LEGO retiring old sets?

Question

Why does The LEGO Group stop producing/selling older sets when they can still be hot items? I understand that they might affect the sale of future models but older models are rarely replaced by their newer counterparts.

As a fan of LEGO Trains, I cannot find anything for these ones:

Level Crossing: 7834 4532 7936 10128

Train Crossing: 7996 7857

These are just examples. There are a lot of other items, both train and non-train related, which are discontinued and are sold on eBay etc. for the price gold. Obviously if LEGO would keep on producing them, they will definitely benefit.

Answer 1

In order to sell older sets, TLG would have to either:

(1) continue a production run even when the demand for a set has dropped off

Production capacity is limited to a set number of components / sets at a time, and it makes sense to focus on newer, more profitable lines. For example, the moulds which produce LEGO parts are unbelievably expensive, but each mould can only produce a certain number of parts before it needs to be replaced.

or

(2) reproduce older sets

TLG has tried that in the past, and it hasn't proven particularly profitable for them. The problems are similar to (1).

or

(3) store sets longer in the hope that demand will pick up again

Which is risky, and typically less profitable than focusing resources on making new sets.

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You can bet that TLG spend a lot of effort figuring out how to maximise the profitability of the company. Of course, it is possible that TLG has occasionally made the wrong decision and retired a set too early. I imagine, however, that these occasions are relatively rare (and even if they aren't, I don't suppose they'd tell us anyway).

Answer 2

There are a lot of factors to consider, but I believe the key one is a matter of production capacity. At any given time, the LEGO company can only produce a finite number of different elements and sets. As older sets stay in production, they would mean that less new sets can be produced, and the same goes for parts.

As far as parts are concerned, TLC pushes very hard toward a consistent parts system, and new parts are usually more functionnal or versatile than older ones. Again, the number of parts currently in production being limited, this means TLC has to retire older parts to make room for newer ones. While staple parts have a good chance of returning if their is a need for them, there is virtually no chance that older systems such as old train tracks, monorail tracks or samsonite gears would return. Considering old train tracks were much more fragile and aren't fully compatible with newer track, it wouldn't make sense to produce them again.

Gev's argument makes a lot of sense too: what you may perceive as "hot item" may in fact only have value because of its rarity and appeal to older fans. While a reissue in small production runs may work, I doubt TLC is willing to try this on a full scale. Keep in mind their goal is to run a profitable business, and selling big numbers of new sets probably works better - and don't forget their target audience is kids at the toy store, not adults on eBay. Actually, TLC tried at some point to reissue older sets ("Legends") and the very fact they don't do that anymore tells me that it didn't fare too well.

All in all, I'm fairly confident that TLC knows what "will definitely benefit" them way better than we can imagine ourselves.