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, 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 gaining new business in China.
Lego said on Wednesday that its consumer sales rose 21 percent last year as a result of a wider range of products, with e-commerce investing rewarding growth and growth in China.
“It’s really the result of a huge effort by the entire 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 retail outlets and saw its distribution costs increase as transportation 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, up 13% from 2019.
Top sellers ranged from classic Lego sets to themed products from Nintendo Super Mario and Star Wars Disney, Christiansen said.
“Our research shows that several families build together,” he said.
While the pandemic could have encouraged consumers to buy more Lego sets to pass the deadlock, Christiansen said, it’s not the only reason sales have been so strong this year. The company takes advantage of the investments in its e-commerce business and in new markets.
The number of visits to Lego.com last year doubled compared to the previous year, as many of the Lego physical stores had to close temporarily. Customers were already gravitating more towards online shopping, but the coronavirus outbreak has accelerated trends and will probably not be reversed.
“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 children with an augmented reality application.
LEGO
Lego is stepping up recruitment for its digital and technology teams, 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 integrated gaming.
However, traditional stores remain a key part of the brand’s strategy. In recent years, the toy manufacturer has made a push in the Chinese market, opening dozens of physical locations.
While Lego has been part of the culture in other regions, such as the United Kingdom and the United States, Chinese parents did not grow up with iconic colored blocks. So having places where kids can walk and get their hands on the bricks and see the sets that can be built was an advantage for sales.
“Kids can see what Lego is and play with it,” Christiansen said. “It’s a brand built on physics.”
In 2020, Lego opened 134 retail outlets, 91 of which were in China. The company currently has 678 Lego brand stores globally 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 best markets, with double-digit growth in the last year.
Christiansen noted that sustaining strong growth in 2020 will not be easy, but that the company is well positioned to continue to be a dominant force in the global toy industry.
“I wouldn’t bet 21% again, but what I think is that if we continue our long-term investment, then I think we have a chance to outperform the market and take part,” Christiansen said.