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Comments
I think someone pi**ed in his Cheerios. :-)
He left it on the counter and left empty handed. Another happy customer.
A bit later, one of the new clerks was trying to (gently) talk me into buying the WVM. "I would like to. In past years I typically picked up the new winter village set in Oct, but the coupon doesn't apply. And so I'll try to find it cheaper elsewhere." The clerk was surprised: both by the fact that the coupon didn't work on exclusives [He said he was new, and this was the first he had heard of it], and (maybe?) that I would take my business elsewhere.
Just two more data points. But I think this new policy is going to diminish a lot of good will that TLG has been enjoying over the years.
I hope the high-echelon person at LEGO making these policy decisions ends up out of a job at some point. but I suppose they will probably get a bonus when LBR profit margins go up.
I found out about the 10% discount not working in the store...not on this blog. I am a huge Lego fan, but I left a WVM sitting on the checkout counter. Christmas is a huge time for Lego sales and Lego sets carry large margins. It will be interesting to see how this impacts their year-end sales. Frankly, I hope the genius that came up with this idea loses their job... I can't afford the Lego sets I want without some form of discount. Where I live, our sales tax is 10% by itself!
I suspect this more than anything is why TLG is doing things like this, and clamping down on it's one free gift per household policy, because they've got some braindead manager who rather than thinking up smarter ways to handle growth, is taking short sharp decisions without properly evaluating or researching the overall impact and knock on effects of them. It's happened so many times before to so many companies, a prominent one I can think of is Dell, it went from being a giant in the tech world to an also-ran that basically no one cares about now because it started trying to increase profits at the expense of customer service (i.e. outsourcing support to India, cheaper build quality of products etc.) and that never ends well.
Hopefully TLG are smart enough in general to notice that although it seems like a way to increase profits, annoying the customer never actually is in the long run.
They remain the third biggest PC supplier after HP (who really should never have lost the 1st place after joining up with Compaq) and Lenovo. Now I've never dealt with Lenovo CS but have done with HP and its appauling. So what does that say.
I have to say, these kind of comments with absolutely zero insight into LEGO's finances always seem kind of silly. We don't know what kind of impact the 10% discounts have, we don't know the reasoning nor the contractual obligations for the no-discount rule for other retailers. We don't know what kind of profit LEGO retail actually makes. Whether a limited 10% discount is better than no discount is probably about as far as we can go.
Other than my two primary computers, which are custom builds, everything else in my house and my office is Dell, from monitors to computers (about a dozen of each in total).
I have had to use their customer service for warranty service three times in the past few years, twice to swap out defective monitors, once for the defective keyboard on my wife's laptop.
All three times, once I got past the first fool who answered who wanted to run through his script (which is useless since I know more about computers than he does), I was able to get it resolved quickly. They sent out advanced replacement monitors overnight via FedEx and for the laptop, sent out an onsite service tech to replace the keyboard in my home, that was nice, the tech was good, took 10 minutes, no fuss.
So frankly, I think they do stand behind their products, you just have to get past the first support person who reads off their computer screen without knowing anything, then you're fine.
What we do know however is there are about a million case studies out there where this sort of thing that tries to increase profits by a small amount by annoying the customer has been done before and has never ended well.
Lego's store profits aren't some kind of great unknown either for what it's worth. Whether simply taking known figures from similar retail stores, or simply obtaining them from the centre in which the store is in because of the fact most shopping centres share store revenue and profits with other stores in the centre to provide rankings and run competitions amongst managers and so forth it's not hard to obtain a reasonable understanding of how well they do. Anyone who knows a manager in a centre with a Lego store could probably get their annual figures quite easily if they don't know them already, not that I'm suggesting anyone should now go and try and do that out of respect if nothing else.
There's nothing magical about Lego's retail operations, they're a retail operation like any other, and the rules of the game are the same for them just like any other. Retail is a field in which there is a wealth of knowledge and information to draw from to understand the way things work.
