Lego Brick Sets Revamp

The Toy Industry’s Bright Spot: Lego’s Rapid Growth

The toy industry is headed for its second consecutive annual sales decline, but it’s got one thing propping it up: colorful, interlocking plastic bricks. At a time when toy companies are struggling to match the massive gains of pandemic-era sales, Lego is growing rapidly. The Danish company saw revenue jump 13% in the first six months of the year and continues to snap up market share.

"When you look at toy sales, Lego has just been driving all the growth in the industry this year," said Eric Handler, managing director at Roth MKM.

After coming to the brink of bankruptcy in the early 2000s, Lego has reshaped its business and diversified its customer base, helping it to elevate sales even in inflationary market conditions.

Lego has posted positive annual revenue growth in each of the past six years. Its strategy has involved delving into the world of licensing, catering to adults as well as kids, tapping into the digital gaming world, partnering with studios and streamers to bring Lego content to consumers, and building manufacturing sites close to distribution hubs to smooth the supply chain.

License for Fun

From miniature models of Emerald City from "Wicked" to a version of Wednesday and Enid’s dorm room in the Jenna Ortega-led "Wednesday," Lego has tapped into pop culture to bring fan-favorite stories to life in brick form. Licensing has long been an important strategy for toy companies. Pulling from existing and upcoming intellectual property from movies and television shows allows brands such as Lego to cater to an already robust and engaged consumer.

Lego’s first licensed partnership was in 1999 when it linked up with Lucasfilm to bring Star Wars sets to the public. Some of these kits were tied to the release of "Star Wars: Episode I – The Phantom Menace," while others celebrated vehicles and characters from the original trilogy of films.

Finding New Brick Builders

Lego isn’t stopping at franchise-based sets. The company has worked to design different types of sets that cater to new audiences, ones that might not have otherwise bought or built a Lego set. This includes cityscape sets featuring skylines from London to New York, brick versions of famous paintings such as Vincent van Gogh’s "Starry Night" and Leonardo da Vinci’s "Mona Lisa" as well as a line of botanicals.

Delving into Digital

At the same time, Lego has expanded beyond its retail shelf space. The company has launched several theatrical features of its own, partnered with streamers such as Disney+ to bring Marvel and Star Wars content to the small screen, and even launched its own vertical within Epic Games’ popular Fortnite game.

Conclusion

Lego’s ability to be "ahead of the curve" has allowed it to be more nimble during times of inflation, as consumers tighten their purse strings, and to navigate upheaval in the theatrical entertainment industry and even looming tariff increases. The company’s focus on licensing, digital expansion, and catering to new audiences has helped it to drive revenue and counterbalance softness in the theatrical realm.

FAQs

Q: What is driving Lego’s rapid growth?
A: Lego’s growth is driven by its focus on licensing, digital expansion, and catering to new audiences.

Q: How has Lego reshaped its business?
A: Lego has reshaped its business by diversifying its customer base, delving into the world of licensing, and tapping into the digital gaming world.

Q: What is Lego’s strategy for growth?
A: Lego’s strategy for growth involves delving into the world of licensing, catering to adults as well as kids, tapping into the digital gaming world, partnering with studios and streamers to bring Lego content to consumers, and building manufacturing sites close to distribution hubs to smooth the supply chain.