Lego reaches record heights

UTKU TANSEL INSIGHT LEGO SALES AND PROFIT REACH RECORD HIGHS

Cementing Its Position as one of the Biggest Winners of The COVID-19 Pandemic

2021 was an extraordinary year for LEGO. Its global sales increased by 43% to hit £2.6bn ($3.5bn) in the first six months of the year while profits rose by a whopping 140% during the same period. The company announced that its sales were up by more than 10% across all markets while online sales rose by 50%. Top performing themes included LEGO Star Wars, LEGO Harry Potter and LEGO City.

The company opened more than 60 new branded stores in the first half of 2021, over 40 of which were in China. This brought the total number of LEGO retail stores to 737 as of mid-2021, with 291 of those located in China. This is part of LEGO’s business initiative towards what it calls an ‘omnichannel network’, operating in tandem with LEGO.com.

LEGO’s announcement did not come as a surprise to many in the industry as shoppers stayed at home even after lockdown continuing to spend on both for themselves as well as their kids.

After the holiday season, the growth should stabilise to more sustainable levels while consumers return to preCOVID spending habits.

In the UK, these news stories had come amidst rising concerns around stock shortages around the Christmas period caused by the ongoing driver shortage as well as higher transport costs. Previously, LEGO had addressed part of the threat by revealing that the company had secured enough shipping containers to keep up with the demand over the holiday season. LEGO continues to build on its success with its ‘Retailtainment’ strategy

LEGO’s first ‘Retailtainment’ flagship store in Europe was recently opened in Spain’s Barcelona. The store celebrates the architectural icon Antoni Gaudí offering engaging new play and product experiences with many unique local features, including the 3D LEGO model of the Sagrada Família as well as Park Güell. The move is part of LEGO’s global store expansion strategy which debuted at its New York shop, called ‘Retailtainment Center’ in June 2021. The company’s new store format is being hailed as groundbreaking retail innovation offering unique immersive digital and physical shopper experiences.

LEGO’s ‘Retailtainment’ store concept roll out worldwide and its enviable financial results confirm that the high street is far from dead and as channels, online and physical are complementary

to each other. As I investigated in my “Retail and Ecommerce: Shopping Reinvented” Opinion piece in my Total Licensing column previously, the high street is just evolving as it always has, and inevitably, there are winners and losers. The retailers that have disappeared in recent years are the ones that had already been struggling and the pandemic just accelerated the trend. In city centres, particularly, newer and better retailers are coming in which will undoubtedly help with the footfall into the high street. Going forward, this should accelerate as life gradually goes back to full normality.

A shift in shopping habits

Consumers are starting to visit brick-and-mortar locations again while continuing to embrace the convenience of online shopping. This shift in shopping habits is posing unprecedented challenges to retailers to diversify their in-store shopping experiences from what they offer online, engaging consumers in physical locations with social and playful activities to build an in-depth brand/ customer relationship.

As highlighted in Mintel Trend Experience Is All, consumers still value the advantages of shopping in-store, which include the ability to try products in person and to be helped by customer service associates that are also among the key USPs of LEGO. It is important to note that this trend is not about countering online sales, but rather turning shops into enjoyable experiences that promote purchases - either in-store or remotely. Shops are windows and adverts as much as places to purchase stock and they need to extend the time people spend there as well as the frequency of their visits.

Mintel Traditional Toys and Games, US, 2020 report showcases that consumers need toys and games to bring more than just fun and brands

can connect with adults by appealing to their need for wellness. It is clear that LEGO definitely got that right during the rather stressful (and gloomy) pandemic period and should continue to recoup the benefits in the short to medium term.

What can retailers learn from LEGO’s success?

LEGO stores are a great example of retail theatre with plenty of life sized models and figurines as well as play stations. Their outlets are seen as a destination in their own right by consumers.

COVID-19 and confinement measures have accentuated many consumers’ cravings for experiences and entertainment. In an era where the price can often seem like the deciding factor, a return to experiences may be more welcome than ever. To combat the stay-at-home-or-stayonline mentality, retailers must all pay heed. They need to extend their offer beyond mere retail and act as a venue, not just a shop. Investments in human resources need to deliver the differentiation of a ‘human touch’ and stores need to avoid ‘showrooming’ through initiatives like redeemable instore credits and in-store exclusives.

For consumers, a shopping day out will continue to be a leisure activity and it will increasingly be a choice rather than a necessity moving forward. There is a huge opportunity and good retailers will continue to do well.

Utku Tansel LLB, MBA

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Utku has 18 years of success in driving global thought leadership, project and content management, delivering strategic business intelligence and actionable insight to major international companies, retailers and financial institutions. Throughout his career, he has led many global research programs across a wide range of diverse and dynamic industries including Toys & Games, Licensed Consumer Products, Consumer Electronics, Apparel & Footwear, Homewares & Home Furnishings, and Personal Accessories & Eyewear. With a solid market research background, Utku regularly writes for leading industry publications including Total Licensing focusing on the most recent trends and developments. A sought-after speaker, he also presented at world-renowned industry events including Licensing International Mind Mix Executive Conference, Hong Kong Toys & Games Fair, PlayCon, World Congress of Play, and Walmart Global Toy Summit highlighting key findings from the latest global research studies.