Discounts on LEGO Exclusives

DadsAFOL

A source has shared with me that Lego and Merlin are having a bit of a disagreement over Lego's VIP program. Apparently, Merlin is taking a hard line and refusing to participate. They never actually have, so likely Lego has been ramping up the pressure to get them to join.

Unfortunately for us fans, Lego Stores will stop honoring the Merlin Legoland annual pass 10% discount on 12/31/12. Not all stores currently honor this, but typically the ones with geographic competition have, such as in So Cal. For those of us that have relied on that discount to stack with VIP, it will be a significant hit.

Nelly

Just visited my local SoCal Lego store today. While I had never had a problem up until now using my pass for the 10% discount, today was different. The store manager claims that the dispute with Merlin, coupled with Lego's new aggressive stance against resellers, they are refusing to apply discount to 'Exclusive' sets. Apparently that means modulars, limited editions, and potentially BIG sets. Does anyone else here use their LEGOLAND pass for discounts on a regular basis?

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!

dougts

^ doesn't surprise me at all. Can we next expect to see the 10% coupon from the mailed catalogs also not honored for exclusives?

sidersdd

^ and Black Friday?

dougts

Yeah, was thinking about that one the other day

LegoFanTexas

Yes, the upcoming BF discounts and scratch offs likely won't apply.

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.

gmpirate

Not honoring 10% on exclusive items took effect Aug 1st. They only knew which sets were excluded when they were rung up. Can't remember for sure, but they might have said it was only new exclusives. Either way, guess its just more business for Amazon, Target & Walmart.

Goldfreek

LegoFanTexas said:

Yes, the upcoming BF discounts and scratch offs likely won't apply.

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.

I was told the same thing at my local Lego store. I used to look forward to getting the damaged boxes because any discount helps. I could sometimes get 20% if it was real bad. I was told they now have to either sell the damaged boxes at full price or send them back.

Dougout

I've been told twice now that the Lego catalogs would stop coming with coupons. Last time I was at the Lego store the manager also mentioned retailers like Target were upset about the Lego VIP program. However to me, this seems more in line with what TLG has been doing over the past couple years with reducing the discounts so I would have to say they are just taking the opportunity to make more money by not giving discounts when they don't need to.

Russell844

As of July 1st, the following “exclusive” items are no longer available to be purchased at a discount, with no exceptions:

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

Renny

That's a shame. I always looked forward to buying a big set for myself whenever I would receive the catalog coupon. Would VIP rewards still work on these?

nkx1

^^Are you referring to discounts at Lego stores, and/or other retailers?

Russell844

I am a LEGO Ambassador, and this was the list of sets provided to us. None of these sets can be discounted by LEGO or any other retailer for any reason. Even LEGO employees can no longer get their employee discount on these sets. They were removed from the company store in Enfield.

LegoFanTexas

Russell844 said:

I am a LEGO Ambassador, and this was the list of sets provided to us. None of these sets can be discounted by LEGO or any other retailer for any reason. Even LEGO employees can no longer get their employee discount on these sets. They were removed from the company store in Enfield.

This is what I was told as well...

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.

LegoFanTexas

Renny said:

That's a shame. I always looked forward to buying a big set for myself whenever I would receive the catalog coupon. Would VIP rewards still work on these?

Yes, VIP points work as normal on these sets. I just used $20 worth of VIP points to buy Ewok Village a few days ago and no problems.

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. :(

LegoFanTexas

I just looked something up...

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.

http://www.fastcompany.com/47593/wal-mart-you-dont-know

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...

ColoradoBricks

Bought #21050 at a B&N store recently with the 10% member discount and a 20% coupon. Some of those might be hard to enforce...

Poochy

Does this mean no more after Xmas sales like we've seen with the WV series previously?

Basta

I assume this is only US at the moment? It will be interesting to see how this play's out world wide, as in Australia 20% off Lego is standard. At just about any given time one or more of our large retailers will have a 20% off toy sale. Most of those exclusives listed are available at said retailers.

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.

LegoFanTexas

^ Regarding Walmart, it is well worth reading that article I posted... a few choice quotes (this was posted in 2003 mind you, Walmart is even bigger now):

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.)

