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article imageLego announces layoffs as it forces itself towards digital

By James Walker     Sep 5, 2017 in Technology
Lego is laying off 1,400 employees after posting its first sales slump in a decade. The company conceded the future is digital as children's toys move onto phone displays and computers. It said it will seek opportunities to "engage with kids and parents."
The cuts represent around 8 percent of Lego's global workforce, according to Reuters. The iconic Danish toy firm said its mid-year revenue has fallen by 5 percent, the first drop since the company came close to bankruptcy in 2003.
Lego executive chairman Jorgen Vig Knudstorp said the business has become too complex, leading to inefficiencies and a loss of momentum. Knudstorp is now pressing "the reset-button" in an attempt to streamline Lego's operations and reverse the sales decline. It seems the company's sprawling array of partnerships with brands including Minecraft, Harry Potter and Star Wars hasn't been enough to stave off the impact of digital technology.
Lego itself has already embraced the digital era, creating video games, its own Lego Life social platform and Lego Boost, a physical coding toolkit for kids. Despite its ability to look beyond the physical bricks, the company still has not succeeded in luring children back from digital displays. As kids spend more time on phones and consoles, Lego's been forced to realise it's not structured for the digital age.
A Lego minifigure on a skateboard
A Lego minifigure on a skateboard
Micah Elizabeth Scott
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Lego's now planning a step back. With the company resetting, it's going to assess its situation and identify its next move. According to Knudstorp, the restructuring will place more emphasis on the company's existing digital offerings. It'll also see the creation of new platforms, possibly opening up new digital-focused job positions. While Lego bricks won't be going anywhere soon, it might be technology that has to headline the brand.
"We will find more opportunities to engage with kids and parents, including innovative ways to blend physical building and digital experiences, such as our successful Lego Life social platform and Lego Boost building and coding set," Mashable reports Knudstorp said in a statement.
The majority of the job cuts are intended to be complete by the end of the year. Up to 600 of the 1,400 positions being cut will be made at Lego's Billund headquarters in Denmark. After recovering from near-bankruptcy and seeing strong growth throughout the financial crisis, the digital era is emerging as the most significant threat to Lego's business.
The company said it cannot confirm whether it expects to see a return to growth this decade. It anticipates that sales could continue to decline over the next two years while it pivots towards the web and implements a new digital-first strategy. While it might not be an obvious casualty of digital
More about Lego, digital transformation, Toys, Games, digital era
 
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