10224 - Town Hall

[ravenb99]

Look at the size of the current and past CUUSOO and Ideas sets.

Yeah and they all fit in one tiny section at $20-50 per.  Right now 4 minecraft, EXO, BTTF, ECTO1 and maybe a sprinkling of RI all in one section that ToO would take up in the same shelf space

[trekgate502]

Lego is not going to sell anything in China, until they're ready to sell minifigs for $.50 each and compete with the counterfeiters.  TLG is about as innocent and clueless as UniKitty.  I keep waiting (and hoping) for them to suddenly morph into AngryKitty and go all KraGl on the Chinese...

 

First of all who ever said there was price equity for American (or Danish) products when sold in China that it would be at US Levels?

Do you really think that when people buy MS Windows and other products "legally" in China they pay what the US rate is?  I think not.

Second if the China plant is a JV with a government owned entity I am sure product will move.

Who knows, but if you know how to integrate well to China you do fine.

Just my opinion.

[fuzzy_bricks]

Its been inevitable for awhile now to trim some of these larger exclusives.  The main story I hear repeatedly is "there is not enough room for all the sets" and "normally this would of been gone a long time ago".  A lot of these sets take up so much space and don't always fit with the theme that was being displayed (ToO a great example).  That one looked the most out of place of all of them when you went into a store.  They also take up about 3 to 5 smaller sets that might move faster in the $20-50 range.  

 

Could be why we've seen some sets go "online" only in some areas (Maersk, Horizon).  Big sets that might not appeal to everyone enough to warrant shelf space in the store and don't really go with anything.

 

Even R2 has been mentioned on that list of sets that doesn't move well in store.  Everyone says its cool and likes it but its not translating to sales.  Was recently told DS outsells R2 even with the huge price difference.

 

SC was always a full shelf or 2 and did not appear to move well at the store level until it was on its way out.  Even then I was able to get 10 in store over a period of 3 weeks as they still hadn't sold.

 

If you look at TH, R2D2, ToO and SC none of them sold particularly well in store and that also was reflected on those 4 on ebay sales leading up to this point of being snatched up  (all 4 were always below retail for the most part in auction format)

Would a change to their discount policy help this, or do you think these sets would be slow movers regardless?

[ravenb99]

Would a change to their discount policy help this, or do you think these sets would be slow movers regardless?

Depends on the discount.  Think about it we just got off double VIP which is like 10% and a promo which was another 10% so roughly 20% off. 

 

R2 stayed in stock

ToO would of been had I not bought them

HE at the stores that carry it stayed

WVM was in stock the whole month and just now sold out this past week along with SW

Only sets that went in and out during the month in my area was AA (which is still sold out), PS (back in stock)

 

TH and SC were already out of stock here at the beginning so those can't weigh in on.

[MrMorden]

Quite true...but how many.  Hundreds?  Thousands?  Tens of thousands?

 

I would also assume that there are many more hundreds (if not thousands) of new lego investors today than there were back when Market Street was discontinued and more every day.  The daily new influx of lego investors as evidenced by 300 new members to this site in 7 days, could certainly make for a very different investment outcome 5 years from now vs. 5 years ago.

We dont even have to wait for China, just look at how many European countries have Lego stores. Also not even all the states in U.S. have one. The market for Lego and especially exclusives has much room to grow as there are so many people unaware of them still.

That said things have changed alot in a few years and one has to adjust to changes and be realistic, not to buy 100 of the same set (on credit) expecting 5x return.

Modulars, especially the Town Hall, have one huge advantage on their side. They have big quantities of rare pieces in rare colours, suited for building such modular cities. Even if one has a Town Hall, a real modular enthusiast (and there are lots! of them) can find use for several for building purposes. I know I do.

[Darth_Raichu]

I'm not saying kill it, just trim it.

Cue (even more) chaos ;)

[inversion]

Take a look at the potential large sets that have recently retired or will be retiring within the next 6 months or so and look at what is coming.  It seems sort of lopsided.  Just making an observation that a scaling back of exclusives is a possibility.

