The Toy Book spoke with Soren Torp Laursen, president of the Lego Group, about the state of the construction toys category and how Lego is adapting to trends.
The Toy Book: Building sets saw a 23 percent increase in sales from 2011 to 2012, according to the NPD Group. And the category is the strongest toy category right now. Why has the construction category taken off over the past couple of years?
Soren Torp Laursen: Building is the best and most versatile play experience available to children, and it is our DNA. Our single brand status has given us the focus and discipline to offer the best quality material and grow our business—and the category along with it. Our momentum has been strong over the last eight years, which furthers our ability to invest in expanding the brand to invite new users and drive continued growth. Parents and children alike recognize the lasting value and versatility of a Lego building experience, which is why we strive to meet their evolving needs with Lego solutions. We don’t see that different play patterns need to be discreet experiences, and fortunately, our brand’s versatility allows us to adapt compelling play patterns to the building sets category, such as action figures, dolls and play sets, vehicles, and gaming. By changing the way we approach what constitutes a building experience, without fundamentally changing what makes it a Lego experience, we continue to deliver relevant, yet familiar, Lego products that are driving industry growth.
TB: What are some of the biggest trends you’ve noticed in the construction category recently?
STL: Perhaps the biggest trend in building sets at the moment is licensing, which seems to be increasing as other players seek to establish or grow their businesses. Building sets is an incredibly tough toy category to enter, establish, and sustain, therefore it is not for dabblers. Being a player requires costly complexities in molding and supply chain operations, plus research and development to be relevant and broad enough to attract a sustainable fan base, which we have found comes not only from single event-based properties, but from a wide variety of original and licensed themes that appeal to any child of any age.
TB: When it comes to Lego specifically, what are you doing to push growth in this category?
STL: Leveraging the versatility of the Lego idea, material, and brand keeps us fresh and relevant to engage current fans and also draw new children in. We’re driving growth by adapting other play patterns to the building sets play pattern to recruit new builders, for example dramatically increasing the number of girls who are building with Lego bricks with Lego Friends. At the same time, we’re investing heavily to bolster our ongoing businesses by growing and introducing original themes and properties, such as Ninjago and Legends of Chima. Finally, our preschool business is rapidly developing as we’ve streamlined our offering to the needs of U.S. parents and found a unique formula for extending the Lego brand to an even younger age. Our investments and growth are driving the sustained over-performance of the building sets category.
TB: What has Lego’s success been like over the last year or so? Are you seeing growth statistics that match the statistics for the overall category? Can you share a few examples?
STL: Our growth over the last five years in particular has been almost supernatural, so of course we’re both optimistic and cautious about our ability to sustain what is otherwise unheard of. We have an aggressive plan to continue our growth, and we’re seeing sustained momentum that is outpacing the industry, but that we believe is a much more sustainable rate. We’re very optimistic about our ability to deliver another year of growth, given the incredibly strong gains we continue to see with Lego Friends and Lego Duplo, both of which both could be considered incremental to what has for years been a Lego business focused primarily on boys ages 6 to 12. Our core business remains very strong, with lines such as Lego City increasing and Lego Super Heroes delivering sales well above our plans.
TB: What sort of lessons can be learned from what’s happening in the construction toys category? Can any of these translate to other toy categories and increasing the success of those toys?
STL: From our perspective, we have been able to drive growth by adding new users to the system, either through recruiting younger builders with Duplo and Friends, retaining core builders with themes including Ninjago and Chima, and reactivating lapsed users with themes such as Monster Fighters and Galaxy Squad. All of them in some way represent our ability to adapt other play patterns to our single brand focus in the building sets arena. It doesn’t seem to work as well in reverse—for example, many companies are trying to adapt digital experiences to physical toys and there have been a small handful of strong successes. We believe that our single brand status and sole focus on building gives us an advantage in this arena, and we look forward to sharing more examples of our approach moving forward.
For more on the construction toys category, including a showcase of new products in the category, check out the soon-to-be-released July/August issue of The Toy Book.