Subject:
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Are *we* part of TLG's problem?
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Newsgroups:
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lugnet.general
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Date:
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Sat, 23 Oct 2004 21:15:25 GMT
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Viewed:
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706 times
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I've been reading the recent articles about The Lego Group's financial
problems. Its sad to see a company with a long history of good practices
in trouble.
But, it has occurred to me that we AFOL's might be part of the problem.
What do we do? Well, we buy lots of Lego - often far more than parents
would ever buy for their children, and certainly far more than kids could
ever buy for themselves. But, and here is the big thing, we do our best to
buy most of our Lego on sale. We do that because we want lots of it, and
because it is expensive.
I know that there is a large markup on Toys, so stores have quite a bit
of ability to sell at reduced prices without losing money. But, I'm thinking
that the stores don't absorb all of that reduced price. I'm thinking that
Lego takes some of the hit too. Consider also the recent sale items
available at Shop@Home. Sure, this is old stock that Lego needs to sell
off, but they are most certainly making less money from the reduced prices
(some as much as 50% off).
I only need to look at what happens here in Edmonton to know that this
can't be good for someone, and I'm guessing that Lego itself is part of
that unknown "someone". Whenever sales of interesting sets are spotted
by any of our members (some of who check the stores almost every day),
an email about it is posted to our mailing list. The result is often a
horde of locusts descending on the stores, buying up all of the on-sale
items. Some goes into personal collections for use, and some ends up in
online stores. Judging by the size of some online stores, we certainly
aren't the only group that does this, and there are likely other groups
that are worse than we are.
When we buy up all of the stuff on sale, that means that parents and kids
can't buy it. That means there are fewer people exposed to more Lego, and
quite possibly there is then less demand for new sets at regular prices.
In the past, perhaps the effect we had wasn't that big. But, it seems to
me, looking at projects people are doing, that the size of the projects
is steadily increasing. That means the amount of Lego being bought (and
how often is that at full retail price?) by AFOLs is increasing. Are we
in fact contributing to the trend of fewer new young Lego fans because
we are buying up all the cheap Lego?
Do we compensate for all of this by getting more people interested in Lego?
Probably not, because what we do is just increase the number of people who
are not paying full retail price!
Another possible contributor is the tremendous consolidation of the retail
market for toys. What percentage does Walmart sell in the U.S.? Do you
think they pay as much for their huge bulk buys as other stores do? I think
we've heard in the past that they most definitely don't. This is yet
another reduction in income for Lego, for the same production costs.
Comments?
--
Experience should guide us, not rule us.
Chris Gray cg@ami-cg.GraySage.COM
http://www.GraySage.COM/cg/
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Message has 4 Replies:
 | | Re: Are *we* part of TLG's problem?
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| (...) All good points! And while we (AFOL) might be contributing to the overall problem like you show we are a small percentage of the problem. AFOLs for all their wallet power (AKA $$$) are only a very tiny fraction of the total sales of LEGO. The (...) (20 years ago, 24-Oct-04, to lugnet.general, FTX)
| | | Re: Are *we* part of TLG's problem?
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| (...) A lot of you do that, but a lot of us still buy new sets at new set prices (okay, I'm guilty of taking advantage of a few conveniently timed sales to pick up brand-new releases at 20% off a few times, but...). Besides, once a store buys the (...) (20 years ago, 24-Oct-04, to lugnet.general)
| | | Re: Are *we* part of TLG's problem?
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| (...) You say many good things, but I believe that this is a stretch. When a store decides to carry LEGO products, they make their best guess how much they can sell. This is typically called 'up front buying' and can happen many months in advance (...) (20 years ago, 24-Oct-04, to lugnet.general)
| | | Re: Are *we* part of TLG's problem?
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| (...) I don't believe that's true. LEGO targets the yound children with "cool" products that are all fresh and new. Most kids would rather have the newest theme than an old set they saw in a catalog a year ago. And if these kids wanted these sets in (...) (20 years ago, 24-Oct-04, to lugnet.general)
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