Some Kids Play the Old-Fashioned Way
The arguments for and against video games and games consoles are still raging. But for some children (and their parents), old-fashioned toys such as Lego are still popular. Sales in the U.K. apparently rose 51 percent last year.
The Times said that Lego's chief executive, Jorgen Vig Knudstorp, believes the family-owned business has "emerged stronger from its crisis earlier in the decade, when it faced competition from computer gadgets, falling birth rates in the developed world and Mega Bloks, a Canadian product that exploited the expiry of Lego's patent on its plastic bricks."
Marko Ilincic, U.K. and Ireland managing director, referring to diversification into licensing, theme parks and merchandising, said, "We had lost our way. We had started to adapt Lego in a new and different manifestation and we had taken our eye off our core business, which was toys."
Characters based on Star Wars still remain popular but a period of debt, restructuring and refinancing has contributed to Lego being one of the top performers in a Populus poll for The Times in December 2008 in which parents expressed safety concerns. One new approach is licensing the brand to console games. Mr. Knudstorp told The Times, "We were concerned children would play the games and stop using the Lego toys. But, actually, they move to the toys after the game, so there's a synergy there. That's been encouraging."
The demise of Woolworths is a setback but Mr. Knudstorp is convinced "we can find other customers who will take up the volume. Consumers will find the product eventually if they want it...We're actually experiencing growth at the moment." This year's growth is forecast to be five to 10 percent against a decline in the toy market generally of two percent year on year. While other manufacturers cut back spending on new product development, Lego changes some 60 percent of its range annually. "You have to be coming to the market with new product every year ... because children get bored."
Arguably using different skills and levels of imagination, it looks like there is still room in the marketplace - and the home - for both kinds of activity.
Discussion questions: How would you rate the market opportunity for traditional toys and games in a video gaming world? What could retailers or toy manufacturers be doing to promote traditional toys and games?