10218 - Pet Shop

[Veegs]

This is very scary, specifically when it coming from Ed. Hope lego will not go that way.

The Ewok Village note is perhaps indicative of future strategies?

I think we'll find out soon regarding the Pet Shop, though. Hard to imagine it doesn't go OOS in the Oct-Nov period, so we'll see how that is addressed by TLG.

[asharerin]

I still have not seen a box redesign for Pet Shop. I think there will be a number of exclusives that will be retiring end of 2015 / early 2016, just not the ones most resellers are expecting / talking about / hoarding (at least out in the open forums lol).

[legone3]

This is my speculation:

TLG wants to limit reselling activities since it has been a bit out of control recently. The 5 minute clearing of Haunted House's last production run, or 24 hour clean up of 1000+ SSD on Amazon are some examples. In addition Lego must have heard of thousands of consumers complaining about set disappearance of sets and "price gouging" by QRLLs.

TLG's approach FOR NOW is to slowly make it harder for us QRLLs, without triggering resentment.  Sets' shelf lives extended, inventory status changesd more often and less predictable, old sets reissued, etc.

Basically they will make it harder for resellers to make money. 

If reselling does not get better they will have more drastic measures. For example, they will reissue more sets, especially those popular among investors such as modulars. Or they can let a set go into Sold Out status at 2 years after release, stay Sold Out for 6 months then come back to all retailers and be available for another year, etc.

This is strictly my speculation, and I hope I'm wrong.

 

[Ciglione]

This could be one of the measures. Also the decrease of sales and discounts can be added to these. I have seen multiple shops where older sets were taken from the shelves. But they were not put on a nice sale. They were put into containers and disappeared. Previously the shops would put them on a seperate aisle for discounted prices. I still wonder where these sets went to. There were alot of interesting sets there. Which disappeared from under my nose. 

A lady in a toyshop once told me they do not decide on sales and discounts. Lego decides if and when they are allowed to give discounts or have a blowout sale.    

[diablo2112]

...but but but, I have all these VIP points to spend.

Ha.  As long as you don't spend them during double VIP, you'll be ok.

[BrickLegacy]

This whole mess around PS retirement gives some support to another acquisition strategy: buy exclusives *after* they've retired.  Yes, you pay a small premium.  

For example, you could purchase GE after retirement in the $220 range.  Sure, that's above MSRP, but now GE has been on a steady growth all this year, and that $220 outlay in February is worth about $320 today.  Not bad at all.  

Same with TH, actually.  They were available post-retirement in late December/early January for around $280.  I know, I bought 4 of them at that price.  And I just sold the last of them for $500.  Again, it didn't maximize my gain, but it was relatively risk free, the timing was locked in and I didn't have to play this "will they/won't they" game, I just cashed a nice set of profits for relatively easy acquisition and sale.  My thinking in acquiring the TH at $280 was that is was a surprise retirement, and was sure to appreciate quickly.  Turns out, that was correct. 

Investment is about both $$$ and time.  We tend to focus on the $$$.   Buying post-retirement is a time-efficient strategy, as opposed to $$$ efficient.  I'll bet your CAGR is actually better buying post retirement and selling 12 months later, than buying PS now and selling 12 months post.  YMMV.

 

I'll let you know how my 2015 R2D2 experiment for $300-$325 works out.  I'm hoping for big returns this Christmas and next.

[Val-E]

The great thing about investing is that there is more than one way to skin a sausage, I mean cat.

You have your quick flips, your BOGOS and your EOL stuff. For exclusive sets, it probably is best to buy near to or after EOL as buyin a T1 at 20% off 3 years ago is still going to have the same or worse CAGR. With star wars playsets, it is not the way to go and I can think of plenty other examples where different strategies are required. It would be a boring world if we were all a united sausage.

[Ed Mack]

This makes me very hesitant to buy another modular. Or any big set, for that matter.

Modulars are one of the safest investments IMO...long term.  STAR WARS sets, especially of the UCS variety, could be highly volatile.  If a set is not reissued, it will be fun to watch them skyrocket.  On the other hand, with all of these new "retro" Disney STAR WARS versions being made on an annual basis, there could be multiple UCS sets reissued or improved upon.  The Modular theme is designed for collectors and the chances for a remake are low.  There will always be a LEGO fan who wants one.  

