Building Blocks
Construction toys hold their own in today's tech-crazy toy market
By Colleen Bohen -- Gifts and Dec, 5/1/2006 12:00:00 AM
In a toy marketplace so inundated with tech-friendly playthings it would be hard to believe that a basic evergreen category like construction toys would even make a dent in the sales figures. Well, guess again. Despite a general industry dip in retail sales between 2004 and 2005, building toys were one of only three categories that experienced an increase, according to a recent report released by The NPD Group, the Port Washington, N.Y.-based retail sales tracking firm. In fact, construction toys, or “building sets,” as the report refers to them, generated close to $700 million alone in an industry that made $22.1 billion overall in 2005. That's a 16 percent increase—the highest to date.
The only other categories that experienced increases were action figures and accessories (3 percent) and learning and exploration toys (6 percent).
It is important to note that the NPD report also mentions that the youth electronics and communications category—arguably the most commonly perceived threat to evergreen categories—“began to plateau in 2005, with dollar sales decreasing 8 percent to $600 million, down from the $651 million generated in 2004.”
Regaining focus
One of the factors that likely contributed to the resurgence in the construction toy's popularity could be efforts by benchmark construction brands like Lego to return to their roots and focus on classic building. Michael McNally, senior brand relations manager at Lego, Enfield, Conn., tells Playthings, “We've really been struggling to get back on track and to bring the Lego brand back to what people expect it to deliver—traditional construction toys.” He adds, “There was a time we were trying to be something for everyone. In doing that, we weren't really being the best we could be for the people who depend on us the most.”
McNally says “for an industry where everyone is asking what we need to be to catch kids' attention, we've gone through a lot of trial and error on what we should be and can be.” He points to Lego's past attempts to venture into areas like software, theme parks, clothing, TV and more, “things we as a construction [toy] company are not experts on.” McNally says Lego has since moved to re-focus and rely on outside partners to handle these aspects of managing the brand so that the internal functions of the company can more closely revolve around the core of the business. “We were wasting a lot of money and time on things other than brick-based building. We are who we are, and that's brick-based building.”
Core comeback
This movement to refocus on the core values of building has likely contributed to the category's newfound success because it has better-equipped manufacturers to navigate and implement new, modern features into their products that are consistent with their companies' missions. This refocusing has, in many cases, allowed companies to figure out a new method for success in the modern market: by both embracing their traditional roots and still incorporating new tech-infused elements. As Dave Brisbois, co-owner of The Toy Department specialty retail stores in Pasadena and Valencia, Calif., says “both [technology and traditional products] can co-exist. They're both good, we just need to have balance.” Based on the NPD figures, the initial shock and awe period of the tech toy revolution appears to be leveling off and in turn, building toy manufacturers are recognizing the need to find a way to both implement new and innovative features while still maintaining a link to their classical heritage as a brand.
The innovative trends that have emerged within the category recently, like light-up and flexible parts or the new multi-function products like Lego's Mindstorms robots, are examples of a true linear evolution for the benchmark brands. Each of the new features that are being implemented into construction toys adds to the building experience but doesn't take away from the main appeal of the category—the freedom to be creative.
Nikko, Plano, Texas, recently took over for Brio in managing the Erector brand (owned by the French company Meccano) in the United States. Like Lego, the Erector brand is also making a concentrated effort to return to its roots in order to play off of its nostalgic appeal and reputation for quality. Jim Van den Dyssel, Nikko's vice president of sales, points to its new SpeedPlay line. “It takes the classic elements of Erector and makes the payoff happen sooner,” he says. “It takes the emollient screw collection and [adds] a motorized tool to get the kids to assemble the final model much more quickly.” Basically, they have thoughtfully added a few modern touches to enhance a classic product. In doing so, Erector is recognizing the need to move forward and produce new and exciting product, but still managing to hang on to the key elements that made its brand desirable to consumers in the first place.
