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In lugnet.mediawatch, Andy Evans wrote:
> In lugnet.mediawatch, Larry Pieniazek wrote:
> > In lugnet.mediawatch, Arne Lykke Nielsen wrote:
> > > Hi,
> > >
> > > New press release:
> > >
> > > http://www.lego.com/eng/info/default.asp?page=pressdetail&contentid=4805&countrycode=2057&yearcode=&archive=false
> > >
> > > Look at bullet 5: It seems there will be another balance between TLC's own
> > > products and the licenced prodocts - maybe we could get town back as a line of
> > > its own?!?
But we Do have town back! World city is the new town. While it may not be quite
the same as what we had as kids, it is town nontheless. Police, Fire, and trains
all fit into that catagory. I doubt we will see the other things related to town
that we all would like to see (shops, eateries, etc.). But at least it is a
start!
> > The phrase I find worrisome is this one:
> >
> > "Later in the year the LEGO Company will be evaluating the role out strategy of
> > the company’s own brand retail stores."
> >
> > I'm hoping these stores do well, because I like shopping there, but I think they
> > may have a small problem. They sell their stuff at MSRP, so they get undercut by
> > discounters, but if they were to sell below MSRP, they might be causing "channel
> > friction".
> >
> > So I'll be curious to see what the evaluation results in. More rollouts faster,
> > or less?
>
> I think there's another point that is clear if you read between the lines. I
> suspect that the vast majority of TLC's revenue comes from sales to retail
> outlets (TRU, Walmart, Target, etc.). It would appear that retail channel is
> not making money selling LEGO products. Based on the list of actions it's also
> clear that these retail channels feel that the LEGO Company needs to do a much
> better job in supporting them (better flexibility, inventory management, etc).
> I think they would see the brand retail stores as a competitor or a distraction.
> This might force TLC to "go slow" on brand retail so as to appease their main
> distribution channel.
>
> Other than PAB, I haven't been impressed with the brand retail stores. Perhaps
> they can find a way to do PAB through specialty "boutique" retailers (like
> Learning Express)?
>
> Andy
As far as Brand retail, when I was still with the company, Lego loved the stores
as they are very profitable. Poul Plougman, former executive, said a few months
back that there was a plan to open 20 Brand Retail outlets per year! The problem
with retail outlets such as Target, Walmart, et al, is that Lego has to compete
with other like minded products on the same shelf. Most consumers unaware of the
great differences in quality between brands will generally pick the cheaper of
the bunch. This is why Megablocks has had is revenue increase every year for the
last 10 years, while Lego posted it's worst loss in the company history last
year (with a less than stellar track record over the last 5 years, roller
coaster track is more like it!).
I felt that last years product range was one of the strongest they have offered
in years (Adventurers, Make and Create, WorldCity to name a few), but the
company still LOST money!
But with Lego retail outlets, there is no competition, no cheap knock offs
competing for your dollars, just Lego. One of the other main concerns was the
level of "branding" that was achieved at other toy stores and retail outlets.
There wasn't a real concerted effort to put the products on the shelf as
directed by the Lego company, just throw some stuff up and hope it sells. With
Lego stores, you can have things laid out EXACTLY as planned to showcase the
product, to give a greater push to underselling products, and really enforce the
Lego brand and image.
Not to mention that Bulk brick was one of the STRONG sellers in the Lego
company. They were very unsure about Pick-a-Brick in the beginning. Legoland
California was the first to attempt to sell bricks by peice and weight. Now
every Lego store has this as a prominent feature! It is pure profit, and there
will be more in the future.
So I would think as a company they will continue with the push for retail
outlets of their own, but I would imagine with the great losses of last year it
will be scaled back somewhat.
I just wish that Lego would realize that laying off more workers is NOT the
strategy to profitable growth. It hasn't worked in the past, and will not work
in the future!
Bill
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Message is in Reply To:
 | | Re: Press release: job cuts etc.
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| (...) I think there's another point that is clear if you read between the lines. I suspect that the vast majority of TLC's revenue comes from sales to retail outlets (TRU, Walmart, Target, etc.). It would appear that retail channel is not making (...) (21 years ago, 16-Mar-04, to lugnet.mediawatch, lugnet.general)
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