It is reasonable. LEGO introduced about 8 exclusives this year, they have to keep the outflow at the same rate if they don't want to inflate their exclusive selection.

The question is which of these two scenarios will happen:

• LEGO will keep up current rate of incoming new exclusives which will have shorter production runs. Recent retirements happened to restore the balance of inflow-outflow.
• LEGO will introduce less exclusives per year and trims its overall offers.

To understand this phenomenon you have to think about why LEGO has such a large selection now. I believe they extended the lifetime of older exclusives to discourage resellers, however this resulted in an inflated supply. The exclusives were imagined with a ~1-2 year lifetime initially and they only changed their minds because of the resellers. They had to see by now that this strategy is useless, since FB, GE and other old stuff still have the same behaviour as if they were only 2 years old when retirement is felt in the air. The date of the retirement doesn't matter overall, because mass buying occurs mostly when the signs are there. However keeping this many sets in production increases costs significantly and the demand is fragmented between them. I don't say capacity issues because if there are less sets then more of the same ones will be bought, however that makes logistics and planning much easier while reducing occupied shelf space. With these in mind and the fact that the "extended lifetime strategy" turned out to be basically useless LEGO can only win by trimming its exclusive selection.

On the other hand we can firmly guess that the new golden age is partly a result of the rise of the AFOL market, mainly because those people probably buy much more sets to their children than an average parent. To draw in adults they need some kind of diversity. Trimming the market too much could kill this effect. Also what I see is that new exclusives are top sellers for months after introduction, even go out of stock, I think casual collectors buy the new stuff first because those are conceived to be the best and are represented best in the related media. The demand over time is U shaped: first the collectors, then a flat line with little activity and resellers at the end. LEGO wants to reduce the duration of the low demand phase. Therefore it is reasonable to speed up the circulation of sets.

So this is what I believe LEGO will do: Introduce exclusives at the same rate as now to exploit the large demand after introduction but returns to 1.5-2 year long production cycles to reduce costs. Battling resellers will be done by other methods, for example selling exclusives online etc. We will see.

Edited November 7, 2014 by inversion

[mykingdomforabrick]

Makes sense if they need to put their resources into kids' sets until production capacities are upped.

 

star wars, harry potter, jurassic park. all new sets over the next few years

[legone]

How about if LEGO reverses course and decides to cater to children almost exclusively?  What happens if LEGO stops producing these upscale sets for AFOLS?  What's replacing the multitude of AFOL sets retiring this year and early next year?  How valuable will these current AFOL sets become?

 

Then Brickpicker will be full of kids!

[c666187]

Then Brickpicker will be full of kids!

Crap, not again. We went through that about 1.5-2 years ago..

Edited November 7, 2014 by c666187

[hxckid88]

The above posts have called confuseishhhhhh

[BrickHouse]

Is the bike shop and caf

[Jules_K]

My October 23 order from shop at home just shipped, I'm breathing a sigh of relief.

[Deejay]

Aaand Nov 4 order got cancelled, too. 

 

At least they gave me 400 VIP points for free to easy my mental torture. 

I didn't get any :(

[Grynn]

I find all of this fascinating.

 

So let's consider this seemingly widespread idea that Lego doesn't care about and/or maintains a positive view of resellers (financially, at least)...

 

Just think of it this way:

 

Assuming each individual buying Lego has a finite amount to spend on the product (because assuming otherwise would be insane), why on Earth or anywhere else would the company want to share any of that income with us?

 

Let's take the Tumbler as an example, from Lego's perspective: Ideally, every individual who actually wants a Tumbler to keep will buy it directly from an authorized store - online or otherwise.

It is foolishly shortsighted to think that "a sale is a sale", and that Lego shouldn't care what happens afterward; because for every Tumbler bought at $300 from a reseller there is $100 less that will be spent by someone on OTHER Lego products. Of course this is not strictly/directly true, but the concept is blatantly obvious to me and surely dominates the perspective. If you are an economics expert able to disprove this assumption, please be my guest. I like education.

