Lego Comes Back from the Brink of Bankruptcy to Win Over Fans Young and Old
Do you have a favorite toy from childhood that still brings a smile to your face? Was it Barbie or Hot Wheels, maybe? Or maybe Crayola and Play-dough stole your imagination. Whichever brand it was, chances are you wouldn’t mind going back in time and playing with them again.
One of my favorite toys that always made an appearance on Christmas and birthday lists was Lego. Sometimes it was a specific set (I was obsessed with the Harry Potter sets) or just another tub filled with assorted sizes and colors of these fantastic bricks was all I wanted. Well, several years have passed since I covered my living room floor in them to begin an afternoon of building, but I’m still in love with this brand.
Their past hasn’t been a perfectly shaped tower; they’ve had a few quakes that have shaken their brand to the core. They’ve always come back from whatever was thrown at them to come back stronger and more powerful than ever before! I won’t bore you with a giant history lesson, you can check out their “About Us” or if you’ve got some time to spare, they have a really cool computer animated video telling about their history (writer’s note: the dialogue is pretty cheesy, but the story and animation are beyond neat to watch!)
As I mentioned earlier, Lego has faced its hardships. In the early decades of the company they encountered factories being burned down, having products that were becoming outdated with society, and in the last decade in the early 2000s they faced the possibility of going under completely!
Why the Possibility of Bankruptcy?
They were going up against stiff competition from Mattel and Hasbro and in 2004 had debts nearing $1 billion and saw sales slump 40% in just two years. How did they overcome becoming just a memory in the lives of their faithful fans? They didn’t just stop doing one or two things; they sold off every part of their company that wasn’t an integral brick to their core product. They sold their four theme parks to a Merlin Entertainments Group (a company that specializes in running theme parks), they sold their video game development division to be handled by outside partners under a Lego license, and shortened product development from 2 years down to 1 year.
Starting in 2005 they started to climb out of debt and in 2011 they brought in nearly $710 million in income and have become the most profitable and fastest growing company in the toy industry! They also started to target another previously untapped market and began connecting with them. Adult Fans Of Legos (AFOLs) account for nearly 10% of their yearly sales. Granted, it’s not a huge piece of the pie, but a large enough share that deserves attention.
Popular conventions like “BrickCon” in Seattle, Washington are where Lego fans young and old can go and check out thousands of models created by Lego hobbyists from around the globe. Lego knows how important these customers are to their brand and instead of just saying ‘thanks’, they recruit the most passionate AFOLs to serve as ambassadors and consult on new and upcoming product lines.
Still Not Enough Reasons for You to Love Lego?
How about this great video that a mother posted of her son receiving a set he’d been saving up for. There’s a wonderful back story about 11-year-old James Groccia from Massachusetts, who scrimped and saved all his money for two years to buy the Lego Emerald Night Train set (here’s a link to an Amazon.com product page) to then find out it had been discontinued.
He did what any bound and determined kid would do and wrote to Lego explaining what had happened in hopes of being able to buy one of the ones directly from them. Not only did they acknowledge his letter, but they sent him the train set he’d been lusting after for years! The video is about four minutes long, but trust me, it will warm your heart and make you want to run out and buy a bin of Legos to play with.
Did you ever play with Legos as a kid? As an adult? What do you like most about the brand? What lessons could other companies apply from Lego? Sound off below!
Photo Credits: woodleywonderworks and origamiguy1971
Amy is one of Quality Logo Products’ content developers and social media coordinators. She is a self-professed newspaper nerd and thoroughly enjoys reading business and financial news and having impromptu discussions about it. Oh yeah, she’s “one of those” people! A true Midwestern girl by nature, she loves riding her bike, photography, and the Chicago Cubs. You can connect with Amy on Google+