Lego to expand
Stores to more than double in China, reach lower-tier cities
The Billund, Denmark-headquartered Lego Group is expected to more than double its current number of stores in China and enter lower-tier cities to reach more children, as its revenue in the Chinese market recorded strong double-digit growth in the 2018 fiscal year, according to figures released on Wednesday.
In an interview with China Daily on Tuesday, Niels B Christiansen, Lego Group CEO, said the group has plans to expand its physical presences in China, from 60 certified stores in 18 cities to 140 stores in more than 30 cities.
“You can expect us to open another 80 stores, Lego-branded stores in China to continue our investment in the country,” said Christiansen.
The company has built its presences on e-commerce, digital and physical platforms in the country — one of Lego’s fastest growing markets in the world.
According to Euromonitor International, the traditional toys and games sector in China has continued to grow, with the market valued at 317.5 billion yuan ($47.45 billion) in 2018, an increase from 276.5 billion yuan in 2017. The figure is expected to rise to 352.4 billion yuan in 2019.
The company now has three flagship stores in China, with one outlet recently opened in Wangfujing Street in Beijing, in addition to 60 Lego-certified stores in 18 cities in the country.
“Our branded stores are a great place to deliver our play experiences and elevate our brand in China. We will continue to do more in China,” said Paul Huang, senior vice-president of Lego Group and general manager of Lego China.
Moreover, he said it is a very effective way for Lego to reach more children in the country through e-commerce partners such as JD, Tmall, and Tencent, especially in cities where they might not have physical stores at this moment.
Globally, Lego returned to its stabilized growth last year despite challenges facing the toy industry, such as the departure of the specialist retailer including Toys R Us.
Its earnings for the full year ending December 2018 show that Lego Group’s global consumer sales grew 3 percent while revenue grew 4 percent to 36.4 billion Danish krones ($5.56 billion), up from 35 billion Danish krones in 2017. Its operating profit was 10.8 billion Danish krones compared with 10.4 billion Danish krones in 2017, an increase of 4 percent.
The company will further expand its presence in the Middle East and India to drive growth through emerging opportunities in new markets where there is a large and growing middle class population.
On a global scale, Christiansen said e-commerce and online sales from more traditional retailers will continue to grow and digitalization will allow new and better ways to interact with retailers and also consumers.
Lego will continue to invest in product lines with innovative products that really embrace digital and provide “fluid play” where kids can actually jump between physical and digital, he said.