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 the fact that people spend more time at home during the pandemic, but the company is also winning new business in China.
Lego said on Wednesday that its consumer sales increased by 21% last year, the result of a broader product range, offsetting e-commerce investments and a growth spurt in China.
“It is really the result of tremendous effort by the entire organization, especially with all the things we have had to face over the year,” said CEO Niels Christiansen to CNBC.
Due to the pandemic, Lego was forced to close factories in Mexico and China, temporarily close some retail locations and saw its distribution costs rise as freight became more expensive.
Despite these headwinds, the Danish private toy maker reported revenue for the year that exceeded DKK 43.7 billion, or about $ 6.99 billion, an increase of 13% compared to 2019.
Bestsellers range from classic Lego sets to Nintendo’s Super Mario-themed products 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 spend time in confinement, Christiansen said it was not the only reason sales were so strong during the year. The company is reaping the benefits of investing in its e-commerce business and 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 were already gravitating more to online shopping, but the coronavirus outbreak has accelerated trends and is unlikely to be reversed.
“I’m not sure if this is going to come back,” said Christiansen.
A unique gaming experience that combines the open and creative game of LEGO construction toys for kids with an augmented reality app.
LEGO
Lego is increasing the recruitment of its digital and technology teams, Christiansen said. Ultimately, the company wants to develop products at a faster pace and create platforms to store Lego content and for integrated games.
Still, traditional stores remain a key part of the brand’s strategy. In recent years, the toy maker has entered the Chinese market, opening dozens of physical locations.
Although Lego was part of the culture in other regions, such as the United Kingdom and the United States, parents in China did not grow up with the iconic colored blocks. And so, having places where children can go and lay their hands on the bricks and see the sets that can be built has been an advantage for sales.
“Children can see what Lego is and play with it,” said Christiansen. “It is a brand built on the physical.”
In 2020, Lego opened 134 points of sale, 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 best markets, with double-digit growth last year.
Christiansen noted that sustaining strong growth in 2020 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 think is that if we continue our long-term investments, then I believe we have a chance to outperform the market and gain share,” said Christiansen.