The toy industry is facing its second consecutive annual sales decline, with one exception: colorful, interlocking plastic bricks. Lego, a Danish company, has been experiencing rapid growth amidst the struggles of other toy companies to match the high sales of the pandemic era. In the first six months of the year, Lego’s revenue surged by 13%, allowing it to gain market share.
Eric Handler, managing director at Roth MKM, highlighted that Lego has been the primary driver of growth in the toy industry this year. Despite facing near bankruptcy in the early 2000s, Lego revamped its business model, diversified its customer base, and managed to boost sales even in inflationary market conditions. Over the past six years, Lego has consistently achieved positive annual revenue growth.
Lego’s strategy involves venturing into licensing, appealing to both adults and children, entering the digital gaming sector, collaborating with studios and streamers to deliver Lego content to consumers, and establishing manufacturing sites near distribution centers to streamline the supply chain. The company has focused on introducing new “passion points” kits that cater to various consumers, from fans of franchises like Star Wars and Harry Potter to car enthusiasts and animal lovers.
James Zahn, editor in chief of The Toy Book, noted that Lego has defied industry trends by consistently growing in recent years. By staying ahead of the curve, Lego has demonstrated agility during times of inflation and disruptions in the entertainment industry, including impending tariff hikes.
Lego’s success is also attributed to its licensing agreements, which allow the brand to tap into popular culture and bring beloved stories to life through building sets. Since its first licensed partnership with Lucasfilm in 1999 for Star Wars sets, Lego has collaborated with numerous partners to create sets based on franchises like Harry Potter, Lord of the Rings, Marvel, and DC.
Julia Goldin, chief product and marketing officer at Lego, emphasized the company’s commitment to attracting new audiences by expanding its product range. Lego’s collaboration with Formula 1 to develop F1-inspired sets, catering to a wide range of age groups, exemplifies its strategy to engage diverse consumer segments.
Despite challenges in the toy industry due to disruptions in Hollywood production pipelines, Lego has maintained a robust product lineup, expanded its presence beyond traditional retail spaces, and ventured into theatrical features and digital platforms to enhance consumer engagement. By adapting to evolving consumer preferences and embracing digital experiences, Lego aims to sustain its growth trajectory and remain relevant to future generations.
