Lego’s turnaround, after a period of dwindling interest from younger consumers, came from the unlikeliest of sources.
Few would imagine that the building block company, famous throughout the world, was experiencing a decline just over a decade ago. In 2003,a review of its previous year’s sales showed a drop of 30%. This was followed by a further 10% dip another year later.
Studies that Lego conducted showed that future generations would eventually lose their interest in the brand and its products, due to the younger consumer’s interest in the brick toys being superseded by the digital age and its vast offerings.
The brand would attempt to mitigate this loss by selling off its theme parks, continuing its run of products with franchises such as Harry Potter and Star Wars, and cutting down its number of products while penetrating new markets. But these were short term solutions at best.
In a bid to understand what made Lego stand out, its executives visited an 11-year-old German boy, who was both an avid fan of Lego and skateboarding. When asked which of his belongings he was most proud of, the boy showed them a pair of beat-up adidas sneakers, pointing out that their used condition was testament to his achievement as one of the best skateboarders in the city.
This simple encounter made Lego realize the significance of mastering a skill, be it a skateboarding pro or a Lego master builder, and using this to obtain social recognition from friends and peers amongst children. The insight from this encounter, which proved more useful than large chunks of data gathered from studies, would propel the company to go back to the drawing board and put more focus on its core products, even redesigning some of its bricks.
A decade later, Lego would clock in sales of over US$2 billion and even have its own animated movie. It also emerged from the crisis to become the world’s largest toy maker. Hard to believe it was a worn-out pair of sneakers that saved the day.