Lego becomes world's second-biggest toy maker

[Legoofmyleg]

http://www.bbc.co.uk/news/business-23968860

This is an impressive turnaround considering the company was in serious trouble just a decade ago. They have now even managed to overtake Hasbro in sales/profits. It is interesting to note that it was a sales boom in Asia which helped Lego through what was a slow start to the year. What does the future hold?

[bacem]

http://www.bbc.co.uk...siness-23968860

This is an impressive turnaround considering the company was in serious trouble just a decade ago. They have now even managed to overtake Hasbro in sales/profits. It is interesting to note that it was a sales boom in Asia which helped Lego through what was a slow start to the year. What does the future hold?

their sale are boosted by boom in asia. i hope they will build an official lego store in asia.

[Hrw-Amen]

I find that the sales in Asia were a boom to be difficult to understand. When i have been to Asia the LEGO sets are about twice the price they are in the UK and yet the family income is only about a quarter of mine for about double the hours worked. There must be some mega rich people in Asis buying LEGO to off-set that?

[Legoofmyleg]

I wonder what the breakdown by country is within Asia. Possible countries with high sales may include S.Korea, Japan, Malaysia, Hong Kong and Singapore.

[ShaydDeGrai]

I find that the sales in Asia were a boom to be difficult to understand. When i have been to Asia the LEGO sets are about twice the price they are in the UK and yet the family income is only about a quarter of mine for about double the hours worked. There must be some mega rich people in Asis buying LEGO to off-set that?

An old college friend of my wife is a corporate lawyer type in Hong Kong and rather well off (penthouse condo, two live-in nanny-esque / personal assistants, kids in private school, etc). She and her two daughters came to visit about a year ago to scope possible US college options. When her kids saw my Lego collection they were literally stunned speechless (no small feat when one of the people in question is a teenage girl...) After a suitable period of gaping in awe, the younger daughter asked if I was the richest man in America because she'd never seen so much (genuine) LEGO in a private collection before and they knew how expensive it was back in Hong Kong. The older girl was shocked that most of my sets were collecting dust in my attic and that, if she had a Statue of Liberty or a Taj Mahal she'd make sure everyone knew it because high-end LEGO kits were such a status symbol in her school. Supposedly some kids would even Photoshop themselves into photos of kits they found on-line to make it _look_ like they owned rare or valuable pieces in a bid to impress their peers and buy popularity.

They went on to spend the next hour photographing themselves with my collection. One would have thought they were visiting the Smithsonian or something the way they treated everything like a cross between pop star memorabilia and a religious artifact. They kept going on about how nobody at school was ever going to believe they knew somebody with so much LEGO.

When they were done, I gave them a couple of small (20-30 USD-ish) Creator sets (that I hadn't gotten around to opening yet) to take home. Their mother offered to grossly overpay me for the sets, echoing the sentiment that back in Hong Kong those would have been really primo gifts (both expensive AND hard to find in a sea of knock-offs). I pointed out that we weren't in Hong Kong and that, as my guests, a little entertainment in the form of a few hundred LEGO parts fell under the umbrella of hospitality.

Now her kids weren't spoiled brats or anything (actually they were very polite and well behaved) but the family was definitely on the high end of family incomes, and even _they_ were talking about LEGO as a rich kid status symbol that they _wished_ they could own more of. I certainly don't mean to imply that the culture revealed at the one private school in one particular city as recounted by a teenage girl and her kid sister is indicative of the mindset of all of southeast Asia, but it does make one wonder. Maybe the mega-rich of Asia really are impacting the sales stats from that part of the world?

[1974]

Thanx for the anecdote. Yes, it IS strange with that asian LEGO boom?

Is the EU/US market being close to saturation? If so TLG must be carefull. I think it's a real bad idea to alianate AFOLs (who most certainly do spend a significant amount of money that TLG cannot ignore) with reasent tightning of discounts on exclusives/LUG restrictions etc

[Hey Joe]

I find that the sales in Asia were a boom to be difficult to understand. When i have been to Asia the LEGO sets are about twice the price they are in the UK and yet the family income is only about a quarter of mine for about double the hours worked. There must be some mega rich people in Asis buying LEGO to off-set that?

