Rejuvenated Lego is back on the block
Saturday 31 October 2009
Chances are that Lego will find its way back into children's stockings this Christmas, along with other old-fashioned toys that the internet age had threatened to confine to history.
The annual Toy Retailers Association's (TRA) list of top 10 Dream Toys, revealed on Wednesday, did not include a single product costing more than £50. This was not a deliberate move, according to 100 toy shops, such as Hamleys and Toys 'R' Us; rather when they came to tip the best-selling toys this year, they didn't fancy the chances of Character Options' £109 Roboreptile or Hasbro's £149 My Lovin' Pup.
Toy companies haven't stopped making voice-responsive robotic dinosaurs or 300 battery-operated Audi TTs. However, in a recession, fewer people can afford to lavish £100 on a present that may be jettisoned once the novelty wears off, or the batteries fade.
As disposable spending has dipped, the toy industry has indeed fallen on hard times. Last year's UK sales hit £2.6bn; this year they are forecast to fall by around 10 per cent.
The biggest reason for the trouble in Toytown is the collapse of Woolworth's in January, which, at a stroke, removed 880 outlets stacked with moulded plastic from the high street. But there's also a recessionary trend at play: parents are looking for value, things that can be enjoyed over and over again for years to come.
As a result, this has helped Lego, founded by a carpenter in 1932 and named after the first two letters of the Danish words "leg godt" meaning "play well". Ole Kirk Christiansen, who liked to keep play-time simple, started making wooden blocks; the modern interlocking plastic blocks came later, in 1958.
More than 50 years later, UK sales of the multi-coloured building blocks are on the up, rising by O per cent in the first six months of this year. Lego's new range games that can be played with after they have been constructed have been popular and the company expects a further boost next year when it launches a range based on the Toy Story films.
For a strong brand with a 77-year pedigree, this may not sound surprising, but in the first half of this decade, the over-extended house of Lego was on the verge of collapse. As children became ever more interested in toys that beeped rather than clicked, the family-owned business in Billund, Denmark, slid to a loss in 2003, which turned into a record loss of 1.4bn Danish krone (£169m) in 2004.
Lego, which had diversified into watches, clothing and software, decided to get back to basics and rebuild its empire, one block at a time. Deals were signed to license Disney films and children's TV characters, such as SpongeBob Squarepants, and new remote-controlled, futuristic kits were created.
The range recaptured the interest of children while retaining the essence of Lego's appeal, which is that products can be assembled and re-assembled into something else: building blocks of the imagination. And, although Lego's last patent expired in 1988, it has managed to fight off cheap imitations.
"Lots of people can make building blocks, but you never get a bit missing out of Lego," explained Gary Grant, TRA chairman and MD of toy retailer The Entertainer.
"You never get a bit break, or very rarely. The instructions are never missing. You're buying a quality engineered product. They're not trying to be all things to all people. They're aiming high and they're achieving it."
Announcing the UK sales figures in August, Marko Ilincic, the managing director of Lego UK, ascribed the popularity of traditional lines to "a demand among consumers for trusted quality, particularly in the current economic climate".
Today Lego claims that, if all the pieces it has manufactured in its history were divided equally among a world population of six billion, every person on Earth would have 62 blocks. Almost enough for a Lego bottle of champagne...
Heroes & Villians
Hero: John Grogan MP
The Labour MP for Selby, pictured, has been instrumental in keeping up the pressure on the Big Six energy firms to lower prices. This week he tabled an Early Day Motion calling for a Competition Commission investigation into whether suppliers have been withholding steep falls in gas and electricity costs from customers. So far, 74 MPs have signed up. I have a feeling that many more will join them in the coming weeks.
Villains: Aldi and Associated British Foods
Both companies scored 0 out of 29 for their record on palm oil, the world's cheapest vegetable oil, which is used in half of grocery products from washing powder to chocolate. WWF, the conservation NGO, rated 25 British companies in a survey of European retailers and manufacturers of food and household products to show how some were making efforts to buy sustainable supplies and some weren't. Well done to Sainsbury's, pick of the bunch on 26, and Marks & Spencer, which scored 25.5. WWF said firms needed to do more to avoid fuelling deforestation, which leads to the eviction of native tribes and the destruction of endangered wildlife, such as the Sumatran tiger, clouded leopard and the orangutan.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
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