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Hey Folks.
Lego.com has just added a new press release stating the following..
Extracts:
"Our growth rate is lower than expected and our sales budgets are therefore not
met."
"We get positive feedback from our retailers - yet they are a bit cautious,
which, of course, is due to the all too big stockpiles on their shelves."
"Like all other companies we are dependent on selling to consumers and we
constantly try to influence the market positively through a strong product
range."
My comments to Lego:
How about listening to consumers? I'm sure that if you actually offered
something that people wanted, then there'd always be sales. Of course that is
assuming that Lego do actually listen to their customers at all. A good
starting place would be to keep track of the suggestions that float on here at
Lugnet. And I'm sure that Lugnet represents a small (computer using) portion of
lego customers, not to mention children.
Do Lego actually perform any analysis on which of their products sell
better/worse? Or are they becoming too reliant on the brand name itself?
As to the last statement I've copied above. Isn't it the whole point that the
market influences whats sold to consumers and not vice versa? Or am i just a
picky individual consumer that no company will be willing to cater to?
On the one hand, here's a bunch of consumers literally pleading that if
something was available we'd buy truckloads of it. And on the other hand a
company saying "you want these right?" and clearly not getting right. No wonder
they're struggling. AFOL's must be a very insignifigant portion of worldwide
sales. Anyone agree/disagree?
The mind continues to boggle.
Santosh
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In lugnet.general, Santosh Bhat writes:
> [snip]
> My comments to Lego:
>
> How about listening to consumers? I'm sure that if you actually offered
> something that people wanted, then there'd always be sales. Of course that is
> assuming that Lego do actually listen to their customers at all. A good
> starting place would be to keep track of the suggestions that float on here at
> Lugnet. And I'm sure that Lugnet represents a small (computer using) portion
> of lego customers, not to mention children.
>
> Do Lego actually perform any analysis on which of their products sell
> better/worse? Or are they becoming too reliant on the brand name itself?
>
> As to the last statement I've copied above. Isn't it the whole point that the
> market influences whats sold to consumers and not vice versa? Or am i just a
> picky individual consumer that no company will be willing to cater to?
>
> On the one hand, here's a bunch of consumers literally pleading that if
> something was available we'd buy truckloads of it. And on the other hand a
> company saying "you want these right?" and clearly not getting right. No
> wonder they're struggling. AFOL's must be a very insignifigant portion of
> worldwide sales. Anyone agree/disagree?
In general, I agree... I think there's a lot of reasons Lego's losing money,
though.
1. Legoland Theme Parks - The plan was (as I recall) to release parks every 3
years around the world. Certainly the most recent in Carlsbad cost them FAR
more than they've made off of it. From everything I've heard, it's done nothing
but loose them lots of money (probably the reason they were so eager to hold an
event there this summer). Further, I've heard that they even limit attendance
for a particular day to avoid crowds--- good in theory, but I think that hasn't
helped either... It makes me wonder how successful Legoland in Winsor was?
2. Growing competition - Things like K'Nex, Mega Bloks, Best-lock, etc., have
been growing on the market. Or so I assume from all their products that I see
on the shelves. They look exactly like Lego from the boxes (so parents can't
tell the difference), they're cheaper (parents can see that), and they make a
lot of models that Lego won't (army stuff, Nascar stuff, etc) that kids WANT,
and MAKE anyway (kids see that, parents see the price difference between Lego,
and it's a no brainer which they'll choose-- especially since several are
compatible with Lego).
3. Znap - Znap. Silly, and pretty useless. It probably cost Lego huge amounts
to research, develop, test, produce, and market this product, rather than
enhance their current one. It seemed rather dubious to me that they'd come out
with a product that would compete with their existing product. Also, I think
the Znap system is very similar to another old construction toy (Construx, I
think?) which also seemingly failed. Anyway, for whatever reason, Znap has cost
them lots more money that they couldn't afford to loose.
4. Poor set design & juniorization - Certainly from a retailer's perspective
and a customer perspective, this is the biggie; and most notably the one that
we as fans comment on the most. From what I've seen, set design from roughly
1997-1999 was pretty lacking. Themes like Fright Knights, Wild West,
Insectoids, UFO, Hydronauts, Aquanauts, Stingrays, Town Jr, Cyber Slam, and
even some of the Ninja sets simply get put on the shelf at the toy store and
remain there. For the most part, the themes are either ugly or uninteresting
for most Lego buyers, causing a major loss in sales, and even more discounts on
Lego-- something that I certainly saw only very rarely before; which in turn
causes retailers not to want to buy more Lego for their customers. In addition,
juniorization has made the few themes that ARE worthwhile a lot worse for
collectors to buy. I've even seen several parents in toy stores looking at Lego
and commenting on how little could actually be done with the pieces that they
give you.
Anyway, I could rant for another four hours on juniorization, and I'm not sure
that it's THE major reason for Lego's recent losses, but it certainly hasn't
helped. I can only hope that the trends we've seen in the 1st release of the
Star Wars sets and the Ultimate Collector's series will be followed in other
Lego themes. As for everything else, I can only say I hope that Lego remains
wary of making more bad business decisions-- as of late their actions have been
questionable to me, and certainly others.
DaveE
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