North America Is Crazy For Lego Toys and the Manufacturer Can’t Keep Up
The bricks keep kids and adults coming back for more
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Lego seems to have been everywhere as of late. There’s The Lego Movie and its myriad of upcoming sequels and spinoffs. There are the Lego video games starring the likes of characters like Harry Potter and Rey. And of course, there are the foot-mutilating little plastic bricks themselves.
But the Danish toy company reported this week that it had a decline in revenue growth and profits for the first half of 2016, Matthias Verbergt reports for The Wall Street Journal.
Except don't start changing the lyrics to "Everything is Awesome." The decline, according to the company, was intentional. As Nikolaj Skydsgaard reports for Reuters, the toy company knowingly lowered its image in an attempt to sell less of its iconic brick toys. Surprising? Maybe to some. But for Lego, it was the price of success.
The toy-maker’s recent surge in popularity in North America meant that it couldn’t keep up with demand.
Ole Kirk Kristiansen first founded the company back in 1932, and he ran it by the motto, “Only the best is good enough.” The name Lego came about because it was an abbreviation of the Danish “leg godt” (play well), according to the Lego official history. After its early market foothold, declining profits in the 1990s and early 2000s led to cost-cutting and layoffs. The company almost went bankrupt before Lego was able to turn its fate around and come roaring back by returning the focus to its original product: the brick, Craig McLean reported for The Telegraph in 2009.
Today, the Lego company is still owned by Kristiansen’s family, and those interlocking bricks (patented by the company in the late 1950s) demonstrates its resilliance throughout the decades. But what drives its lasting appeal?
According to Brick by Brick author and Wharton business school professor David Robertson, it's the product's storytelling capablitily. As he tells Lonnie Shekhtman of the Christian Science Monitor, kids and adult fans of Lego (AFOLs to the initiated) can play along with their favourite characters from blockbuster franchises or join Lego-created storylines like the lastingly popular Ninjago, soon to have its own movie featuring Jackie Chan as Sensei Wu.
The current reduction in marketing is a way to buy time so the company can expand factories, the company’s chief financial officer, John Goodwin, tells Skydsgaard. But the colorful bricks won’t be handicapped for long. Black Friday is just two months away, and as Skydsgaard reports, Lego doesn't plan on missing out—it's looking to get to full capacity in time for the 2016 holiday season.