globe.

With the increase in tourists, Tsuzuki is now turning his focus on international airports.

He recently set up an array of machines inside a souvenir shop, and they've already noticed a significant increase in foot traffic.

"Before leaving Japan, I'm using all of my leftover change on capsule toys."

Tsuzuki hopes that the spending leftover yen on capsule toys will become a trend with foreign tourists.

On the day we visited, one traveler chose to spend all of her remaining yen on capsule toys,

and bought nearly $20 worth of small souvenirs.

Tsuzuki says that the sales figures for machines placed in airports are four times higher than average.

"If capsule toys continue to grow in popularity,

I think they could play a huge role in attracting people to Japan and supporting the tourism industry."

Costing about $2 per spin, some people will keep going until they get the toy they're after.

"That's the one I was after!"

The prize? A keychain featuring a motorcycle helmet, made by a world-famous manufacturer located here in Omiya.

"You don't find many capsule-toy machines offering Omiya-related goods like this."

"I love my hometown, so this really made my day!"

Serving as one of the stops for the bullet train, Omiya has long flourished as a major transportation hub.

The capsule toys she is collecting are part of a special series of key chains, featuring famous places and products related to Omiya.

The series was created by Nakajima Yoshio, a manager of a large shopping center located in front of the station.

When the number of shoppers dropped by 50% during the pandemic, he set out to come up with a way to support the local community.

"I wanted to make something they had never been seen before:

capsule toys related to places and things that only Omiya locals would understand, something to lift their spirits."

One of his first choices was a famous local cafe, that's been open 24 hours a day, 7 days a week for nearly half a century!

And the key chain? A replica of the cafe's retro sign!

The view of the main gate to Omiya's 2,500-year-old Hikawa Jinja also made the cut.

Since launching in March of 2021, they have become a huge hit with locals.

To date, more than 85,000 keychains have been sold.

The success led government officials from the nearby Yono region, to reach out to Nakajima

for help creating their own local toy-capsule products.

One of the first candidates to make the list was a local dessert shop.

The shop's most famous product is a frozen dessert bar, that thanks to some added starch,

can be enjoyed for 20 minutes without melting.

But rather than the dessert itself, they chose to memorialize the shop's banner.

When the owner placed a toy-capsule machine outside the store, he instantly saw an increase in customers.

Some would keep buying capsules until they finally got the miniature version of the store's banner.

Many would also take a photo of the keychain alongside the real banner, and post it on social media.

"Since I love Yono so much, I want to collect them all!"

This has led to even further free promotion,

and since the keychains have been released in toy-capsule machines across the area, the shop has seen a 50% increase in sales.

"It's been amazing."

"I never expected to have this many people come to our shop."

"Just seeing it made us all really happy."

The locally-themed trend has continued to spread to other parts of Japan.

Today, Nakajima was visiting Hamamatsu, a city about 90 minutes west of Tokyo by bullet train.

He met with representatives of a department store, as well as a sweets producer,

to discuss creating a new locally-themed capsule-toy lineup.

"We wanted to do something fun for the kids and freshen up our floor space."

The product they chose to represent them? A crab-shaped bread, that's long been a favorite with young children.

"I think even tiny toys like these can generate huge amounts of enthusiasm,

so I hope this trend will continue to spread through other regions across Japan."