Lego lays out the building blocks of a new retail strategy

November 22, 2002 by Simon Ashdown

Though it seems like Lego’s trademark colored blocks are already fixtures in most kids’ rooms, the company is determined to get its toys into the hands of even more children this holiday season. To do that, the Danish toyco’s North American arm Lego Americas has begun rolling out a slew of branded kiosks in Canadian and U.S. malls. On offer is a tightly edited selection of the company’s top lines, including Star Wars, Bionicles, Harry Potter and Galidor.

With discounters steadily eating into the market share of major department stores over the last 20 years, ‘there just haven’t been as many toy-buying opportunities for consumers at the malls,’ says Lego Americas president Andrew Black, who adds that the kiosks will help the company capitalize on the holiday rush and, of equal importance, increase its brand awareness.

The 150 10 x 10 kiosks, which are being staffed by employees of Walden Books (Lego’s retail partner on this effort) is one of a number of initiatives the company is pursuing to get its products more face time with consumers.

Last month, Lego also unveiled the first small-format (200 square meters) stand-alone store in Cologne, Germany. The location, which offers a comprehensive lineup of the toyco’s products – as well as customer-friendly options like the ability to buy loose Lego pieces in bulk – is the first of 20 such stores that the company is planning to test in Germany, the U.K. and the U.S. this year.

While boosting sales is definitely a goal in introducing the new stores and kiosks, competing with its traditional retail partners is not, insists Black. ‘This strategy has already proven that it grows [our retail] partners’ business rather than cannibalizing it,’ he says. Though Black declined to give a percentage, he says that in seven U.S. cities where the company already maintains stand-alone stores, Lego sales have been higher on average than those without. A test of 12 kiosks that Lego ran last year yielded similar results.

Jennifer Pritchard, senior manager at Atlanta, Georgia-based retail consultantcy Kurt Salmon & Associates, concurs that stand-alone boutiques should help, rather than hinder Lego’s overall sales. ‘Typically, what happens with stand-alone stores or kiosks like Nine West’s or Nike’s is it actually gives the consumer more opportunity to touch the brand, which can only encourage that consumer to want to buy that brand in other avenues,’ says Pritchard. Though the 150 kiosks are slated to remain open until the end of the year, if they surpass Lego’s expectations, Black hasn’t ruled out keeping them operational year-round. The company is also working on other retail concepts such as selling Lego in airport kiosks, which it will begin testing next year.

Along with its aggressive move into retail distribution, Lego will unveil a new branding strategy in January that’s designed to make it easier for consumers to understand the various play experiences its products provide. The centerpiece of the effort includes grouping its lines into five categories or portals: Explore (preschool toys); Make & Create (non-licensed building toys for kids six and up); Stories & Action (licensed, sports and adventure lines); Next (building toys that incorporate new technology); and Brand Lego (entertainment-based lines like Bionicles and Galidor). Lego will communicate what the categories mean to consumers via new color-coded packaging, brochures and other P.O.P. beginning in the new year.