 

Otherwise, on the most obvious core business level, reselling hurts the manufacturer in a significant way ($$). But not all reselling is created equal. What sort of product is most susceptible to this kind of lost profit scenario for them?  Certainly not the minor stuff. Mixels are not the concern here. Almost anyone buying Lego in the first place has another $5-20 to spare for whatever small set they want. It's the big exclusives, naturally, that hurt the worst. Expensive, difficult to find sets are not as widely distributed and therefore harder to deliver directly to the target consumer in the first place.

Those consumers who want but can't afford it all, at least right away, or right now, may hesitate to buy... then one day find out they waited too long and suddenly TH at retail is a thing of the past. Perhaps they aren't even getting it for Christmas since the price went up so much. What happens if they really want it, though? They pay a premium to a reseller and then cannot afford to buy the PS or PC or PR as early as they planned, (read: at retail), if at all.

That's what I'm calling the direct effect of reselling on Lego's profits. Indirectly, too, that person may become frustrated and give up on the modular line entirely. Perhaps they move on to another line of Legos, or perhaps another manufacturer gets their $$ next time. In almost any case, the end result is less money flowing from that consumer to Lego themselves.

 

Again, I know it doesn't always work this way. The pattern of an immediate and drastic rise in value of EOL (or those soon to be) exclusive sets of 50% or more tells us that there seems to be plenty of demand to meet the supply (of reselling), so far. But I think, given that we are in a period of extreme Lego sales growth, it is a pattern that will eventually sputter and die. Nevertheless, this pattern just makes it that much more obvious how much more money the target consumer COULD be spending on Lego sets at retail. Anyone think Lego not paying fairly close attention to the secondary market at any time? Seriously?

 

Oh and besides the whole losing money / sharing profits issue? When the average target consumer is pissed off at the whole reselling trend and tells Lego about it, possibly using lots of not-so-nice words, and/or threats to take their money elsewhere, guess what? Lego probably ought to do something about it.

When brand store employees give constant feedback about dealing with all the phone calls from the same resellers each week, followed by the multitude of identical questions and disappointed visits from target consumers due to sets being unavailable, over and Over and OVER, it has got to have an impact. No one with any business sense at HQ is cackling with glee over shelves being empty when demand is still there.

 

So, back to the Tumbler. I can't believe this and RI haven't substantially entered the "something wicked" discussions, yet (and Mars Rover, for that matter). Personally, I see the recent highly limited distribution practices as an experiment toward limiting the reselling phenomenon... in parallel to whatever exactly is going on with unpredictable retirement of exclusives. By controlling the rate of distribution of these limited production sets AND making it more random when they both appear and disappear, the target consumer who doesn't closely track such things stands a MUCH better chance of finding one for themselves at retail, do they not? Of course, other factors have to fall in line for it to happen... but personally I think I am seeing some evidence that this is exactly what is going on.

 

And as Ed has said again and again and again, the savvy, dedicated reseller who rations their purchases out over time and chooses sets wisely based on empirical data more than the reactionary herd mentality, WILL be able to keep up with most of it, and perhaps even reap greater rewards (at the expense of the herd, no less). Meanwhile, Lego DOESN'T MIND this type of reseller quite as much, because they are not constantly emptying shelves and causing big hassles jumping from one EOL (or newly released limited production) set to another.  Yes they do still steal some profits down the road, but if they do so acting more or less as the target consumer would, what can really be done about it?.

Remember, no one likes drama. The wise ones around here have already camouflaged themselves from the hammer fairly well, and are now encouraging others to do the same, because the more that thing is swung around the less safe it is for everyone here. Sparks are beginning to fly. The number of "investors" is growing exponentially, it would seem, and acting so undisciplined at times that a threshold of tolerance (by the public, by retailers, and by Lego) is quickly being reached. If we are only 3.7% of overall sales (a completely random number, fyi), but 60% of the non-monetary problems (and rising), guess what?  Action is going to be taken.

