As the venerable toy company celebrates its 90th anniversary this year, Troy Taylor, general manager and vice president of Lego Group in Australia and New Zealand, discusses the business’ local expansion plans, how it hopes to improves to improve the lives of children, inclusive marketing, and the role of licensing and partnerships in taking on popular video games for market share. Inside Retail: You’ve spent most of your career at Lego. What first attracted you to the brand and why hav
have you remained at the business for so long? Troy Taylor: When I finished my studies, I had an opportunity to work for the Lego Group as a sales rep in Geelong. I looked after regional Victoria for a number of years and had an opportunity to progress. I held a number of key account management roles and relocated to Sydney, where the [local] headquarters are. I also spent some time in the US, which is our biggest market, where I looked after Amazon and Toys ‘R’ Us. After a number of years in the States, I came back and was the head of sales for Australia. The market was growing significantly at the time and we needed more of a strategy around how we grew. I headed up marketing [in Australia] for a number of years, really focusing on the master brand campaign side, and then I had an opportunity to move to Asia, where I headed up Greater China. I looked after Hong Kong, Taiwan, and Macau as general manager, and I spent some time heading up Singapore and Malaysia. Then I was lucky enough to get an opportunity to come home and be the first Australian general manager for Lego, which I’m really proud of. Lego being a Danish company, a lot of Danish people have been the head of it [in Australia and New Zealand], so when the opportunity came up to be in charge, I jumped at the chance. So that’s my Lego journey. I celebrate 20 years with the company this year. IR: That’s pretty impressive – congratulations! TT: I didn’t plan it that way, but when you’re with a company that keeps investing in you, and you’re aligned with its values and its direction, you stay. I’ve been there 20 years, but it hasn’t felt like 20 years. It’s gone pretty quick. I’ve moved around the world, and had different functions within the company, but I’ve really enjoyed the experience. IR: Lego is very outspoken about important issues like using gender-neutral marketing and being inclusive of people with disabilities. What initiatives or commitments do you find really meaningful? TT: We’re really fortunate to work for a privately held company – we’re in the fourth generation of ownership now with Kjeld Kirk Kristiansen, who is the grandson of [Lego founder] Ole Kirk Kristiansen. It really is a company with a social conscience. We donate 25 per cent of all the profits we make each year to children’s charities through the Lego Foundation. We’re talking billions of dollars. We don’t publicise it because it’s not about being boastful, it’s about helping out where we can. Working for a company like that is pretty special. Being a privately held company, we can make decisions for the long term. We don’t have the added pressure of answering to the stock exchange and shareholders on a monthly basis. As an example, we’ve made a commitment to find a sustainable source or material to make Lego bricks by 2030. There is no pressure to do that. We’re doing it because we know it’s the right thing to do. We’re spending millions and millions of dollars to find an alternative source to ABS [Acrylonitrile Butadiene Styrene] plastic. We’re trying materials such as wood, sugarcane, and recycled plastic bottles. These are just a few of the reasons I’ve stayed with the company, and why my values align with it. IR: A lot of businesses don’t speak out on social issues, either because they’re afraid of alienating certain customers or they’re worried about saying the wrong thing and facing backlash. What do you think drives Lego to speak out? TT: I think Lego’s point of view is, we want to state our opinion on things where we feel we can make a positive difference in children’s lives. Being a big brand, we know we have an important role to play in that, so anything that can have a positive impact on children, that’s where we want to state our opinion. IR: Looking at the region you’re heading up now, can you provide a snapshot of what the business looks like in Australia and New Zealand? TT: Australia is a very important market for the Lego Group. It’s in the top 10 markets globally, so we have a very mature market here. We’ve been operating in Australia for 68 years. People are very familiar with the brand, and we’re still in growth mode, believe it or not. We’ve had five straight years of double-digit growth – and that’s against the backdrop of Covid-19 and retailer turmoil, with Toys ‘R’ Us going bankrupt, and all those different challenges. We’ve still managed to find ways to grow, and that’s really important for the Lego Group, globally. You can test and learn in the Australian market, because the consumer patterns are quite similar to the US and the UK. We’re doing quite well in this part of the world. New Zealand has similar growth rates. We’re by far the biggest toy manufacturer in this market, and we continue to recruit not just kids to the brand, but also adults, through passion points. We’ve expanded our portfolio to include people who have passions for cars with our car range, and arts and crafts with our botanical range. We’re in a great spot. IR: I know Lego has stand-alone stores and is also distributed through retail partners. Can you tell me more about your different sales channels? TT: We operate across multiple channels. We have our own Lego-branded channels, which