Behind the Numbers: Reimagining Retail – How LEGO Became the World’s Largest Toymaker

Episode Release Date: February 19, 2025
Hosted by Sara Lebo
Guests: Zach Stambor and Sky Canaves

Introduction

In this episode of EMARKETER’s "Behind the Numbers" podcast, host Sara Lebo delves into the remarkable journey of LEGO, exploring how the iconic toy company ascended to become the world’s largest toymaker. Joined by marketing experts Zach Stambor and Sky Canaves, Sara navigates through LEGO’s strategies that have sustained its relevance across diverse demographics, its innovative business flywheel, competitive challenges, and the lessons other retailers can glean from LEGO’s success.

LEGO’s Cross-Demographic Relevance

Sara initiates the discussion by highlighting LEGO’s unique ability to maintain relevance among various age groups. Both guests, who are parents, share personal anecdotes about integrating LEGO into their families’ lives.

Sky Canaves emphasizes, “LEGO can grow with the consumer through different stages of their lives, starting very young with Duplo blocks and evolving into sophisticated sets for adults seeking relaxation and creativity” (01:39).

Zach Stambor adds, “There’s the educational component, the creative aspect that fosters family bonding, making LEGO a go-to gift for both kids and adults” (02:15).

The LEGO Flywheel: Integrating Retail and Entertainment

Sara identifies the components of LEGO’s business flywheel, which includes an exceptional in-store experience, robust entertainment ventures, extensive IP partnerships, and international expansion.

Zach Stambor elaborates on this integration, stating, “Everything about LEGO is centered around the LEGO brick, which is extremely powerful and creates a consistent flow in their business model” (05:14).

Sara Lebo outlines the elements:

• In-Store Experience: Engaging environments that inspire customers.
• Entertainment: Productions like "The LEGO Movie" and TV shows such as "LEGO Masters".
• IP Partnerships: Collaborations with brands like Star Wars, Harry Potter, and Nintendo.
• International Expansion: Physical stores and theme parks that offer immersive experiences.

Brick and Mortar Success

The conversation transitions to LEGO’s brick-and-mortar strategy, where Sara praises LEGO stores for being “easy to navigate and fun to visit” (06:37).

Zach Stambor highlights the inspirational setup of LEGO stores, from showcasing big sets to allowing customer interaction with minifigures and sculptures. He points out that LEGO stores not only sell products but also serve as community hubs where enthusiasts can engage and find suitable sets.

Sky Canaves shares an observation from London, noting how LEGO transformed a store for Valentine’s Day by creating a flower shop aesthetic with their botanical sets, enhancing visual appeal and customer engagement (07:51). She also underscores the importance of events and workshops that cater to both children and adults, fostering a sense of community and brand loyalty.

Balancing Direct-to-Consumer and Wholesale Channels

Sara probes into how LEGO manages to balance its direct-to-consumer (D2C) LEGO stores with wholesale distribution through retailers like Target and Walmart without cannibalizing its own sales.

Sky Canaves explains, “The selection is much different. LEGO stores reserve the latest and greatest sets for their D2C channels, while wholesale retailers offer more standard selections” (09:24).

Zach Stambor reinforces this by mentioning LEGO’s vast product range allows for effective segmentation, ensuring that exclusive products are available through specific channels without overlap.

Competitive Landscape and Protection Against Duplication

A critical part of the discussion revolves around the threat of competitors and aftermarket duplicates (“dupes”) attempting to mimic LEGO’s success.

Zach Stambor acknowledges the impending competition from Mattel’s upcoming “Mattel Brick Shop,” projecting, “It's coming. It'll be interesting to see how Mattel leverages this because LEGO has such a strong core identity” (11:15).

Sky Canaves points out the quality and interoperability of LEGO bricks as significant barriers to successful duplication. She shares a personal experience, “The non-LEGO bricks were harder to put together and didn’t match the quality, which was frustrating” (11:54).

Sara Lebo notes LEGO’s strong brand equity, comparing it to household names like Kleenex and Jello, which exemplifies LEGO’s dominance and recognition in the market (12:43).