They're moving some Lego at the shops here in Beijing. My son is only three, so we've been spending a lot of time at some malls near our home (they're a clean, safe environment where he can interact with other children and play with toys at the toy shops) and I've been seeing more and more people buying larger and larger sets. Probably the same people who drive the Lambourginis and Porsches in my neighborhood. The prices are exactly double of the U.S. price, so maybe not so shocking to Europeans and Aussies, but seems quite high to me.

...the younger daughter asked if I was the richest man in America because she'd never seen so much (genuine) LEGO in a private collection before and they knew how expensive it was back in Hong Kong.

Lego in the department stores is pretty spendy in Hong Kong I hear, but there's a great market there with lots of little shops that sell sets pretty close to U.S. prices. There was a great blog about it that came up if you googled 'Hong Kong, Lego, market', but I can't seem to find it now. I'm sure the Hong Kong Tourist Association would know the market. It's in Kowloon, and most of the shops are only open at night or on weekends. I've been to Hong Kong more than a dozen times, but unfortunately have had no reason to go there in the two years I've been back from the dark age.

Joe

Edited September 7, 2013 by Hey Joe

[paanjang16]

I am from one of those regions where TLG experience a huge increase in sales. I live in Malaysia and noticed that the stocks on our local shelves at one time were depleted so much so that some toy shops have to fill them up with Mega-you know whats and Kreos so that the Lego shelf do not look empty. Must be due to the fact we had a Legoland and the Shell Ferrari promotion. Lego still move although the price is more expensive than Hong Kong and South Korea.

Lego will see an even higher growth in the region if they consider sets brought in by resellers. Recently one reseller was able to bring in a small batch of Ewok village, BTTF and even the Sydney Opera House, making those who purchase these sets among the very first in Malaysia to build them. I managed to get my Mobile Crane MK2 at the end of July, before the official release and cheaper from a reseller. Then early this year I managed to get my Palace Cinema in less than 1 month after it was released for VIP overseas. The official Palace Cinema only arrive in July I think. If there is a VIP program here I would be among those VVIPS to TLG. I NEVER buy any of the large sets at retail since it is so expensive at retail price.

So there is a HUGE untapped AFOL market that rely upon the resellers that can bring in sets cheaper and faster than the official release. Hope that TLG can distribute Lego themselves and open a proper Lego shop here.

[Hey Joe]

I found another blog that talks about the Lego market in Hong Kong:

http://thebrickblogger.com/2012/05/lego-hong-kong/

It's been very tempting for me to make a trip to Hong Kong just to go there, but I'm afraid of the damage I'd do to my credit card!

Joe

[Blondie-Wan]

An old college friend of my wife is a corporate lawyer type in Hong Kong and rather well off (penthouse condo, two live-in nanny-esque / personal assistants, kids in private school, etc). She and her two daughters came to visit about a year ago...

(*snip*)

Wow, that's amazing. Thanks for sharing that story. I knew LEGO was expensive outside the US, but I had no idea it was regarded like that in Hong Kong. Just astounding.

[TomLego]

Great story on HK. Was in Europe and an American expat was saying their Lego hobby was on hold until they got back to the USA in a couple of years. The country they're living in has made the Lego hobby cost prohibitive, as least in comparison to what it costs in the USA.

[ShaydDeGrai]

(snip) ... in comparison to what it costs in the USA.

I think this is really the key issue. The ideas of "expense" and "value" are really relative and context dependent. It's been said that a "reasonable price" is one where both the buyer and the seller walk away from the transaction feeling that they have gotten more than what they gave up; That sense of "gotten more" really goes beyond a question of price tags and currency conversions. It's more a question of how much innate value (liquidity, pleasure, uniqueness, status, sentimentality, etc.) you place on what you paid or sold, versus how much value (same "soft" metrics) you place on what you got in exchange. This opens up a larger question of how much value do you place on all the _other_ things that you DIDN'T buy in order to make THIS transaction possible.