On the topic of retiring sets, historically, the November to December time frame has the highest rate of retirements, so I am looking forward to seeing a few of the long in the tooth sets go poof for good.  If they don't, then the old LEGO business model will have changed and people will have to modify their investment strategies.  

[mfortunek]

I believe TLG only wants one thing: sustained profitability. Period. Full stop.

No company of its kind wants anything else.

So the question the Lego company is constantly facing is: how do we (1) keep demand for our products up and (2) sell them for as much as we can?  

1) They want people to be scrambling to acquire the sets they produce; they want people thinking "I'd better buy this right now because who knows when it will be retired and gone forever!" That is a very good mentality for Lego's customers to have.  Lego's customers will take a much different approach to buying if they know they can get this same set in a few years for the same price.

2) And let's talk about price: Lego is VERY expensive! Almost outrageously expensive. Seriously.  $200 for a spaceship made out of little bricks with a Star Wars logo on it? That's not cheap.  But a huge reason why people are willing to spend $150, $200 or even $400 for a box of plastic bricks is because consumers believe in their value. Consumers believe these sets will always be worth what they paid for them, and will maybe even appreciate. Consumers trust in Lego because they are well made, last forever, and retain value.  So the $200 price tag is softened quite a bit when you know it will always be worth this amount, even after you open and play with it.

Compare this to my other hobby: my wine cellar.  I often compare the two in my mind, and I think the comparison is worth pointing out here.  Wine is consumable. The moment I pop the cork on a $400 bottle of Bond or Schrader or whatever, that "asset" just became worth nothing except the pleasure I'm about to experience as I drink it. Tomorrow morning I'm going to pee it all out and recycle the empty bottle.

And my $400 Death Star?  I can open it up and build it with my son.  And then display it for a year while he plays with it.  Then tear it apart and build a new scene with some of the pieces and minifigures and toss the bulk in a storage bin.  Then we can find all the pieces again and build it all over in five years.  And then get tired of it and put it all back in the original box with the instructions and sell it used and complete on eBay for $700.

It sure makes it a lot easier for me to spend $400 on a Lego set than a bottle of cabernet once I go through all of this in my head...

To sum up, I think TLG wants to retire sets, loves seeing prices skyrocket in the secondary market, and will not do anything that is going to screw up its own sustainable profitability.  What TLG has done over the past 10 years has seen the company rise from the ashes to become this massive leviathan of money-making.  If they started re-releasing numerous old sets or making their products available forever (i.e. stopped retiring them after 2-4 years) then the consumers' mindsets would really change.  And profits would go down.  And that isn't going to happen.

[Val-E]

But the element of surprise helps to get rid of those who abuse their system i.e. resellers/qfll. Retirig some sets soon and leaving others out for years stops people getting complacent (genuine buyers included).

Let´s face it, if everything was like Technic production schedules, it would be pretty boring being a reseller and probably not much profit in it.

If it is more like Architecture then hold on to your hats as the ride is going to be very bumpy.

[KShine]

I believe TLG only wants one thing: sustained profitability. Period. Full stop.

No company of its kind wants anything else.

So the question the Lego company is constantly facing is: how do we (1) keep demand for our products up and (2) sell them for as much as we can?  

1) They want people to be scrambling to acquire the sets they produce; they want people thinking "I'd better buy this right now because who knows when it will be retired and gone forever!" That is a very good mentality for Lego's customers to have.  Lego's customers will take a much different approach to buying if they know they can get this same set in a few years for the same price.

2) And let's talk about price: Lego is VERY expensive! Almost outrageously expensive. Seriously.  $200 for a spaceship made out of little bricks with a Star Wars logo on it? That's not cheap.  But a huge reason why people are willing to spend $150, $200 or even $400 for a box of plastic bricks is because consumers believe in their value. Consumers believe these sets will always be worth what they paid for them, and will maybe even appreciate. Consumers trust in Lego because they are well made, last forever, and retain value.  So the $200 price tag is softened quite a bit when you know it will always be worth this amount, even after you open and play with it.