Balancing act
It may sound like a simple idea, but many of the manufacturers that we spoke to for this story find that one of the biggest challenges to creating and developing new construction toys is attempting to find that balance. Marla Bank, sales and operational manager for Geomag U.S.A., New York, says that her company has found that its biggest innovative challenge is marrying the old and new category values—“taking the basic building blocks, the concepts of construction and bringing in something new in an environment where children are so tech savvy and being able to fill that desire at the same time.”
Geomag's collection of products revolves around the fairly new category trend of magnet-based construction. Despite the fact that this particular form of construction has only been around for a few years, the company already appears to understand the need to send a consistent message despite product evolution and incorporation of new features. The company's latest venture is its Dekopanel line which takes the magnetic-based construction platform to a new level by providing users with the chance to personalize their own building pieces by inserting photos or drawings of their choice into the panels. Users can create the images using included software, and Bank stresses that the software is not limiting because users can just as easily forgo that option in favor of drawing their own images.
It is this idea of avoiding limitations that makes construction toys such a vital part of the industry, many manufacturers agree. K'nex, Hatfield, Penn., has a similar philosophy that drives their creativity. Diane Adams, vice president of marketing and sales at K'nex, says her company works to surmount the obstacles that come with attempting innovation by focusing on the development of new parts. “We say: 'If you can imagine it, you can build it,'” she says. This focus has recently led the company to produce a host of new items, such as gears and flexible pieces that expand the options available to young builders. As Adams says, “It's not the parts that are the news but what people can build with them that is exciting.”
Ticket to ride
Adams tells Playthings that in addition to maintaining the opportunity for open-ended creativity, her company, K'Nex, also makes an effort to “focus on what's relevant to kids today.” This focus, she implies, comes through its licensing deals. As an example, she points the K'nex Orange County Choppers line, which is based on the TV show American Choppers. The products in the line allow kids to build smaller-scale versions of the customized motorcycles that they see on the show. The selection of this particular brand marries well with the general experience of K'nex building products. Adams stresses the importance of choosing brands that “really resonate with building.”
Dynatech, Toronto, launched its line of light-up Atomic Blox in the fall of 2005. Despite the company's short time in the construction toy field, Dynatech's marketing director Andrew Kamondy says they have already seen very positive results. As part of a company that is relatively new to the category, Kamondy comes to the game with fairly fresh eyes, yet his assessment of the direction of licensed products is very similar to Adams of K'Nex. “In the past, companies have just slapped licenses on construction toys so kids recognize the brand, and that takes away from the traditional play value,” he says. “Companies like K'nex are doing a great job with [licensing], because they're using technology to enhance the construction play pattern and not just living by stories and licenses.”
Breaking in
Perhaps the most trying obstacle to the growth of the construction market is the perceived limit of key players. The evergreen nature of the niche combined with the perception that, as Kamondy puts it, “there are two or three construction toys that pretty much dominate the category,” is likely intimidating to newcomers. Dynatech and Hexabits are both companies who have attempted to enter the category recently despite any sense of intimidation. While each company says they've been successful, they also admit the road hasn't always been smooth.
Kamondy mentions that “getting shelf space is a bit of a challenge.” However, he also says “It's been a lot of fun getting into this category against the giants. We've seen a very positive experience with specialty stores that can really display the light-up feature.”
Anthony Pawlak, president of Hexabits, Ann Arbor, Mich., a new company that produces a construction system based entirely on flexible parts, had similar sentiments about trying to get exposure for its new products. He says the biggest challenge for a small manufacturer like Hexabits is when the company attempts to introduce a system that is not in-keeping with the traditional products already on the market. “It's a challenge because people look at us and assume that they know everything [based on their experience with] other construction products,” he says.
The evergreen nature of the construction category, while helpful in some cases, can also be detrimental—particularly for new manufacturers who are trying to convince retailers to take an interest in their products. Pawlak tells Playthings, “I think when we started Hexabits and were talking to retailers, they just seemed kind of tired of construction. I don't know what they're looking for, but they're seemingly not as interested in the construction category, because they think it's full.” He adds, “There's always room to freshen up a category and we're trying our best to do that.”
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