On Saturday, December 21, 2013, a boy selects a Lego A / S toy in a box at an E-Mart Co. store, a subsidiary of Shinsegae Co., in Incheon, South Korea.
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There is no doubt that the Lego brand has benefited from people spending more time at home during the pandemic, but the company is also gaining new customers in China.
Lego said on Wednesday that consumer sales were up 21% last year, the result of a broader product offering, e-commerce investments paying off and strong growth in China.
“It’s really the result of a tremendous effort from the entire organization, especially with all the things we’ve been dealing with throughout the year,” CEO Niels Christiansen told CNBC.
Due to the pandemic, Lego was forced to close manufacturing locations in Mexico and China, temporarily close some retail locations, and see distribution costs rise as shipping became more expensive.
Despite these headwinds, the privately-owned Danish toy manufacturer reported sales of more than DKK 43.7 billion, or approximately $ 6.99 billion, for the year, an increase of 13% compared to 2019.
Top sellers ranged from classic Lego sets to themed products from Nintendo Super Mario and Disney’s Star Wars, Christiansen said.
“Our research shows that more families are building together,” he said.
While the pandemic may have encouraged consumers to buy more Lego sets to pass the time in lockdown, Christiansen said that’s not the only reason sales were so strong during the year. The company is reaping the benefits of investments in its e-commerce activities and new markets.
Visits to Lego.com doubled last year from the previous year, as many of Lego’s brick-and-mortar stores had to be temporarily closed. Customers were already more drawn to online shopping, but the coronavirus outbreak has accelerated trends and is unlikely to be reversed.
“I’m not sure it will go back,” said Christiansen.
A unique play experience that combines the open creative play of LEGO building toys for kids with an augmented reality app.
LEGO
Lego is ramping up recruitment for its digital and tech teams, Christiansen said. The company ultimately wants to be able to develop products at a faster pace and create platforms to house Lego content and for integrated play.
Still, traditional stores remain an important part of the brand’s strategy. In recent years, the toy maker has boosted the Chinese market by opening dozens of physical locations.
While Lego was part of the culture in other regions such as the UK and the United States, parents in China didn’t grow up with the iconic colored blocks. And so, having places where kids can go to get their hands on the bricks and see the sets that can be built has been a boon to the sale.
“Kids can see what Lego is and play with it,” said Christiansen. “It’s a brand built on the physical.”
In 2020, Lego opened 134 retail locations, 91 of which are in China. The company currently has 678 Lego stores worldwide and plans to add another 120, including 80 in China. The goal is to have around 300 Lego stores in China by the end of 2021.
China is already one of the company’s top markets, with double-digit growth over the past year.
Christiansen noted that sustaining 2020’s strong growth will not be easy, but that the company is well positioned to remain a dominant force in the global toy industry.
“I wouldn’t bet on 21% again, but what I do think is that if we continue our long-term investment, then I think we have the opportunity to outperform the market and gain market share,” said Christiansen.