Marcus Leroux
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Not content with simply seeing off the economic downturn, Lego appears to have defied a generation of technological advance. The Danish company behind the famous toy building bricks reported that sales in Britain had risen by 51 per cent last year, even though the nation's children appeared to be glued to their Wiis, PlayStations and mobile phones. The group's profit rose by 24 per cent to DKr1.8 billion (£210 million), even though the toy industry suffered from parents reining in spending on treats for their children.
Jorgen Vig Knudstorp, the chief executive of Lego, said: “Maybe it's the case that in times of crisis consumers seek something that's well-known, safe and durable and known to be of value. That's where the parents come in. They definitely think we're cool.”
Lego's success mirrors retailers reporting a rise in well-known board games and toys based on traditional characters. John Lewis said that sales of Scrabble rose 23-fold over Christmas and that it shifted three times as many games of Trivial Pursuit.
Among the top performers was Lego's Star Wars line, which Mr Knudstorp said was testament to the brand's enduring appeal with children. “Lego is razor-sharp right now,” he said. “We're topping wishlists. This is a business where 40 per cent of your sales are in December. Get that wrong and you don't get any growth.”
Mr Knudstorp said that the family-owned Lego had emerged stronger from its crisis earlier in the decade, when it faced competition from computer gadgets, falling birth rates in the developed world and Mega Bloks, a Canadian product that exploited the expiry of Lego's patent on its plastic bricks.
Mr Knudstorp, a former management consultant, has been quietly dismantling Lego and rebuilding its blocks into a sounder structure. He said: “Four or five years ago Lego went through its own financial crisis: debt, restructuring, refinancing. Every day we read in the news about what a business should do in an economic crisis, and I think: ‘That's what we have been doing'.”
Lego estimates that the market for traditional toys was down by about 10 per cent in January. “We're still bucking the trend and, while we're happy with that, we are concerned what this decline means,” he said.
“The downfall of Woolworths will definitely harm us, but we feel positively encouraged that we can find other customers who will take up the volume. Consumers will find the product eventually if they want it.”
Marko Ilincic, managing director of Lego's British business, said that marketing spending would be increased by nearly 30 per cent this year to help to build market share, which grew from 2.2 per cent to 3.3 per cent last year.
Lego's British base is in Slough, near the Legoland theme park in Windsor. In December, Lego was among the top performers in a Populus poll for The Times that indicated a sharp rise in parents' safety concerns over toys. Mr Knudstorp said: “We're not going to really, really low-cost countries such as China or India. We want to be in countries we know, where we're completely in control of IT contracts, quality, safety, child labour, you name it.”
Lego is profiting by licensing its brand to console games. Mr Knudstorp said: “We were concerned children would play the games and stop using the Lego toys. But, actually, they move to the toys after the game, so there's a synergy there. That's been encouraging.”
And the award for best toy goes to ...
— Lego maintained its status at the top of the toy industry after the long-time children's favourite won the construction category at the Toy of the Year Awards last month.
— However, the Slumdog Millionaire of this year's toy Oscars turned out to be the Ben 10 Action figures.
— These are based on a Cartoon Network show in which a 10-year-old boy finds a watch-like device that allows him to become one of ten different aliens.
— The Ben 10 characters scooped not only the coveted “Toy of the Year” prize, but the “Boys'
— Favourite Toy Range of the Year” award, too.
— Meanwhile, a series of figures based on the BBC's In the Night Garden, a psychedelic neo-Teletubbies creation, won the “Pre-school Range of the Year” category.
— “Pre-school Toy of the Year” was the Kidizoom toy camera.
— Disney scooped “Most Lucrative Film Licence of the Year” with its ever-popular High School Musical and the myriad products associated with it.
— Meanwhile, “Girls' Range of the Year” was Sylvanian Families, a collection of homemaking miniature animals.
— The “Girls' Toy of the Year” was FurReal Biscuit My Lovin' Pup, a fake pet.
— The “UK Creative Toy of the Year” filled that perennial theme — kitchen play. It was the Cup Cake Maker from Character Options.
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