A boy selects a Lego A / S toy at an E-Mart Co. store, a subsidiary of Shinsegae Co., in Incheon, South Korea, on Saturday, December 21, 2013.
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There is no doubt that the Lego brand has benefited from people who spend more time at home during the pandemic, but the company is also gaining new business in China.
Lego said on Wednesday that its consumer sales rose 21% last year, the result of a wider range of products, investments in e-commerce that paid off and increased growth in China.
“It’s really the result of a lot of effort from the whole organization, especially with all the things we’ve had to deal with throughout the year,” CEO Niels Christiansen told CNBC.
Due to the pandemic, Lego was forced to close factories in Mexico and China, temporarily closed some commercial locations and saw their distribution costs increase as shipments increased.
Despite these headwinds, the privately owned Danish toy maker reported annual revenue in excess of DKK 43.7 billion, or about US $ 6.999 billion, 13% more than in 2019.
Bestsellers range from classic Lego games to Nintendo Super Mario and Disney Star Wars themed products, Christiansen said.
“Our research shows that more families are building together,” he said.
While the pandemic may have encouraged consumers to buy more Lego games to spend time off, Christiansen said, it’s not the only reason sales were so strong during the year. The company reaps the benefits of investments in its e-commerce business and in new markets.
The number of visits to Lego.com last year doubled from the previous year, as many of Lego’s physical stores were forced to close temporarily. Customers had already been more interested in online shopping, but the coronavirus outbreak has accelerated trends and is unlikely to reverse.
“I’m not sure he’ll be back,” Christiansen said.
A unique gaming experience that combines the open creative play of LEGO construction toys for kids with an augmented reality app.
LEGO
Lego is increasing recruitment for its digital and technology equipment, Christiansen said. The company finally wants to be able to develop products at a faster pace and create platforms to host Lego content and for an integrated game.
Still, traditional stores remain a key part of the brand’s strategy. In recent years, the toy manufacturer has boosted the Chinese market, opening dozens of physical locations.
Although Lego has been part of the culture in other regions such as the United Kingdom and the United States, China’s parents did not grow up with the iconic colored blocks. And so having places where kids can go and get their hands on the bricks and see the sets that can be built has been an advantage for sales.
“Kids see what Lego is and play with it,” Christiansen said. “It’s a brand based on the physical.”
In 2020, Lego opened 134 retail outlets, 91 of which are in China. The company currently has 678 Lego brand stores worldwide and plans to add another 120, including 80 in China. The goal is to have about 300 Lego stores in China by the end of 2021.
China is already one of the company’s top markets, with double-digit growth in the last year.
Christiansen noted that it will not be easy to maintain the strong growth of 2020, 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 think is that if we continue our long-term investments, I think we have a chance to outperform the market and participate,” Christiansen said.