Opinion | Foundation of success: What can retailers learn from the LEGO approach?

As global pandemics go, the onset of Coronavirus, while forcing many to navigate a treacherously rocky road to begin with, hasn’t fared too badly for the toy industry; a global business that has provided support and entertainment to families and children worldwide. Among some of the last year’s biggest successes was LEGO, who achieved a 13 per cent growth on sales over the course of 2020.

With an eye for analysis, Utku Tansel LLB, MBA, an industry analyst who has led global research programmes across the entire toys, games, and licensed consumer products spectrum, turns his attention to the Danish toy maker and how shifting focus onto new and emerging audiences has helped the art of LEGO building continue to go from strength to strength.

While the COVID-19 pandemic is forcing some retailers around the world to close, LEGO opened 134 new stores – of which 91 were in China – last year. The company plans to open a further 120 new shops in 2021, including 80 in China alone, expanding its total global store count to almost 800 in 2021.

This is part of LEGO’s business strategy towards – what it calls an ‘omnichannel network’ – operating in tandem with LEGO.com, whose online visits doubled over the last year. This ties with Mintel’s COVID-19 tracker showing that nearly half of British consumers are now doing more shopping online – a double digit increase since mid-April 2020.

LEGO’s sales in 2020 grew by a substantial 13 per cent, while operating profit rose by 19 per cent worldwide. Its retail strategy is definitely working. 

Merging online and offline

 

In terms of new product launches, the LEGO Super Mario set from 2020, which uniquely blends physical bricks with online games, has been one of LEGO’s most successful theme launches. The product line featured an interactive LEGO Mario figure that collects coins in real life game levels created with LEGO bricks. The figure has LCD screens in its eyes, mouth and belly to display a wide range of instant reactions to movement, colour and action bricks. 

Meanwhile, and collaborating with Universal Music Group, the innovative company continues with this strategy in 2021 with the LEGO Vidiyo release –  which taps into kids’ creativity through music and play. Through LEGO Vidiyo, children can direct, produce, star in, and share their own music videos, using chart-topping tracks from Universal Music’s extensive variety of global artists. Its playful music video maker experience combines physical and digital play as special effect ‘BeatBits’ and music inspired minifigures integrate and come to life through AR in a vibrant new app.

Mintel Trend Extend My Brand investigates how brands are expanding into new categories and demographics to find new business as well as intrigue consumers. Brands are advised to assess the opportunity to use their company’s established image, visibility, and strong brand following to launch new product lines – which LEGO has been utilising very successfully in recent years. They are encouraged to explore new categories and price points that may cater to an extended clientele while still aligning with the brand’s identity.

Brick by brick, LEGO, which dominates the construction category globally, has been expanding its presence in toys targeting beyond its core business. In 2020, the company entered the arts and crafts category with the introduction of LEGO DOTS – a concept which offers kids a creative canvas for self-expression. Based on multiple shapes and colourful tiles, the line featured bracelets and items for home décor.

Targeting stressed-out adults

Aiming at adults, LEGO also released its 2nd 2D tile building theme, LEGO Arts, in 2020 featuring Andy Warhol’s Marilyn Monroe, The Beatles, Marvel Studios Iron Man, and Star Wars The Sith. Mintel Traditional Toys and Games, US, May 2020 report highlights 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. 

With products for adults that can tout stress relief and relaxation, each LEGO Art design is accompanied by a bespoke soundtrack. These soundtracks dive deep into the inspiration behind each wall art set helping adults unwind and fully immerse themselves in the building experience. Our consumer research (US, March 2020) confirms that there is a large market for toys and games for adults, since half of consumers who have purchased toys and games in the previous 12 months have done so for an adult.

 

Providing a unique retail theatre experience             

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 consumersMintel Trend Experience Is All highlights that most consumers still put a premium on the advantages of shopping in-store, which includes the ability to try products in person and to be helped by customer service associates.

This trend is not about countering online sales, but rather turning shops into enjoyable experiences that promote purchases – either in-store or remotely. Retailers are reminded that 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.

So, what’s next?

Post-pandemic (or when the restrictions are eased), LEGO should be able to continue to build on its success. As I also investigated in my West End Farewells? – Regent Street’s Hamleys has met a modern cross-roads Opinion piece in ToyNews recently, for consumers, a shopping day out will continue to be a leisure activity and it will increasingly be a choice rather than a necessity.

Overall,the retail landscape will be leaner, the battle for consumer attention will be fierce and when the economy recovers, consumers will remain value conscious. In city centres, particularly, newer and better retailers are coming in which will undoubtedly help with the footfall into the high street, moving forward.

There is a huge opportunity and good retailers will continue to do well. LEGO is in a very good position to capitalise on these.

Utku Tansel has 17 years of success in driving global thought leadership, project and content management, delivering strategic business intelligence and insight to major international companies. He can be contacted via LinkedIn

About Robert Hutchins

Robert Hutchins is the editor of ToyNews and its sister title, Licensing.biz. He has worked his way from Staff Writer to Editor across the two titles, having spent almost eight years with both and what now seems like a lifetime surrounded by toys. You can contact him by emailing robert.hutchins@biz-media.co.uk or calling him on 0203 143 8780 You can even follow him on Twitter @RobGHutchins if ranting is your thing...

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