If I look at a $20 LEGO kit, _I_ usually think it's a bargain because where I live $20 will buy you lunch, or _one_ ticket to a movie theatre with enough left over for popcorn and a drink so long as you don't "supersize" anything. Twenty dollars just isn't a lot of money in my (locally inflated) economy compared to what it was when I was growing up. On the other hand _I_ place a lot of innate value on LEGO (probably too much, but whatever) so even the "pricy" kits seem worth it to me compared to what a dollar can (and can't) buy elsewhere. My wife and I went out to dinner last night, nothing terribly fancy, but the final bill (with tax and tip) was more than what Jabba's Sail Barge was selling for at the far end of the mall (just to be clear, I'm not saying that I like LEGO more than a night out with my wife I'm just saying it's not hard to spend over a hundred dollars on things as simple as grabbing a bite to eat while running some errands).

Now I've also been to places like Nebraska (for those EB members who've never been to the USA, it can be easy to forget how big and non-uniform (socially, economically, racially, politically, religiously, etc) the US really is) and, although they "enjoy" the same "low" MSRP on LEGO as I do, that same $20 kit effectively costs them a lot more because people living there make less money, pay less in taxes, get cheaper food and, in general, are measuring their expenses with a different scale. The asking price for the item may be the same, but the "value" of the item takes on a whole new meaning in the local context. There are some parts of this country where you can _buy_ a few acres of land for what I pay in real estate taxes on an annual basis. A small LEGO kit to them might equate to half a days' pay, whereas to me, it's just the cost of lunch.

I don't know enough about Southeast Asian markets in general to know if similar scenarios are playing out (I only have one data point to go on). Is LEGO seen as having a higher innate value than other things people _could_ be spending their money on? The kids I met from HK definitely knew genuine LEGO from clone brands (and had pretty low opinions of the competition), do kids all over Asia have this same understanding and pressure their folks for the genuine article when they could be getting more parts for less money from a different brand?. What does the average family make in South Korea or Singapore or wherever compared to the local asking price for LEGO? How many bags of groceries could I fill for the price of an Ewok Village, for example?

I'd love to know more about the local contexts and cultures to help put TLG's latest sales trend numbers in perspective.

[TomLego]

I offered to ship the expat some Lego sets from the USA. However, they said that by the time their host country got done inspecting and collecting taxes on what I shipped to them, it really wouldn't be that much of a savings for them.

[LEGO Historian]

LEGO was first introduced to Asia in 1962, when sales started in Japan, Singapore and Hong Kong. Sales started off very slowly, and remained so for a very long time.

One of my new chapters in my LEGO DVD download (free to current owners when the upgrades are available) describes the struggle that LEGO had in Japan. It wasn't just a cost issue, it was also one of culture. Just like Japanese feeling that Japanese cars are superior to foreign built... the same culture happened with toys and other household goods.

When the Ahashi Corp. first imported LEGO from Denmark in 1962, sales were very poor. It wasn't until the Fujisho Company took over in 1969 that sales improved somewhat, but that was partly due to the 1970 importation of OLO... a TLG produced half priced LEGO clone that almost exactly duplicated Minitalia of Italy. By 1978 sales were still not significant in Japan, and that was the year LEGO A/S (the overseas subsidiary of TLG) took over sales in Japan. It wasn't until 1986 that a LEGO Dacta type set was introduced in Japan that sales started to increase, as toy stores were being deluged by parents of children who ordered a set thru their grade schools. A big part of the problem with LEGO sales in Asia was problems with the distribution network, and the reluctance of toy store owners to supply a foreign toy. (This is Deja Vu all over again of the 1955-56 scenario of Danish LEGO imported into Germany for the first time.)

It wasn't until the new millenium that sales in Japan and elsewhere in Asia started increasing significantly. Today... although Japan is LEGOs leading market in Asia... other lesser countries (and China) are increasing sales... and that's where sales increases this past year have left TLG in the #2 spot. Sales in Japan, USA and Europe have been somewhat flat by comparison.

The TLG Archives have very little information on LEGO sales in Asia in the early years... but I have had some contacts with Asian collectors that have helped me to expand on history of LEGO sets and parts from 1962 onward for my LEGO DVD download. There are some very interesting sets, parts and LEGO catalogs unique to the Asian market back then.

Gary Istok