Lego’s Loss May Not be Competitors’ Gain

Earlier this month, Lego announced that it would cut 1,400 jobs after reporting revenue and profit both fell in the first half of 2017, driven by declines in US sales. Much of the discussion around this story has focused on contributing factors within the company. However, these declines may also signal waning popularity in construction toys.

Producers Riding High on Construction Set Boom

In recent years, trends towards toys that promote STEM (Science, Technology, Engineering, and Math) education supported demand for building sets. While Lego has long dominated this market, other suppliers like Mattel (owner of MEGA BLOCKS) and K’Nex Brands also benefited from the category’s burgeoning popularity, with both expanding their product offerings. For example, K’Nex launched its Mighty Makers line of construction sets aimed at girls in 2015.

Vulnerability to Category Downturn Varies

While the popularity of construction toys has been a particularly long-lived trend within the larger STEM toys movement, their popularity may now be declining. In addition to reports of declining sales at Lego, Mattel seems to be having troubles with the category. For the quarter ended June 30, 2017 the company’s Construction and Arts & Crafts Brands segment reported a 27% decline in gross sales when compared to the same quarter last year, and attributes the majority of that decline to lower sales of MEGA BLOCKS.

While Mattel could weather a downturn in building sets relatively easily – thanks to its diversified collection of toy brands – such an event would be bad news for smaller producers, like K’Nex Brands, whose products almost exclusively fall into the category.

Want to Learn More?

Don’t worry, we have you covered! For additional information and analysis of US industry trends, see Toys & Games: United States, a report published by the Freedonia Focus Reports division of The Freedonia Group. The report also includes numbers and analysis covering US toy and game shipments by product for 2006-2016 with projections to 2021 and total US toy and game demand numbers for 2006-2016 with forecasts to 2021. Shipments by product segments include:

• electronic
• board games and puzzles
• models and kits
• children’s vehicles and doll carriages
• dolls and stuffed toys
• other products.

While you’re there, check out some of our related reports, which include Computers & Peripherals: United States, Durable Childcare Products: United States, and Sports Equipment: United States.