Everything is NOT awesome! Lego shortage looms – USA TODAY
Some families will have to let go of their LegoÃ‚Â dreams this holiday season.
The Denmark-based toy company reports that it’s doing so unexpectedly well that its manufacturers will not be able to keep up with demand come December. Right now, the shortage is contained to some European countries.
“The demand for LegoÃ‚Â products during the first half of 2015 has been significantly higher than our and our customers’ expectations and projections and this has put a strain on the LegoÃ‚Â Group’s manufacturing facilities globally,” LegoÃ‚Â press officer Roar Trangbaek wrote in a statement.
Factories are full-steam ahead, but it won’t be enough for what it calls “unprecedented demand.”
LegoÃ‚Â Group’s sales in the first half of 2015 increased by 18%, compared with the same period last year. Based on sales, they are now the world’s largest toy company.
“For Lego, the seven-year average growth rate has been 20%,” said David Robertson, author of Brick by Brick: How LEGOÃ‚Â Rewrote the Rules of Innovation and Conquered the Global Toy Industry. “They’ve been growing like that since 2007, a 37% profit growth. This makes no sense for a company that makes commodity plastic blocks.”
Thankfully, it looks like U.S. LegoÃ‚Â lovers are safe for now, and the company is “closely monitoring the demand and taking action to secure our inventory for the holiday season,” according to Trangbaek.
Robertson accounts the recent LegoÃ‚Â boom to the company’s ability to create supplemental products, both of its own brand and in partnering with other strong brands like Star Wars, Batman and the Avengers — while keeping the classic bricks in play. (Last year’s much-loved The LEGO Movie was a huge boost for the brand, too.)
He says the family-run company, which was started in 1932, faced failure when it tried to shift the brand away from physical LegoÃ‚Â blocks. Instead, they changed their strategy. “They’re a great example of how innovation actually doesn’t have to be disruptive to be successful,” he said.
Robertson likens Lego’s success to Disney’s profits around Frozen, in which blockbuster film sales translated into massive profits from retail, live shows and even a Scandinavian cruise.
There’s also something iconic about the classic plastic building bricks. “My guess is that this sales success is due in part by Lego’s geographic expansion,” Robertson said. LegoÃ‚Â is building a factory in China and continues to expand into that market.
“Once a family becomes middle class, at least by Western standards, they want buy Legos for their kids. That’s exactly what’s happening,” he said.