One major draw of Lego is their licensing of expensive creative IP. Look at the Harry Potter, Star Wars, DC, Lord of the Rings themed sets. Smaller competitors likely can not afford the same offerings. And Lego probably has deep enough pockets to ensure exclusive deals.

There's also something to be said for having such a dominant, established brand. Lego is a cultural icon, beloved by multiple generations. Picking up a knockoff kit is sort of like taking your kid to a random local theme park instead Disney World. While in theory the two options have similar features (rides! characters running around in costume!) they are of course not the same.