Toymaker Lego boosted its revenue and profits again last year despite rising production costs, continuing its COVID-era boom and outperforming rivals.
Here are four ways in which Lego has built its empire:
1) Building bigger, more ambitious models
Lego has increasingly diversified its toys to appeal to a wide range of consumers spanning all ages and interests. Speaking to CNBC, the company’s CEO Niels Christiansen said that there is a particularly strong demand for “bigger more complicated sets,” even if costs have increased. “It’s a combination of volume and value,” he said.
Among some of the company’s bestsellers last year were the “City” and the “Icons” series, which feature complex urbanscapes and landmarks. Lego has also rolled out franchised sets based on the Star Wars, Harry Potter, and Lord of the Rings series.
2) New factories
Lego is expanding its footprint by meeting consumers where they are.
According to the company’s performance report, the brand broke ground on a new carbon-neutral run factory in Binh Duong, Vietnam — just north of Ho Chi Minh City. It also has plans to build another carbon-neutral factory in Richmond, Virginia, saying that the facility will meet future demand in the Americas.
Increasing its sales and profits by two-thirds since 2020, Lego has outpaced rivals such as Mattel and Hasbro.
3) Digital play
Last year, Lego released The Skywalker Saga video game and the Lego Builder app with the goal of attracting more children to the brand and encouraging them to buy physical toys too, Christiansen said, as toymakers compete with digital devices.
The company’s digital efforts will continue to grow — as Lego partners with Fortnite maker Epic Games to launch a child-friendly version of the metaverse. The toymaker invested $1 billion in the video games developer last year, The Wall Street Journal reported.
4) Investing in China
Over the past year, Lego has shut down 81 stores in Russia due to Moscow’s war in Ukraine, but the company has opened 155 new stores, according to the WSJ, mostly in China. The brand now has a global store count of 904.
Christiansen said that the opening of stores in China will help boost sales by a high single-digit percentage, Reuters reported.