The toy industry is facing its second consecutive annual decline in sales, but it has found a bright spot in colorful, interlocking plastic bricks. While many toy companies struggle to replicate the impressive sales growth seen during the pandemic, Lego is experiencing significant expansion. The Danish company’s revenue has surged by 13% in the first half of the year, driving growth in the overall industry.
Eric Handler, managing director at Roth MKM, noted, “Lego has been the main driver of industry growth this year.” After nearly going bankrupt in the early 2000s, Lego revamped its business strategy and diversified its customer base, leading to increased sales even in challenging market conditions. Over the past six years, Lego has consistently achieved positive annual revenue growth.
Lego’s success stems from various strategies, including venturing into licensing, appealing to adult consumers, expanding into digital gaming, collaborating with studios and streamers to deliver content, and optimizing manufacturing locations for efficient supply chain management. The company has focused on introducing new “passion point” kits that cater to a wide range of consumers, from fans of franchises like Star Wars and Harry Potter to car enthusiasts and animal lovers.
Despite industry trends, Lego has remained resilient, standing out for its forward-thinking approach. James Zahn, editor in chief of The Toy Book, observed, “When others decline, Lego tends to thrive.” By staying ahead of the curve, Lego has demonstrated agility in navigating challenges like inflation, changing consumer behaviors, and market disruptions.
Licensing has played a crucial role in Lego’s success, allowing the brand to tap into pop culture and bring beloved stories to life in brick form. From recreating iconic scenes like Emerald City from “Wicked” to designing sets inspired by contemporary shows like “Wednesday,” Lego has leveraged partnerships with entertainment properties to engage consumers effectively.
Beginning with a landmark collaboration with Lucasfilm in 1999 for Star Wars sets, Lego has since worked with numerous partners to create building sets based on popular franchises like Harry Potter, Marvel, and Jurassic Park. The company continues to innovate with new releases, such as kits featuring iconic locations from “Hocus Pocus” and scenes from classic movies like “Jaws.”
Julia Goldin, Lego’s chief product and marketing officer, emphasized the brand’s commitment to reaching diverse audiences and fostering continued growth. Lego’s deliberate efforts to engage both existing and new consumers have contributed to its sustained success in the competitive toy market.
Ensuring Strong Connections and Expanding Audience Reach
Lego is not content with just franchise-based sets; the company is continuously seeking new ways to engage consumers. By designing diverse sets tailored to different audiences, Lego aims to attract individuals who may not have considered purchasing or building a Lego set before. This includes cityscape sets featuring iconic skylines like London and New York, brick interpretations of famous artworks such as van Gogh’s “Starry Night” and da Vinci’s “Mona Lisa,” as well as a series of botanical designs.
Goldin highlighted Lego’s commitment to expanding its audience base by introducing new products. From cityscapes to paintings, Lego is investing in appealing to a broader range of consumers. As part of this initiative, Lego has partnered with Formula 1 to create a line of F1-themed sets, catering to various age groups, from preschoolers to adults. The collaboration extends beyond physical products to include Lego’s digital platforms and a presence at F1 racing events.
Recognizing the shifting landscape of consumer preferences, Lego focuses on engaging new audiences and driving revenue. By diversifying its offerings and tapping into emerging trends like F1 racing, Lego remains innovative and adaptable in a changing market.
In response to challenges in the toy industry, such as disrupted movie pipelines affecting tie-in merchandise, Lego has maintained a robust product lineup, with around half of its 780 offerings in 2023 being new items. Additionally, Lego has ventured into the digital realm, expanding its presence through theatrical releases, streaming partnerships, and interactive experiences within popular games like Fortnite.
Looking ahead, Lego aims to further integrate digitalization and interactivity into its offerings, recognizing the evolving preferences of young consumers. By meeting children where they are and providing engaging experiences beyond traditional building sets, Lego continues to resonate with its audience and drive retail sales. CEO Niels Christiansen emphasizes the importance of staying relevant and accessible to children in an increasingly digital world, ensuring that Lego remains a beloved brand for generations to come.
Lego has been actively collaborating with Disney+ on multiple animated projects within the Star Wars and Marvel universes. The company also recently embarked on a cinematic endeavor with the release of a full-length animated documentary titled “Piece by Piece,” centered around the life and artistry of Pharrell Williams.
Jill Wilfert, head of global entertainment partners and content at Lego, expressed enthusiasm about the unique nature of “Piece by Piece.” She emphasized the originality of the project, highlighting its potential to resonate with a wide audience. Wilfert articulated the company’s strategic goal of expanding its reach and engaging diverse demographics through compelling content creation. By leveraging entertainment as a medium, Lego aims to communicate its core brand values in an entertaining and meaningful manner that fosters shared experiences among families and friends.
Looking ahead, Wilfert disclosed that Lego is actively developing several theatrical ventures that may grace the silver screen in the near future. Concurrently, the company remains committed to delivering episodic content and shorts associated with established franchises available on platforms like Netflix, Nickelodeon, and YouTube.
In the realm of corporate developments, the financial landscape witnessed a downturn as the Dow experienced a decline exceeding 200 points at the onset of a week abbreviated by holidays. On the business front, Nordstrom announced its decision to transition into private ownership through a substantial $6.25 billion transaction involving the founding family and a prominent Mexican retailer. Meanwhile, major players in the automotive industry, Honda and Nissan, have initiated formal discussions about a potential merger, a strategic move that could culminate in the establishment of the world’s third-largest automaker.
The collaborative efforts between Lego and Disney+ underscore a strategic alignment aimed at captivating audiences through captivating narratives set within beloved fictional universes. The recent foray into documentary filmmaking with “Piece by Piece” signifies Lego’s commitment to exploring diverse creative avenues and engaging with audiences on a deeper level.
In a statement reflecting on the significance of “Piece by Piece,” Wilfert emphasized the project’s innovative essence and its role in broadening the company’s audience appeal. By tapping into the storytelling potential of the documentary format, Lego endeavors to connect with viewers in a profound and authentic manner, fostering a sense of shared experience and connection.
Looking towards the future, Wilfert revealed that Lego has an array of theatrical projects in various stages of development, hinting at a cinematic landscape enriched by the company’s creative endeavors. Additionally, Lego’s ongoing commitment to producing episodic content tied to established franchises ensures a steady stream of entertainment offerings across multiple platforms, catering to diverse audience preferences.
Amidst fluctuations in the financial markets, the Dow Jones Industrial Average faced a notable decline at the outset of a holiday-shortened trading week, reflecting broader economic uncertainties. In the retail sector, Nordstrom’s decision to transition into private ownership through a multibillion-dollar deal underscores the evolving dynamics within the industry. Simultaneously, the automotive sector witnessed significant developments as Honda and Nissan engaged in preliminary merger discussions.
