I could be wrong, but I feel like Nintendo may have misred the target demographic for Nintendo Labo correlating to the Switch's actual user base demographics.
I think most would agree that Labo is predominantly aimed at young children, the thing is, looking at Nintendo's US Switch demographics as an example, it appears the majority of Switch consumers at present, are not likely to have children nor fall in to the age category that might want Labo for themselves.
76% of Switch players are between the ages of 13 and 34, and a whopping 90% are male. In the US, on average, most males aren't having their first child till age 31, add several more years on top for that first child to grow to an age relevant to the Labo, and your core demographic for the product becomes increasingly marginal and slim. Even then, only a small portion of this already very small portion of the Switch's user base is actually even going to be interesting in purchasing it.