we operate through Alquemie Group. We’ve also got the Lego store in Dreamworld, which we operate through Ardent Leisure. And we operate in the hypermarket channels, so we have listings in Kmart, Target, Big W, and department stores such as Myer and David Jones. The specialty-toy channel is also very important to us. We have a great relationship with Toyworld, which operates in regional areas across Australia, and the Mr Toys Group in Queensland. And, of course, there’s lego.com operated by the Lego Group, and we have a relationship with Amazon in Australia as well. We have quite a varied landscape in terms of the channels we operate in, and we think that’s important for reaching all different shoppers and demographics around the country. Australia is massive, and we want to make sure children and families get access to Lego wherever they are. At the same time, we are quite selective. There are some retail channels where you won’t see the brand because we try to position ourselves as more of a quality, premium brand. But we need to balance that with being accessible as well. IR: What are some of the biggest growth opportunities that you see for the brand in 2022? TT: Our focus in 2022 is recruitment. Obviously, the toy category is quite challenging because we’re seeing age compression happen each year. Children are growing out of toys at an earlier age. They’re either getting into video games or they’re spending more time online on social media platforms. It’s getting harder and harder to recruit and retain children, so our focus is on making sure they have a positive play experience with the Lego brand, and then hopefully they’ll become AFOLS – adult fans of Lego – later in life and stay with the brand through all different ages and stages. You could argue that passion points, such as the adult portfolio, are more organic sales, because people will always follow their passions. The challenge for a brand like Lego – and really any toy company – is to make sure you continue to recruit and retain active users each and every year. And that’s getting harder and harder to do. IR: That’s a really bittersweet observation. Kids are growing up so quickly nowadays, with technology. TT: They are. We’re still managing to stay relevant, despite all these challenges, but you never take it for granted. You’ve got to always be switched-on and aware of the next craze to make sure you know your brand is at the top of the wish list for kids. IR: Is that where licensing agreements come in, where you have sets from different movies and the like? TT: Absolutely. It can be through branded partnerships, like what we did with Adidas, where they can buy the shoe and also build it with Lego, we make sure we’re hitting a demographic that might not have had an interest in Lego but does through a passion for Adidas shoes. Or it can be through IP partnerships, such as with Disney or Warner Brothers. If you’ve got a child that’s big into Star Wars or Harry Potter, they [might] play those video games and watch those movies, but they might have never thought of Lego. When you have a Lego offering under those licences, they can have a building experience with that theme. IR: Circling back to the social issues that we were talking about before, what if any topics is Lego focusing on at the moment? TT: We’ve been working really hard to make Lego play more inclusive, and part of that is addressing gender bias and harmful stereotypes. I think we are living that commitment through the design features in our product ranges and some of our marketing materials. For example, children with disabilities are featured in our sets now and throughout our marketing materials, which is the way it should be, because that’s reflected in the real world, and real-world scenarios have always been part of Lego play. I guess you could say that, in the past, Lego play has traditionally been accessible for boys, but products such as Lego Dots, Lego City Wildlife Rescue, and even our licensed ranges such asHarry Potter, have been specifically designed to appeal to both girls and boys. And at the end of the day, that’s really important because we need to let children choose what they like. It’s not our job as a company to tell them what to play with, it’s really up to them to choose. By producing more product ranges that reflect that, [we’re allowing] them to make that choice in a more authentic and organic way. That’s something I’m really proud of and it has been really prevalent in our product ranges in the last two years in particular. IR: I know we’re going to see more Lego Certified Stores in Australia and New Zealand over the next few years. What other plans do you have for this market? TT: We’re always evolving as a company. In fact, we’re celebrating our 90th anniversary in August this year. Only 1 per cent of brands globally make it to 90 years old, so we’re pretty proud that Lego has stood the test of time and is more popular than ever. You’ll hear a lot of noise in the market about our anniversary this year. We’ll be trying to tap into the nostalgia of the Lego brand over our 90 years of existence. Obviously, continuing to open Lego-branded stores is part of that because we’re not in all regions yet. We only opened our first store in Perth late last year, so we’ve got some more opportunity to grow in Western Australia; we don’t have a store in Tasmania yet; we don’t have many stores in South Australia and other parts of the country. And, of course, we only have one store in New Zealand at the moment, so there are more opportunities there as well. There’s still a lot of runway to grow and a lot of runway to reach more shoppers with our brand.