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A customer examines a box from the Lego Dots collection at a Lego A/S store in London on March 7, 2022.
As the toy industry faces its second consecutive year of sales decline, one brand stands out from the rest: Lego. The iconic Danish company is experiencing significant growth, with a 13% revenue increase in the first half of the year, as it capitalizes on the struggles of its competitors.
“Lego is driving the majority of the growth in the toy sector this year,” said Eric Handler, managing director at Roth MKM.
Having narrowly avoided bankruptcy in the early 2000s, Lego has since transformed its business model, successfully diversifying its offerings and appealing to a broader customer base. This adaptability has been crucial in maintaining sales, even amid inflationary pressures.
Over the past six years, Lego has consistently reported annual revenue growth.
The company’s approach has included expanding into licensing, targeting both children and adult consumers, integrating digital gaming, and collaborating with various entertainment studios to deliver engaging Lego content. Additionally, by establishing manufacturing facilities near distribution centers, Lego has made strides in optimizing its supply chain.
Among its popular product lines, Lego focuses on “passion points,” which feature kits designed for various fan communities, from franchises like Star Wars and Harry Potter to automotive and wildlife enthusiasts.
“Lego has consistently defied market trends over the years,” remarked James Zahn, editor-in-chief of The Toy Book. “While others struggle, Lego continues to thrive.”
Zahn highlighted that Lego’s proactive approach has allowed it to navigate the challenges posed by inflation and the entertainment industry’s disruptions, noting, “They seem to always be a few steps ahead of their competitors.”
Leveraging Licensing
Lego’s collaboration with pop culture has been a significant part of its strategy. From recreating scenes from shows like “Wicked” to designing a dorm room set inspired by Netflix’s “Wednesday,” Lego has effectively brought beloved narratives to life through its building blocks.
Licensing has always played an essential role in the toy industry, allowing brands like Lego to draw from well-established intellectual properties in order to engage dedicated consumers.
The partnership that set the stage for Lego’s licensing success began in 1999 with Lucasfilm, introducing Star Wars sets linked to various movie releases.
“Lego embraced the adult market long before the term ‘kidults’ became popular, and they’ve continued to adapt their approach to maintain that connection,” Zahn noted.
Over the last two decades, Lego has partnered with countless franchises, creating LEGO adaptations based on popular properties from Harry Potter to Marvel and Pixar.
Recent kit releases, including the Sanderson sisters’ house from “Hocus Pocus” and a “Jaws” set, reflect ongoing innovation and audience engagement.
“We’ve seen significant growth for the Lego brand,” shared Julia Goldin, chief product and marketing officer at Lego. “Our strategy has been intentional—unlocking potential with new audiences and reinforcing connections with those already engaged.”
Attracting New Consumers
Lego’s efforts extend beyond just franchise-themed sets.
The company has developed products catered to previously untapped markets, targeting consumers who might not have considered purchasing Lego sets before. This includes cityscapes showcasing iconic skylines, reproductions of famous works of art, and botanical-themed kits.
Goldin stated that Lego is actively working to attract new audiences and expand its offerings for them.
Lego’s collaboration with Formula 1 aims to create a range of F1-themed sets, catering to diverse age groups—from preschool Duplo kits to collectible versions for adult fans. Additionally, the partnership will extend to digital experiences and showcase Lego’s presence at upcoming F1 events.
Goldin remarked that previous automotive-themed products, such as the McLaren sets, had performed well, prompting deeper exploration into the auto racing niche.
“Our focus is always on the audience,” she explained. “We recognized that interest in F1 has been growing significantly among younger kids and is now capturing attention from a broader demographic, including families and women.”
Engaging new consumers has bolstered Lego’s revenue streams, providing some insulation against downturns in film-related toy sales.
The toy sector’s recent struggles have been largely linked to disruptions in Hollywood, which resulted in fewer kid-friendly film releases that traditionally inspire toy tie-ins.
However, in 2023, Lego launched 780 products, about half of which were new, maintaining consistency with its recent offerings.
Embracing Digital Platforms
In parallel with expanding its physical product range, Lego has ventured into digital realms as well.
The company has produced its own animated features, collaborated with streaming platforms like Disney+ for Marvel and Star Wars content, and engaged players through digital experiences within popular games such as Fortnite.
This expansion has helped Lego remain relevant and continuously engage consumers, driving additional retail purchases.
“Children grow up, and new generations emerge,” Goldin observed. “In the next five years, we anticipate further advancements in digital interactivity and experiences we can provide.”
Through its partnership with Fortnite, Lego aims to create a unique interactive environment, allowing players to build digital Lego structures within the game, engage in combat, customize avatars, and interact with fellow Lego enthusiasts.
Lego CEO Niels Christiansen has emphasized the importance of connecting with children where they spend their time, indicating that such relevance translates into increased sales of Lego products.
This strategy mirrors Lego’s collaborations with Disney+ for animated series and its recent full-length documentary about Pharrell Williams titled “Piece by Piece.”
“We viewed ‘Piece by Piece’ as an original project that conveys our values engagingly,” said Jill Wilfert, head of global entertainment partners and content at Lego.
Wilfert added that Lego is focused on projects that not only draw in wider audiences but also create shared experiences for families and friends.
With multiple theatrical projects currently in development, Lego aims to continue producing content tied to established series on platforms such as Netflix, Nickelodeon, and YouTube.
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