Compare this to my other hobby: my wine cellar.  I often compare the two in my mind, and I think the comparison is worth pointing out here.  Wine is consumable. The moment I pop the cork on a $400 bottle of Bond or Schrader or whatever, that "asset" just became worth nothing except the pleasure I'm about to experience as I drink it. Tomorrow morning I'm going to pee it all out and recycle the empty bottle.

And my $400 Death Star?  I can open it up and build it with my son.  And then display it for a year while he plays with it.  Then tear it apart and build a new scene with some of the pieces and minifigures and toss the bulk in a storage bin.  Then we can find all the pieces again and build it all over in five years.  And then get tired of it and put it all back in the original box with the instructions and sell it used and complete on eBay for $700.

It sure makes it a lot easier for me to spend $400 on a Lego set than a bottle of cabernet once I go through all of this in my head...

To sum up, I think TLG wants to retire sets, loves seeing prices skyrocket in the secondary market, and will not do anything that is going to screw up its own sustainable profitability.  What TLG has done over the past 10 years has seen the company rise from the ashes to become this massive leviathan of money-making.  If they started re-releasing numerous old sets or making their products available forever (i.e. stopped retiring them after 2-4 years) then the consumers' mindsets would really change.  And profits would go down.  And that isn't going to happen.

While this all sounds fine and good - How can you explain LEGO continuing to expand the avg life of sets, and re-releasing sets on a more frequent basis?

You are saying that they will not do it, but they already are.

[mfortunek]

While this all sounds fine and good - How can you explain LEGO continuing to expand the avg life of sets, and re-releasing sets on a more frequent basis?

You are saying that they will not do it, but they already are.

Changing the "average" life of a modular from 2.5 years to 3.5 or 4 years isn't a meaningful change with respect to changing the mindset of consumers.  It doesn't affect the mentality that I am emphasizing as being desirable to TLG.  Changing the lifespan to 8-10 years would change the mindset.  That isn't  going to happen.  And before you say it, the Death Star is one set and plenty of Star Wars UCS sets have been born and died during the lifespan of the 10188 (most of which have jumped greatly in value), so it doesn't prove any point.

Regarding re-releases, the Winter Toy Shop is an interesting development for sure.  But again it's one set.  If a retired exclusive gets re-released each year, then I think it would be folly on Lego's behalf.  They would start hurting their own profitability by doing that.  And I'm giving them more credit than that, because I think they're smarter.  We'll see! Haha

[Frank Brickowski]

We will find out in three months if business is back to normal or if there is a new, "sun never sets" mentality within The LEGO Group.

Wait a minute... is this a cryptic hint about the Sandcrawler NOT retiring?

Edited September 14, 2015 by rfish

[Frank Brickowski]

Ha.  As long as you don't spend them during double VIP, you'll be ok.

This is pure irony, I guess.

[Val-E]

It´s a given - all SW sets without Disney boxes were retiring this year, weren´t they?

[Ciglione]

It´s a given - all SW sets without Disney boxes were retiring this year, weren´t they?

That was my line. And the year is not over yet!

[dcdfan]

Available @ Amazon...

[Val-E]

That was my line. And the year is not over yet!

I know, we are still in sausage season

[Ed Mack]

Wait a minute... is this a cryptic hint about the Sandcrawler NOT retiring?

Is the sun rising or setting?  

[cissi]

Is the sun rising or setting?  

Should ask which galaxy/star/planet this combination is. It could probably take 100 some Earth years for this star to set/rise, or a couple of Earth days.

[Darth_Raichu]

Is the sun rising or setting?  

Does it matter ? Tatooine had 2 suns, when 1 set and the other rose.  It was always sunny there no matter what

[dcdfan]

In stock @ Amazon on September 22, 2015...

[Ciglione]

Is the sun rising or setting?  

Setting... look at the minifigs. They are smiling. Cannot imagine they would be smiling so early in the morning.

[ISO8T0]

Is the sun rising or setting?  

The Sun is setting.

Luke had to take the new droids back and have them cleaned up before dinner.

[TheOrcKing]

Is the sun rising or setting?  

Maybe it's stuck.