HokieJoe99

I wonder how this policy will affect sales of the WVM. I know personally I was planning on buying this set on Black Friday with a scratcher (10%off is better than nothing). From comments on this board, others are pointing out the apparent lack of value in this set so I would imagine that a discount would be needed to entice others to buy it as well. What happens then when the set does not sell well and it hits the inevitable clearance shelf after Christmas? Will it be on clearance for no discount since there are no exceptions, or will they realize that some discount is needed to move the set and bend their rules?

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.

dougts

First, I think they will move plenty of these things at full RRP - they always do. Us die-hard AFOLs are often price-conscious, but the vast majority of the LEGO buying parents aren't nearly so discount-focused. Believe me, I spend enough time in the LEGO store to see this first hand.

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

dougts

Walmart will be an interesting case for sure. What if they are sitting on thousands of exclusives in the warehouse (I think these are mostly internet-only items for them, outside of select stores) that aren't moving, and they know if they discount them, they can clear out stock in a hurry? What's LEGO going to do - threaten to not sell to Walmart anymore? I think LEGO needs them a lot more than they need LEGO - especially if Walmart says they will give the shelf space to Kreo and/or Megabloks instead.

Dougout

Walmart may have a massive supply network, but the products they sell suck and their image has been going downhill for a long time. It might be good for TLG to start making its own demands, it being the world's number one toy and all.

dougts

^ I was hoping we could leave the Walmart politics out of the discussion, as that's a conversation for another site. The point, in terms of LEGO, is that Walmart is a massive account - maybe their largest (at least top 3), and that historically the large retailers have more clout over suppliers, not the other way around.

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?

juggles7

More over-reaching arrogance from TLG.

Yellowcastle

Nature abhors a vacuum. I imagine eBay drop shippers could be emboldened.

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)

Ma1234

Disneyland Annual Passholders still get 10% off everything (excluding sale items) at the Anaheim store. Just used my discount this weekend on Opera House.

Aleydita

Pretty sure they can't force retailers to sell at RRP in the UK (except for newspapers and some independents even discount them), I'm reasonably sure that they're not even allowed to suggest this to retailers. Just one example from the top of my head, about 10 years ago Hasbro and several major chains in the UK including Argos were fined in the past for attempting to enforce RRPs of board games.

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.

LegoFanTexas

dougts said:

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?

Walmart actually doesn't play chicken. From all accounts, they come to the table armed with facts and figures, and often tell suppliers what they will pay and it is a take it or leave it deal, they don't haggle.

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:

Target
Home Depot
Lowe's
Best Buy
Sears
Amazon.com
Kohl's
JC Penny
Staples
Office Depot
Toys R Us
Barns & Noble

Combined...

--------

If TLG thinks it will dictate terms to Walmart, they are out of their minds...

LostInTranslation

Yellowcastle said:

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.

Likewise, I've tended to save my exclusive purchases for discount opportunities. Ironically, if there ends up being no possibility for discount on exclusive sets, I'm more likely to try my hand at selling on eBay if I find the odd Lego bargain at Tesco or whatever.
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 :-)

LegoFanTexas

Aleydita said:

Pretty sure they can't force retailers to sell at RRP in the UK

They can't do it in the US either, it is price fixing and illegal as heck.

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. :)

Dougout

Surely Walmart has more power now, but TLG shouldn't let themselves get bullied. The increased popularity of Lego over the past years hasn't been Walmarts doing and if the online retailers are undercutting [email protected] with the exclusives, then I see no reason for TLG to be totally okay with it. Those are the flagship sets. They are only sold online and if an overall goal is to get people to buy most of their product directly from [email protected], then a start would be getting some people to turn away from Walmart.

@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.

rocao

LegoFanTexas said:

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...

Erm, in citing this, you missed that they were just comparing revenue to GDP. But Walmart's GDP is far lower than this because their revenue != value added, which is the same mistake the article makes: http://www.forbes.com/sites/timworstall/2011/06/28/gdp-for-a-country-is-not-the-same-thing-as-turnover-for-a-business/

LegoFanTexas said:

If TLG thinks it will dictate terms to Walmart, they are out of their minds...

This made me chuckle. Pot, Kettle. Kettle, pot.

LostInTranslation

Just thinking about my comment above, I suppose TLG wouldn't care if I turned small-time reseller to fund purchases, as I'd still be buying their product without discount. But if there's no discount *anywhere*, why should I buy from Brand retail as I have in the past? Might as well buy from JL or Smyths.

