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LEGO® will double retail presence in two years
By G Balachandar
Oct. 07, 2010 , Chennai
About six months into its distribution pact with Funskool India,
Denmark-headquartered toy maker LEGO Group seeks to pursue an aggressive growth
strategy on the back of the growing middle-class population. CEO and president
of the 2 billion Euro LEGO Group, Jorgen Vig Knudstorp, who was in Chennai,
spoke to G Balachandar.
Excerpts:
What has been the learning after your distribution pact with Funskool?
We are an 80-year-old family owned group. With just three shareholders, we are a
value-based group. We always pursue organic growth and don’t do acquisitions.
Working with partners is not an easy decision and we don’t this always. But as a
leading producer and distributor of toys in India, Funskool has been a strong
and potential partner. We have improved our presence massively after the tie-up
with Funskool, compared to the previous situation. We have established our
presence through 140 stores across the country.
What is your perception about the Indian toy market?
The toy market landscape in India is changing rapidly, and there is a new range
of consumers. More importantly, there is an emerging middle class in major
cities. The time is ripe for us to penetrate and expand. You will see a brand
like Lego becoming very strong in the near future as we expect Indian consumers
to show interest in quality toys that are safe besides helping a child’s
development. At present, the market is highly fragmented with small players.
Going forward, there will be more international brands and both local and
foreign brands will see growth.
Is there any entry barrier for a new player? What are your key challenges in
the near term?
We don’t see any entry barriers as we gather that Inspector Raj is history now
in India. The economy is now more open and highly competitive and offers strong
growth opportunities for a company like Lego. The general challenge is
infrastructure that India needs to address. However, we see the same challenges
in other markets like Brazil. But we don’t see any major challenge other than
understanding the market and reaching out to consumers. These are normal
challenges we face everywhere and we hope to overcome them in India as well.
What are the business fundamentals you plan to create in the immediate term?
We will focus on two things in the near term. First, find and strengthen a
viable business model. It means ensuring profitability for our partners,
retailers, etc., as we want everyone to benefit from the model so that they bet
big on Lego. We are happy with the current model of working with Funskool and
will continue to fine-tune this. Second, we need to create huge awareness about
Lego and attract children to the specific themes of the products we sell now in
India. We gather from retailers that the general perception about toys is waste
of money. We want to promote that Lego is not just a toy but helps develop
children at reasonable prices.
How big is your network now and what are your immediate term targets?
Though our current business in India is quite small, at the corporate level we
intend to pursue an aggressive growth strategy in the coming years. We want to
add 60 outlets this year to take the total presence to about 200 outlets, which
will include departmental stores, book retail chains, etc. We intend to double
this in two years, as there is strong growth potential. The most strategic point
is to get the business model going and deepen the relationship with retailers
Would you set up exclusive outlets for brand promotion?
We don’t want to do that right now, though we do that in other geographies in a
limited way. These outlets on a global scale contribute just about 10 per cent
to our sales. We want to be visible through product experience, not by huge
spend on marketing and promotions.
mydigitalfc.com
-end of report-
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