Lego, the building blocks maker, recently reported strong financial results. Since some aspects of what Lego has been doing go counter to industry trends, it is interesting to see to what Lego’s management attributes its recent successful performance.
According to the September 29, 2021 Wall Street Journal article, “Lego Builds on Its Position as World’s No. 1 Toy Maker” by Trefor Moss, Lego “reported a 46% rise in first half sales” at a time when ”net profit more than doubled.” The article said that Lego “Chief Executive Niels Christiansen attributed the company’s performance to improvements in Lego’s digital platforms and the opening of hundreds of new physical stores.”
At a time when so many retail stores have been closing, it is interesting that Lego’s CEO credits the opening of many new stores as contributing to the company’s success. This seems to defy the general trend away from bricks and mortar physical locations, a trend that has been in place in retailing for quite some time. Yet, gong counter to this trend brought success to Lego.
On the other hand, Lego’s CEO also attributes the company’s strong performance to digital platform improvements. Thus, while Lego seems to defy a trend by opening many retail locations, Lego’s combining its digital platform improvements with opening more physical stores is consistent with another trend. It is consistent with the trend toward integrating digital with bricks and mortar. Thus, Lego is succeeding as it follows one trend (integrating digital and physical) while defying another trend (store closing).
The lesson here is to pay attention to trends in ways that fit the company. Following a trend that fits the company poorly can lead to disappointing results. Likewise, defying a trend that doesn’t fit the company can bring strong results, as Lego is finding as it opens many more physical stores despite the industry trend toward shutting down retail locations.
Trends should not be ignored, but whether and how to respond to them should reflect what is right for the company. Many companies can benefit from following a trend. But, some may do quite well by defying a prominent trend, just like Lego did.