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.

Bumblepants

If it were not for discounts I would not own Death Star, Haunted House, Imperial Shuttle, Horizon Express, or Kingdoms Joust. I agree with @Yellowcastle, triage is in order. I think my sights have just dropped from planning to get several exclusives to hoping I can get Tower of Orthanc somehow.

CCC

Dougout said:

Surely Walmart has more power now, but TLG shouldn't let themselves get bullied. The increased popularity of Lego over the past years hasn't been Walmarts doing and if the online retailers are undercutting [email protected] with the exclusives, then I see no reason for TLG to be totally okay with it. Those are the flagship sets. They are only sold online and if an overall goal is to get people to buy most of their product directly from [email protected], then a start would be getting some people to turn away from Walmart.

Part of the reason lego is (increasingly) popular is the advertising. Most advertising I see is not direct from lego, but in (non-lego) stores.

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.

Diggydoes

Don't want to start a reselling-discussion,but i wonder how this may affect the aftermarket?! Maybe all those stockpiled FB's will do well after all ;)

vitreolum

Concerning the aftermarket, they are ruining their own sales with this. Anyone who got these at 40-50% off can sell them now below retail and make a decent profit if they want.

Hardrada

vitreolum said:

Concerning the aftermarket, they are ruining their own sales with this. Anyone who got these at 40-50% off can sell them now below retail and make a decent profit if they want.

These exclusives are almost never in such huge sales. With maybe Winter Village sets being the only exception.

prof1515

By eliminating discounts from vendors, Lego is balancing the distribution of these sets across a wider market including their own stores. MSRP stands for Manufacturer's Suggested Retail Price and companies that sell for less than that make sales difficult for vendors who do not. Keep in mind that companies like WalMart drive others out of business in just about every market they share by undercutting competitors and counterbalancing the losses by distributing the difference over a greater number of outlets. The loss of a greater number of vendors reduces availability and cuts into Lego's profits as well since not everyone shops online or at a Lego Store for toys.

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.

CCC

prof1515 said:

I've said it many a time: one should be thankful for a price lower than MSRP but not expect it.

That is true. But then many lego sets seem to have an unrealistically high RRP / MSRP that is set so that discounts can be given (and often need to be given) before the set will sell.

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.

SirKevbags

Lower prices should be considered a bonus however when they have been available and are then taken away I think its reasonable to be a little disappointed. No it isn't a huge loss in the grand scheme of things but when something becomes the norm even if it isn't guaranteed I think its unrealistic for most people not to consider it the standard.

Phonebooth

LegoFanTexas said:

If TLG thinks it will dictate terms to Walmart, they are out of their minds...

But You feel entitled to dictate terms to TLG....

mr_benn

^ Almost never - the UCS B-Wing saw some significant discounts both in the USA at the end of last year and in the UK earlier on this year, and we have seen discounts on the previous Winter Village sets in the New years sales - quite a few of us picked up the WV Toy Shop a year or two ago for 50% off.

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!

legogal

Many US AFOLs lost their main discount when TLG ended LEGO event 30 percent discounts in nearby LEGO stores for shows like BrickWorld, BrickCon and BrickFair this year. Others were just hit by this happening for LUG members purchasing exclusive sets.
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.

Bumblepants

It is going to go so well Black Friday this year when they advertise "Spend $100 get 10% savings!" and then people load their carts with this and that and get to the checkout and find their discounts aren't adding and can't seem to figure out why Timmy's Police Station is getting a price knock but Tommy's Horizon Express won't.

But their website never has meltdowns or miscommunications on heavy traffic days so nothing like this will happen at all...

Yellowcastle

^ As far as I understand, it's still just speculation as to Brick Friday.

mountebank

^ The only way you'll take our speculation from us is out of our cold dead hands.

Yellowcastle

Phonebooth said:

LegoFanTexas said:

If TLG thinks it will dictate terms to Walmart, they are out of their minds...

But You feel entitled to dictate terms to TLG....

I supported Walmart when they were banned from buying directly from [email protected] until they then skirted established buying limits and had Kohls and Target buy 2 copies each of #42199. ;o)

JP3804

Just curious, How many of you would have bought Jaba's Palace at RRP/MSRP.
I bet, not many.