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I am interested in this because I have always justified purchasing the annual pass as I netted more via the 10% discount, and wouldn't you know, renewal is coming up!
I found a damaged box Sydney Opera House in store and was informed that no further discounts of any kind are allowed on the big sets, even if crushed or otherwise damaged.
No discounts, period.
10188 Death Star™
10197 Fire Brigade
10211 Grand Emporium
10214 Tower Bridge
10218 Pet Shop
10221 Super Star Destroyer
10220 Volkswagen T1 Camper Van
10223 Kingdoms Joust
10224 Town Hall
10225 SW R2D2
10226 Sopwith Camel
10228 Haunted House
10229 Winter Village Cottage
10233 Horizon Express
10937 Batman™: Arkham Asylum Breakout
10232 Palace Cinema
10240 Red Five X-Wing Starfighter™
10237 The Tower of Orthanc
10234 Sydney Opera House™
10236 Ewok™ Village
10235 Winter Village Market
31313 MINDSTORMS 2013
21050 Architecture Studio
Walmart/Amazon/Target/Etc. have been informed that if they sell these sets below RRP, they will have future shipments cut off to them of these sets.
Walmart is not known for taking such threats lightly, or sitting down... they may well hit back by cutting the size of the LEGO aisle in half, or no longer carrying these sets on their website out of principle. Or they might do so and comply, but that would be unusual for them.
Amazon? They are the discount king online, but they might comply to keep getting stock. Of course right now DS and SSD are discounted by 4 cents, but TLG might let that amount slide. :)
Target is probably not large enough to push back.
TRU marks up, not down, so they are not really an issue here.
These are just my opinions of course. :)
It also might depend a bit on what they might be offered in return for complying. As I've said before, everything in business has a price.
The sets still earn VIP points as well, so really you do still get that 5% discount. But no other discounts of any kind regardless of any other factors.
Which means no more 10/20/50% off scratchers for BF for these sets. :(
Last year, TLG did $4 Billion USD in sales worldwide.
Last year, Walmart did $469 Billion USD in sales worldwide.
In fact, to put Walmart's number into perspective... that is more than 3% of the Gross Domestic Product of the United States of America...
3 cents of every dollar of productive activity in the United States... happens at Walmart.
It shall be interesting to see just how well TLG can dictate anything to Walmart, normally it is the other way around.
Worth reading... that was written in 2003, since then Walmart has almost doubled in size in 10 years and has only grown stronger when it comes to doing deals with suppliers...
I would be surprised if Walmart and Amazon don't push back, especially if sales decline. Although if everyone plays ball and sales do not decrease then it is win\win for everyone, except of course the consumer.
For many suppliers, though, the only thing worse than doing business with Wal-Mart may be not doing business with Wal-Mart. Last year, 7.5 cents of every dollar spent in any store in the United States (other than auto-parts stores) went to the retailer. That means a contract with Wal-Mart can be critical even for the largest consumer-goods companies. Dial Corp., for example, does 28% of its business with Wal-Mart. If Dial lost that one account, it would have to double its sales to its next nine customers just to stay even. "Wal-Mart is the essential retailer, in a way no other retailer is," says Gib Carey, a partner at Bain & Co., who is leading a yearlong study of how to do business with Wal-Mart. "Our clients cannot grow without finding a way to be successful with Wal-Mart."
It also is not unheard of for Wal-Mart to demand to examine the private financial records of a supplier, and to insist that its margins are too high and must be cut.
No one wants to end up in what is known among Wal-Mart vendors as the "penalty box"--punished, or even excluded from the store shelves, for saying something that makes Wal-Mart unhappy. (The penalty box is normally reserved for vendors who don't meet performance benchmarks, not for those who talk to the press.)
This is a little reminiscent of JC Penney in the past couple years. JCP decided to do away with having sales in favor of everyday low prices. That didn't work very well for them and this policy probably won't work to well for TLG. Those little 10% coupons work wonders getting people into stores, and if the big sets aren't eligible for them, then there is less incentive to drive to a store to use the coupon.
We'll see the true test of this policy for other retailers in October. Last year Walmart offered a lot of great deals on just these sets. I wonder if Walmart will flex their muscles and offer these exclusives for a discount again this year. I don't think LEGO will do so well getting into a test of wills with Walmart.
Second, I suspect that "not disountable" applies only to additional situational discounts taken at the register - coupon codes, AFOL discounts, damaged discount, BF scratchers, etc. Having a price reduction built into the system (controlled by corporate) is a different matter. I suspect if LEGO wants to clear inventory on these after the holidays by knocking 10% or 20% off, they still will do so. The two thing are really entirely different mechanisms of control
So, what demands would you suggest LEGO make - other than the one they may already have in regards to prices on exclusives? and I'll re-ask the question I alluded to above - who stands to lose more if Walmart and LEGO become adversarial? It's well and find to make demands, but at the end of the day the side with more leverage is going to have the bulk of the power - it becomes a huge game of chicken. So, who blinks first - Walmart or LEGO?
