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 consumers. Mintel 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

Children’s entertainment licenses praised by Toy Retailers Association among its Toy of the Year Award winners

Children’s entertainment licenses PAW Patrol, Super Mario, Harry Potter, and Star Wars have been among those praised by the Toy Retailers Association for the role they have played in helping the toy industry through a troubled 2020.

In this year’s Toy of the Year awards, reflective of the change of pace for the retail scene in general over the course of last year, a strong line-up of licensed product has been championed alongside some of the best performing companies to have fuelled the industry’s five per cent year on year sales increase.

In a change of approach to the usual Toy of the Year selection process, this year’s listing reflects the impact that the pandemic has had on the sector. Yet, while online sales have accounted for just under half of all toy sales of 2020, suppliers and retailers have still played a major role in keeping the nation’s children smiling.

Amid the uncertainty, there have been four outstanding categories which have played their part in delivering the industry’s growth, all of which have outperformed the overall market.

The TRA recognises that multiple suppliers have played an integral part in each of the categories, but the selection panel has decided to highlight a ‘winner’ in each of these categories to represent the largest overall contribution to the category in a unique year for the industry.

“This year, in keeping with the year we have just experienced, we decided to be total different in our approach,” Alan Simpson, chairman of the Toy Retailers Association, told ToyNews.

“When people look back at award winners in years to come, they will notice that 2020 was totally different. I believe that this was the correct approach to reflect the challenges we have all had to overcome.”

GAMES & PUZZLES

This was a key performer in the overall market. As well as helping educate and entertain children, this category topped the growth (year on year) performance with various suppliers driving this increase.

It was the like of Ravensburger, Orchard, Gibsons Games, Asmodee, Hasbro and Tomy (Drumond Park) that all performed superbly well throughout the year.

The panel has chosen RAVENSBURGER as its standout performer in this category.

BUILDING & CONSTRUCTION 

This is an area dominated by one supplier, although Hornby with its Airfix range added a different dimension to this category with notable ranges from K’Nex and Geomag.

The winner in this category is LEGO. Delivering remarkable growth consistently over the last 10 years, LEGO has yet again outperformed the market and is to be commended for keeping the nation’s children (and kidults) entertained and amused throughout the Covid-19 pandemic and various lockdowns.

OUTDOOR & SPORTS

In a category that benefitted from people having to stay at home, it was inevitable that growth would be achieved in this area. Many products helped with our children’s mental and physical health – bicycles, trampolines, skateboards, as well as outdoor ranges from the likes of Little Tikes.

The standout performer in this category was MOOKIE TOYS for its swingball range.

ARTS & CRAFTS

Again, a variety of suppliers contributed to making this category such a success. These were Galt, Crayola, John Adams, and Spin Master with its Kinetic Sand, to name but a few.

The winner in this category is HASBRO for its domination in the arts and crafts sector through its Play Doh brand.

Many other suppliers contributed to the success of 2020 and the panel recognised the most notable listed below, with the reasons noted alongside. These will all receive a “Highly Commended” certificate this year.

BANDAI for its launch of the Cocomelon range.

CHARACTER OPTIONS
 for continued success with its Peppa Pig, Goo Jit Zu and Pokemon ranges

FUNRISE for its Fart Ninja line

GOLDEN BEAR
 for its Hey Duggee and Bing ranges

MGA ENTERTAINMENT
 for its L.O.L. Surprise! range

MATTEL
 for its success with its Barbie, Hot Wheels and Star Wars’ The Child ranges

SPIN MASTER for Paw Patrol

VTECH
 for its varied pre-school learning range

ZURU
 for the successful launch of its 5 Surprise Mini Brands range

Meanwhile, LICENSES continued to play a big part in 2020. In addition to licenses already mentioned, Frozen, Super Mario and Harry Potter continued to deliver throughout the year.

The TRA sincerely hopes that ‘normal service’ resumes in 2021 when we can revert to our customary criteria and identify the actual toy winners and allocating awards accordingly. In the meantime, we wish you all a successful and healthy 2021.