 

Could Lego modify their business model to include and gain an advantage from a significant sector of individual resellers? Probably. Should they? I doubt it. The reasons go well beyond the current marketplace. Perhaps the hypothetical "experiments" going on lately are designed to answer just that question, though.

 

All I know is, unless you are in this for a quickie, it's time to wake up. Your friendly, fatherly alarm clock has been ringing for a few weeks, now. Stop snoozing. Times are changing. Kudos to those who have already started to adapt.

[Val-E]

This thread seems to be going a little off course. However I think it is a valid point that TH costs substantially more than other modulars and there is not the same demand for sets that break the 100 and 150 euros/USD psychological barrier.

 

I will also say that this difference is even more important when we consider that it is priced at a 1:1 ratio between USD and EUROS when the real Exchange rate is 1,25 (although falling). This makes it a much more costly set in the EU which impacts on sales and on the amount of stock shops want to carry. Then there is box size vs shelf space to consider too.

 

Here, salaries have fallen in recent years yet LEGO maintain some of the highest prices in the world - this means that there are very few people willing or able to spend a fifth of their monthly salary on a 200 euro set. In Germany or the UK it is more likely to be a tenth of the average salary and in the USA maybe even less?

 

That may explain why there is a stock shortage in one area while others have still got plenty.

[asharerin]

It is foolishly shortsighted to think that "a sale is a sale", and that Lego shouldn't care what happens afterward; because for every Tumbler bought at $300 from a reseller there is $100 less that will be spent by someone on OTHER Lego products. Of course this is not strictly/directly true, but the concept is blatantly obvious to me and surely dominates the perspective. If you are an economics expert able to disprove this assumption, please be my guest. I like education.

 

This article will help educate you:

 

http://fivethirtyeight.com/features/you-see-sneakers-these-guys-see-hundreds-of-millions-in-resale-profit/

[thehornedrat]

By most accounts, 10179 wasn't a great seller at $500 either.  I'm in no way saying Town Hall will appreciate like the MF, but there are a lot of people who wanted this set but passed on it for other modulars, thinking there would be plenty of time to buy later.  There will be time, but it will be at $400.

True this. My 10179 languished for so long on the shelf, the cords of the anti theft device bit through the edges of the box by the time I bought mine.

 

We can keep the thread 'on course' by adding 'and other topics' just like the 10221 Super Star Destroyer thread. Problem solved!

Edited November 7, 2014 by thehornedrat

[Neosphinx]

This thread seems to be going a little off course. However I think it is a valid point that TH costs substantially more than other modulars and there is not the same demand for sets that break the 100 and 150 euros/USD psychological barrier.

 

I will also say that this difference is even more important when we consider that it is priced at a 1:1 ratio between USD and EUROS when the real Exchange rate is 1,25 (although falling). This makes it a much more costly set in the EU which impacts on sales and on the amount of stock shops want to carry. Then there is box size vs shelf space to consider too.

 

Here, salaries have fallen in recent years yet LEGO maintain some of the highest prices in the world - this means that there are very few people willing or able to spend a fifth of their monthly salary on a 200 euro set. In Germany or the UK it is more likely to be a tenth of the average salary and in the USA maybe even less?

 

That may explain why there is a stock shortage in one area while others have still got plenty.

Valid pointer as to why the investment market will change. In a few years, salaries of the average worker in Europe will have dropped to a point where they can not justify paying let us say 500

[Locutus001]

@Marzipan:

Also you should take into consideration that most people who happen to think about LEGO investment will ask the same questions and a lot of them will wonder if it really is worth it with all those risks and WORK involved.

 

I would say that the majority is not willing or able to store a lot of LEGO sets and also is rather limited when it comes to spending money on it and holding it for several years.

So all those 1.000$ investors won't trouble the market (though there might be a lot more investors today, the number of high end investors didn't grow that much I'd guess, since at a certain point of money stock market and other things might be more profitable with less tax/work involved (not to mention the storing room! ever stored LEGO products worth 100.000$? I didn't (yet))).

