Lego Faces Headwinds Following 2017 Mid-Year Results
The year 2017 wasn’t a been a good-luck charm for Lego- the leading Danish family business for toys, with a revenue report showing a radical 5% decline during the first half of the year; making Lego to take the harsh step of downsizing their global workforce with the termination of 1400 employees on spot to recover the after-loses of their first revenue decline in over a decade.
The 2017 decline has much to do with the 2016 revenue report analytics when the giant global toy market , U.S, with over a USD 2 billion in value sales for 2016 ; entered the red zone during the same year with a 1.6% yearly sales drop in construction toy industry.
The way how Lego touched the sky-tops of sales growth & industry reputation over the past few decades is simply phenomenal & unquestionable with only a single product –line specialization ; meaning that now the group needs to slow down or they might hit a wall!
Besides the already present market rumors about Lego’s stagnating sales ratio in key markets; it won’t be a difficult part to swallow Lego’s turn down in the first half of 2017 in comparison to the preceding year when performance was still not so good but, though experiencing a big demand for Lego Star War products backed by the launch of The Force Awakens in 2015.
Moreover, the propagation of smartphones within industrially developed markets is also adding quite a bit of competition by being that attention-seeker among majority of kids.
So, What’s The Back-Up Plan?
As far, our prayers & good luck wishes are with Lego & these kids simply can’t afford to say you a good bye! Meanwhile, Lego must plan its shift towards more mature markets like, the US and Western Europe back towards growth while, checking & balancing other growth-priority strategies.
Most emerging markets like China being the hit list with the most lucrative opportunities for business like such, could be one avenue to expand & market their toys directly to childless adults, or possibly with some brand extensions by tapping into an untapped niche or with some line-extension into new areas unrelated to construction toys. Lego continues to care for strengthening its positioning in a more educational way so, leveraging this domain is extremely important.
Also, despite the reported impact of Lego Batman on the entire toy sale was still titchy to comprehend, it can be confidently said that the company won’t be expected to wind-off & will continue to benefit from its new line of entertainment ecosystems that widen films, comic strips, and video games, as well as toys, around its product lines.
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