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Thu 27 Aug 2020 03:05 PM

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LEGO still committed to building MENA retail network despite Covid

Toy maker's regional chief sees 'phenomenal' surge in e-commerce business during Covid but says expansion plans will always include bricks-and-mortar stores

LEGO still committed to building MENA retail network despite Covid

Image: ITP Media Group

Among the many welcoming Dubai’s decision to throw open its doors again to international tourists, Jeroen Beijer, the general manager, Middle East & Africa, for the LEGO Group, may not have been an obvious choice.

However, the popular construction toy, with interlocking bricks and characters, which has entertained generations, has also suffered somewhat from the Covid-19-enforced closure of international borders.

“Right now in our current portfolio we’ve got the Burj Khalifa, which is a very iconic tower and a very iconic LEGO product and has done really well for us over the years. Tourists really like it, but also think I know many people in this part of the world who have this on their shelves as well,” Beijer told Arabian Business.

“With the absence of tourism, those sales took a bit of a beating there.”

The same could be said for the Dubai skyline product, featuring some of the most iconic buildings in the emirate, which was produced to coincide with Expo 2020 Dubai.

At the height of the Covid-19 global pandemic earlier this year, an estimated 1.6 billion children were forced to stay at home as part of concerted efforts to curb the spread of the virus.

It meant big business for streaming services – subscribers to the recently rebranded OSN Streaming more than trebled in the last four months to 250,000, up from 80,000 in April.

But more traditional forms of entertainment, such as LEGO, also benefited – lack of tourists aside. The company moved quickly to adapt to the circumstances, with various initiatives, including the #letsbuildtogether idea, which saw daily activities and play ideas published daily for adults and children to enjoy.

Donations and collaborations, financial and otherwise, were also made by the company to help those who could not access online education and home learning.

“We’ve seen a phenomenal uptick in demand for our products. We are in an extremely fortunate position that not only are we able to help and contribute in a very meaningful way, we’ve also seen our consumers and shoppers through Covid actually have big demand for our product,” said Beijer.

While the company’s shops had to close, like many it witnessed a huge upsurge in its online presence.

Beijer explained: “It’s been interesting. It’s a phenomenal shift. E-commerce was already a very big part of our lives in different parts of the world. In the Middle East, e-commerce I think is still in its infancy. As Covid rolled over various different markets and physical retail outlets were closed, obviously consumers shifted to go online, which meant that people who were familiar with online were shopping online, but also it brought in new consumers that were not so familiar online, or were not particularly shopping in that category online.

“What we saw globally is that the mature markets that had very mature e-commerce players were able to respond quicker than e-commerce in other parts of the world and the Middle East, in my view, is one of those areas, where it took a bit more time and effort.

“Prior to Covid I think we were in high single digits (for e-commerce). When we were at the height of Covid we were well north of 50 percent. We were in the high double digits and the majority of the sales were coming through e-commerce.”

That’s not to say, however, that the popular bricks will no longer be sold in bricks-and-mortar stores, with the experience for shopping for LEGO almost as important as the purchase itself.

Beijer said that has been reflected in consumer behaviour since the end of lockdown and reopening of the retail industry.

“As shops opened again, we’ve seen a natural level of e-commerce come back down,” he said. “The Middle East is an interesting region because where we’ve seen e-commerce accelerate in other parts of the world, it dropped down a little bit as bricks and mortar reopened, but as brick and mortar reopens in the Middle East you actually saw a big shift back to brick and mortar channels which also speaks towards the uniqueness of this region and the shopping mall culture and also that shopping malls and shopping is a big part of social, which I think is slightly different from other parts of the world.”

It may be slightly different in that respect, but the Middle East remains an important market for the company, which was founded in Denmark in 1932.

The LEGO Group opened an office in Dubai last year and is already targeting expansion across the region.

“In about eight years from now, we expect there’s going to be 125 million children between zero and 14 in the Middle East and North Africa region and hence we see this really as a growth opportunity for us, but also saw that we need to be on the ground,” he said.

“In the Middle East we still see many spots where we are under-represented and where we have opportunities to step up.

“As we brought the team here on the ground in 2019 we’ve started to roll out into the UAE, we’ve started to expand into Saudi Arabia and we will continue to expand from our base in Dubai for many years to come to make sure that we unlock that potential and that we reach more children tomorrow than we reach today.”

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