 

Another point is that TLG (or was it TLC?) is expanding what they have. You see new themes popping up and a much greater variety than before (and I guess that this trend will go on for a while).

So as investor you actually have to chose what you want to buy.

For example:

SSD seems to be worth an investment so as investor you will probably want to buy some. How many? Putting all my money on one set is a higher risk so I won't. So let's say I buy 10xSSD = 10x 400$ = 4.000$ (for !!!10!!! SSD)

Another set might be the Tumbler, Evok Village, R2D2 and let's also take all the modular available

SSD 10x400$

Tumbler 10x200$

Evok Village 10x250$

GE 10x150$

TH 10x180$

PR 10x150$

PS 10x150$

PC 10x150$

 

16.300$

 

this list can go on and on buying only other exclusives (ToO, Simpsons House, Seacow, UCS X-Wing, AA, HE, T1Camper Van, Mini Cooper, UCS Sandcrawler, WVM, DS, SWC, TB)

 

This leaves us with a variety of other sets that also might appreciate after EOL, including the ideas theme!

So most investors probably won't have 10x of each set, also most investors probably do not have the time and space for all this.

So are there risks? Yes! Are there still good investment chances though we face a lot of more investors today? Absolutely!

 

That's only my opinion, but reading about other peoples investments here (e.***. Emazer, I bet Ed'******'Ed have quite a lot as well, etc.) makes me believe that others share this opinion in some way.

[fantomas007]

 

But as I stated to you earlier, the Town Hall was gone from all US retailers before anyone even noticed.  Read back in the thread.  Panic buying didn't sell this set out.  Resellers buying up a few remaining sets over the past month or so has nothing to do with the initial "Sold Out" notation.  This set flew under the radar for months.  No More Monkeys pointed out originally that the set was reduced to a 2 purchase limit and some people started to notice...

 

 

Wasnt such situation with many other sets, which were sold out in many retailers? I am sorry I am from Europe, in my country is minimum retailers selling exclusive lego sets, so there is no chance to see a signal from them. What was different with TH in US retailers instead of other sets - TH was removed from their portfolio, or it was sold out? I have been reading this thread several weeks and all what I have seen was just a discussion whether TH can end, speculations about signs of the end, also most of the people voted for 2015 as an EOL date, etc. Sorry I just want to identify the signal of the end of this set, what was different compared to other sets, which are temporary sold out and come back after the high season.

Anyway, my order from 4. November was cancelled, so this set is probably definitely out.

Is there a time for panic buy for 195 eur and above?

[tractorboy]

Look at the size of the current and past CUUSOO and Ideas sets.

Interesting point. AFOL sets don't necessarily need to big or expensive, or even exclusive.

Some of my favourite sets in the past couple of years were the T1, the Villa Savoye and Arch. Studio.

Also the Ecto and Mars Rover.

Edited November 7, 2014 by tractorboy

[JM123]

Interesting point. AFOL sets don't necessarily need to big or expensive, or even exclusive.

Some of my favourite sets in the past couple of years were the T1, the Villa Savoye and Arch. Studio.

Also the Ecto and Mars Rover.

 

I think the T1 is a perfect example of an exclusive set that is much appreciated by normal people and brickvestors. It is available everywhere, but also bought by a great audience. Sets between the 40 and 100 bucks can therefore be an optimum for TLG with respect to revenues / profit margin.

[tractorboy]

I think the T1 is a perfect example of an exclusive set that is much appreciated by normal people and brickvestors. It is available everywhere, but also bought by a great audience. Sets between the 40 and 100 bucks can therefore be an optimum for TLG with respect to revenues / profit margin.

Yep. Given the success of the T1, it could well be the type of set we see Lego use as a model for future sets.

[Deejay]

Received 2 TH's. Sealcode 29S4

I really hate it when they ship in too large boxes without filling up the gaps, now the lego boxes are damaged. Grrr potted plants at Intertoys

Edited November 7, 2014 by exciter1
Edited for language