Lessons for Other Retailers

Sara shifts the focus to what other retailers can learn from LEGO’s strategies. She highlights LEGO’s DIY-style media partnerships and successful collaborations with creators on platforms like social media.

Zach Stambor emphasizes LEGO’s “laser-sharp focus” on its core product, the brick, and how returning to this focus after diversifying led to a resurgence in sales (14:18).

Sky Canaves adds that LEGO’s discipline and responsiveness to customer feedback have been crucial in turning customers into loyal brand fans, sustaining continual engagement and loyalty (14:49).

Sara draws parallels to other brands, citing examples like Sephora’s collaboration with Hulu for content creation, likening it to LEGO’s "LEGO Masters" for effective product-creator-streamer partnerships.

Sky Canaves also mentions Crocs as another brand that successfully maintains focus on a core product while refreshing it through collaborations, ensuring multi-generational appeal (15:24).

Sustainability Initiatives

Towards the end, the conversation touches upon LEGO’s efforts toward sustainability.

Sky Canaves notes, “They’ve been working on finding sustainable sources for resins and recycled materials. Last year, they launched a take-back program to recycle used LEGO pieces” (16:22).

This initiative not only reflects LEGO’s commitment to environmental responsibility but also enhances its brand image among increasingly eco-conscious consumers.

Personal Experiences and Final Thoughts

The episode concludes with personal reflections from the guests about their LEGO projects:

Zach Stambor humorously admits, “We’re past the LEGO phase” (16:46), indicating a temporary lull in his family’s LEGO activities.

Sky Canaves shares enthusiasm for the botanicals collection, stating, “We have flowers to work on. Loads and loads of flowers” (16:58).

Sara Lebo echoes a long-term personal loyalty to complementary brands, mentioning her enduring relationship with Crocs since fifth grade, paralleling LEGO’s timeless appeal.

Conclusion

Sara wraps up the episode by thanking her guests and listeners, reinforcing the key takeaways from LEGO’s sustained success:

• Consistent Focus: Maintaining a clear focus on core products while allowing for expansion within that framework.
• Innovative Engagement: Creating immersive retail experiences and leveraging media partnerships to engage diverse audiences.
• Quality and Brand Equity: Upholding high-quality standards and fostering strong brand recognition to guard against competitors.
• Sustainability and Responsiveness: Embracing sustainable practices and actively listening to customer feedback to build loyalty.

LEGO’s journey offers a blueprint for retailers aiming to achieve long-term success through strategic focus, innovation, and unwavering commitment to quality and customer engagement.

Notable Quotes with Timestamps

• Sky Canaves: “LEGO can grow with the consumer through different stages of their lives... it's a screen-free toy.” (01:39)
• Zach Stambor: “There’s the educational component, the creative aspect that fosters family bonding…” (02:15)
• Zach Stambor: “Everything about LEGO is centered around the LEGO brick...” (05:14)
• Sky Canaves: “They create events and a sense of community in their stores...” (07:51)
• Zach Stambor: “LEGO is so innovative in the products that they roll out...” (04:25)
• Sky Canaves: “It’s really hard to just copy the product because there is something to the product and its quality...” (11:54)
• Zach Stambor: “LEGO has such a strong core identity...” (11:46)
• Zach Stambor: “LEGO got into trouble... when it ventured into clothing and dolls...” (14:18)
• Sky Canaves: “They take customer feedback very seriously...” (14:49)
• Sky Canaves: “They’ve been working on finding sustainable sources...” (16:22)

Timestamps Reference

• [01:39] - LEGO’s relevance across demographics
• [02:15] - Educational and creative aspects of LEGO
• [04:25] - LEGO’s innovative product rollout
• [05:14] - LEGO’s business flywheel centered on the brick
• [07:51] - LEGO store experiences and community events
• [09:24] - Balancing D2C and wholesale channels
• [11:15] - Competition and potential dupe threats
• [11:54] - Quality and interoperability issues with dupes
• [12:43] - LEGO’s brand equity
• [14:18] - Focus on core product leading to sales resurgence
• [14:49] - Discipline and customer engagement
• [15:24] - Collaborations and multi-generational appeal
• [16:22] - Sustainability initiatives
• [16:46] - Personal LEGO project updates