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Lego builds a chain of own-brand stores.

Lego builds a chain of own-brand stores

When was the last time you visited your friendly local toy-store? Last Christmas? The Christmas before that?

The chances are that it was many years ago. The reason is that giant retailers like Toys 'R' Us have transformed the market, driving many of the smaller, local toy retailers out of business.

This growing consolidation in toy retailing - especially in the USA - has put enormous pressure on some of the big toy manufacturers. They have come to feel that they are losing control of their destiny at retail level. The response of companies like Lego has been to launch their own outlets which they can use as a marketing platform to create their own brand experience in exactly the way they want to - and learn more about their customers at the same time.

In volume 39 number 6 of International Journal of Retail & Distribution Management, Laura Ilonen et al. [ih-LOH'-nehn] point out that not all of Lego's own stores have been profitable. The company has had to close some flagship stores in particularly expensive locations. Its remaining 74 outlets, while not seen as Lego's principal sales channel, do create sales both directly and indirectly, allowing the company to test new ideas and supporting external retailers with their example.

One new idea has been to launch a Lego range specifically for girls. Brad Wieners looks at this in the 19 December 2011 issue of Bloomberg BusinessWeek. He points out that, after four years of research, design and exhaustive testing, Lego believes it has a breakthrough with Lego Friends, a product that targets girls aged five years and over.

Market research has revealed that, like boys, girls love to build. But they do so in a different way. Boys tend to be 'linear', building rapidly, even against the clock, to finish a kit so that it looks just like the picture on the box. Girls, in contrast, tend to prefer a 'steps along the way' approach, and to begin storytelling and rearranging.

As a result, Lego has bagged the pieces in Lego Friends boxes in such a way that girls can play out various scenarios without finishing the whole model. The company has also introduced six new colours, including azure and lavender.

Lego will also introduce 29 mini-doll figures for girls this year. They will represent five main characters, each with her own name and back-story. The reason is that, while boys tend to play with mini-figures in the third person, girls need a figure they can identify with and who looks like them.

Even if Lego succeeds in increasing its sales to girls, the company still has work to do on its branding. In Young Consumers: Insight and Ideas for Responsible Marketers, Vol. 12 No. 2, Emily S. Kinsky and Shannon Bichard reveal that, of 20 logos showed to 10 children, only Lego and Dell were not recognized by a single child with regard to the product associated with the logo.

No prizes for guessing the most recognized; when it comes to eating under the golden arches, it seems that children really are 'Lovin' it'.

In other top management news, Emerald has recently published a practical new book on strategic planning for single-business companies. Strategic Planning: A Practical Guide for Competitive Success provides original and proven techniques to develop viable strategic alternatives, many other useful analytical tools and includes examples of real companies. To view the companion website, go to: http://www.emeraldinsight.com/strategicplanning