As for me, I'm going to have to see how this plays out. If the mixture of facts and rumors above hold firm, then I would guess I wont be the only one having to triage his/her current purchase queue. Heck, my queue currently includes but is not limited to Haunted House, Town Hall, Palace Cinema, Ewok Village, Arkham Asylum and Orthanc. (shudders)
Most of my major exclusive purchases have been discounted either via TRU BOGO, Black Friday Scratcher, Catalog Coupon, Random Target/Walmart Mark Down, May the Fourth promotion or Damaged Box Discount. The Mrs. keeps me on a budget. :o)
I suppose that doesn't stop Lego from refusing to trade with some retailers but there are precious few outlets for Lego in the UK these days that I'd be amazed if they cut supplies from any of them.
Price fixing is legal in some EU countries though.
If you read that article I posted, in 2002 Walmart and Levi talked about getting Levi jeans into Walmart. At that point in time, Levi's worldwide sales for the whole company was $4.1 billion. Walmart's private label brand of jeans (Faded Glory) was selling $3 billion. Think about that one... Walmart was selling almost as many private label jeans as Levi was selling, total, everywhere...
If TLG pisses off Walmart, perhaps Walmart decides to go into the toy business. They could well purchase Mega Bloks, fix the quality issues (well enough anyway), double the number of sets produced and give it an entire aisle in 4,000 Walmart stores.
Or don't do that, they could simply go to Hasbro and say, "hey, want to get into the KREO business big time? Interested in an entire isle for KREO? Lets talk.
Walmart has the ability to push TLG back into second place, all by themselves. TLG does not have as much power as they think.
Consider for a minute that if Walmart was a country, they would be listed #24 on the list of largest GDP nations on Earth, or put another way, their GDP would be about equal to bottom 100 nations on the world GDP list... combined...
How about other retailers? Walmart did more sales last year than:
Toys R Us
Barns & Noble
If TLG thinks it will dictate terms to Walmart, they are out of their minds...
I only have a limited Lego buying fund so, according the the Becky Bloomwood Shopaholic philosophy, I'll have to either a) Cut back or b) Make more money in order to buy the sets I most want. MMM is far more appealing a prospect than CB :-)
However you are correct that they don't have to do business with anyone they don't want to, so if Walmart keeps discounting, TLG can refuse to ship more product to them.
Of course, it is then debatable who that hurts more, Walmart or TLG. :)
@dougts, I wouldn't say TLG needs to make any demands other than not let themselves get bossed around. TLG may stand to lose more, but I imagine direct Lego to customer sales are increasing while Walmart sales are dropping.
Though it is inevitable I wouldn't buy as much if there was no discount. I've already withdrawn from buying the winter village line due to the increased prices last year and this. No way I'm buying those without discount.
Another reason lego is popular is the price, many people buy lego on discount. You only need to look at discount sites online when a lego deal is posted and you see comments such as "got one, put away for christmas" and "overpriced at RRP, but good price at £X".
Walmart (or tesco or other retailers depending on location) are responsible for popularity.
If the goal is to get most people to buy from [email protected] or a lego store and not from a large chain of supermarkets, then lego is going to disappear.
Additionally, Lego offers occassional deals and discounts around the holidays. Those who lack the patience to wait suffer the cost of their impatience in the form of full prices. However, while most people do like a bargain, it could be said that those who truly like and appreciate something don't need bargains to do so.
I've said it many a time: one should be thankful for a price lower than MSRP but not expect it.
I reckon for most buyers, they are fairly insensitive to the different ranges and just view the lego range as the lego range. If they come to expect discounts on one part of the range before buying, they will expect discounts in others.
It is still not clear (and probably never will be) whether it is lego that is setting high RRPs for regular supermarket sets or that stores are asking for this so that they can offer large discounts later, 3 for 2's, etc.
Can never see the modular buildings ending up in these sales though. Lego would almost do well to have a secret aftermarket division that sold these sets after being discontinued!
So we are now facing much higher prices for large sets this year. There are several ways of viewing this increase in prices, and the full impact on AFOLs will be hard to understand for a year or two. The writing is on the wall that we are facing significantly higher prices with few discounts in the future.
The only discount I have received this year is the five percent from VIP points from TLG except for a few small sets purchased when Target reset its shelves. It is a shock paying full price most of the time, but it does level the playing field for those without discounts and for buyers in other countries who face considerably higher prices.
But their website never has meltdowns or miscommunications on heavy traffic days so nothing like this will happen at all...
I bet, not many.