Despite a 7% decline in global toy industry sales, the Denmark-based Lego company managed to grow its sales by 2% last year, reaching a revenue of 65.9 billion Danish krone, approximately $9.65 billion. This achievement is particularly impressive given the challenging circumstances of the pandemic era, where consumers were cutting back on discretionary spending due to rising inflation and increasing credit card debt.
Lego has consistently outperformed the industry, maintaining its competitive edge and capturing market share, even during difficult times. The company saw a 27% jump in sales in 2021 and a 17% increase in 2022. Its top-performing brands in 2023 included Lego Icons, Lego Technic, Lego City, Lego Harry Potter, and Lego Star Wars, catering to a diverse range of consumers across age groups.
With a total of 780 products in 2023, approximately 50% of which were new items, Lego’s strategy is to keep its product line fresh and relevant to consumers. This constant innovation ensures that the company remains appealing to both existing and new customers, providing a wide selection of sets for all preferences and skill levels.
While facing macroeconomic pressures, including customers tightening their spending, Lego observed a trend of customers opting for lower-priced sets in 2023. This shift resulted in a decrease in net profit by almost 5% compared to the previous year. The key Chinese market, in particular, experienced revenue declines as a result of cautious consumer spending habits.
Despite the challenges faced in China, Lego has been steadily growing its presence in the country, with hundreds of retail locations. While the company has seen success in the region, it acknowledges the need to adapt to changing consumer behaviors and preferences in order to maintain its competitiveness in the market.
In response to changing consumer trends, Lego has been expanding its digital footprint by partnering with Epic Games to launch Lego Fortnite, an open-world survival video game. The company has also been focusing on enhancing its online shopping experience and creating engaging content to appeal to consumers across digital platforms. This strategic move aims to engage consumers across various touchpoints and ultimately drive physical product sales.
The Lego company’s ability to navigate through challenging market conditions, adapt to changing consumer behavior, and innovate in both its product offerings and digital presence has contributed to its continued success and resilience in the toy industry. By staying true to its core values of creativity, quality, and innovation, Lego has managed to not only survive but thrive in a rapidly evolving global market landscape.
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