On June 27, In response to market rumors that its products will raise prices, Lego Group said in response to securities Daily reporter that due to the continuous rapid rise of various costs, the company has decided to raise the prices of some products from later this year until 2023.
In its response, The lego group also said it had absorbed higher costs for a period of time to keep prices stable.
Securities Daily reporter found that although Lego did not give the specific time and increase rate, but from the official online flagship stores of Lego Group and offline brick-and-mortar stores, the price increase has long been not news.
The rising cost drives up the price of the product
A staff member of lego Group's official flagship store told reporters that the company decided to raise the prices of its products due to rising costs caused by rising energy, logistics and raw material prices over the past two years. In addition, lego Group's price adjustment not only involves the Chinese market, it is a global price adjustment, as for the specific increase, has not been clear.
However, from the market outflow of Lego group commodity map, the price of most of the products are best-selling, many of which have been priced at more than 1000 yuan. The official price of "BMW Motorcycle" has been adjusted from 1,799 yuan to 2,099 yuan, up about 16 percent; The official price of the Ferrari was adjusted from 3,499 yuan to 3,699 yuan, up about 6 percent.
For Lego Group this price increase, a senior retail analyst in exchange with "Securities Daily" reporters said that it is not unexpected, "global commodity prices are rising, Lego product price is expected."
He said that from the perspective of lego Group's brand positioning, it is a light luxury product, and the price increase will only affect the entry-level hobbyists who are more sensitive to price, and has little impact on lego Group's original customer group. "From another point of view, the price increase of Lego group products may further improve its brand positioning, which may in turn stimulate the sales volume and price of Lego products to rise further."
The transfer price of Lego on second-hand e-commerce platforms also confirms this point. Some experienced Lego enthusiasts say that some of lego's hot products are not pure commodities to some extent, but become financial products, with a certain appreciation space.
For example, Lego products with well-known IP co-branded models will not be renewed after they are sold out, so some fans will stock up in advance or ask for goods at high prices on second-hand e-commerce platforms. In addition, the number of buyers and prices on the platform have been rising due to the news that Lego has raised the price of popular models recently.
In response to this, Lego Group said that it is true that lego products have been sold out and will not be re-sold. As for other markets, consumers resell and hoard products at a higher price, which is not the official guidance of Lego Group and lego Group has not been involved.
Accelerate the layout of the domestic market
The price increase is corresponding to the performance of Lego Group growth significantly.
Lego Group's 2021 annual financial report shows that during the reporting period, the company achieved annual revenue of 54.844 billion Danish kroner (about RMB 51.92 billion yuan), up 27% year on year; Net profit was 17 billion Danish kroner, up 32 percent year on year. Among them, the revenue from the Asia-Pacific region was about 9.907 billion Danish kroner (about 9.379 billion yuan), up 26.09% year on year.
Financial data also show that in recent years, Lego group is increasing its presence in the Chinese market. By 2021, lego has 832 stores worldwide, with 340 stores in China accounting for 40.86% of the total. In 2021, Lego Group will open 165 bricks-and-mortar stores worldwide, of which more than 90 are in China, accounting for 57.58%. In fact, the Lego Group has accelerated its expansion in the domestic market every year since it opened its first branded flagship store in Shanghai Disney Town in 2016 and its first authorized store in 2017.
In the last three years, for example, nearly three-quarters of lego Group's 449 new stores have been in China, data show. In addition to brick-and-mortar stores, Lego group is also exploring the theme park market. For example, it is currently building China's first Lego theme park in Sichuan province, which is scheduled to open in October 2023. Lego theme parks in Shanghai and Beijing are also expected to open in 2024.
In addition to first-tier cities, Lego Group is also gradually deepening into the second and third-tier cities in China. Huang Guoqiang, senior vice president and General manager of China, said that Lego's future market layout in China will further tilt toward the second and third-tier cities. Lego now has nearly a third of its retail stores in third-tier cities and below in China.