Which is precisely why it's far from silly, it may be silly for yourself to make such comments if you genuinely don't know much about the field, but you can't just place everyone else in the exact same boat as you. I don't pretend to know a massive amount myself, but having lived with an experience retail manager I know enough to know what kind of profits stores of similar size to most brand stores, with similar profit margins and similar staffing costs make to know that 10% on a handful of high cost but relatively low volume sets is penny pinching.
I also wonder how low volume the purchases were. It may well be people buying 10 sets of an exclusive, so buy 9 get one free. That may be small volume, but it also means that a week's stock could go in one transaction at a discount, when it might have easily sold at full RRP to ten people.
I was in a lego store last weekend, and I used a coupon off the back of a catalogue. But many other people in there did not use a coupon of any sort yet they were still purchasing happy. I even saw two people turn down VW polys as they had spent £49.95 / £49.99 but didn't want to spend more to get over the £50 threshold. People are funny at times.
They can still do the full price sales, as well as the coupon sales. You are assuming that everyone buying at full price would use a coupon if they could, that is just not what tends to happen in retail. That is a completely separate issue, there are already purchase limits and have been for a year or more, it is separate to the coupon exclusion.
If a retail store can't make healthy profits by having 10 customers all buy at 10% off, then the store has a margin problem to begin with. When the threshold is £50, if a customer spends £49.95, it is a poor manager/store/system that doesn't give the freebie to the customer.
Of course, they could give discretion to the manager rather than a fixed cost threshold, but then that would be applied unfairly in some cases.
I hate paying RRP for Lego---It's too expensive at that price.
I rarely shop at the Lego Store, unless there is a good sale. The coupons ensured I entered the store at least twice a year and purchased something. Now that the exclusives are excluded, that's two purchases a year that now will go to some other company. E.g. The new (UCS?) X-wing is an example. With 5% red card + 5% pharmacy reward + a few gift cards that I earned this week, I'll happily get a better deal on it from Target than I would from the lego store.
As an aside, one of the things LEGO retail appear to be reigning in is managers favouring certain individuals - perhaps a more european approach than a US one.
Clearly it will cost them some sales, but clearly there is a point to it that I think its fair to say no-one here understands. It wouldn't just happen as its seemingly involved a not inconsiderable amount of effort.
My experience as an American has been that in most businesses that deal directly with customers, be they retail, restaurants, or what have you, the people do learn who their best customers are: the ones who return often, who make larger purchases, and so on, and often give them a degree of special treatment. That is just good business.
Some people view a set as just a set (me included - I couldn't care if it came from the lego store or Argos). Others view the way you are buying it as part of the deal you are buying.
Someone who buys one or two LEGO sets a year, it probably isn't worth their time to figure out the best deals, they just go with "easy" which is fine, the annual cost difference is minor.
Someone who buys a LEGO set every week? Another matter...
Why would you want to run the latter customer out of your store?
It is just good business to give your customers deals from time to time, even if you don't have to. It does a world of good for brand image and people's overall feeling about a business. It all depends... A dollar under strikes me as a reasonable number, but are you really going to send a customer away unhappy if it is two dollars under? Maybe 5% is a reasonable limit.
A retail store is in trouble when the store manager no longer has the power to make customers happy. Store managers are largely paid based on the profit performance of the stores (among other factors like shrinkage and payroll usage). Because of this, they are motivated to keep customers happy, but only as far as is required, or it cuts into their own pay.
Frankly, if it was my own retail store, I expect that they will go further than I would sometimes, but if you aren't doing that, then you aren't taking care of your customers.
They don't only have to think about what benefit those sales do to their store but also to the parent company and also to other retailers. Loosing a $2000 a year customer would be bad to the stores accounts but not necessarily to LEGO if those sales are just being resold (and hence taking future non-discouted sales away) or if they're causing a problem with their major stockists - for example if they're toys-r-us exclusives being sold on ebay. Its also bad if the discount is encouraging all the buying to occur at one or two times throughout the year. Also is a $2000 a year buyer really going to stop because they loose 10%? Especially if the other stores aren't offering discounts? Either they are a LEGO addict and the poly freebies will be enough to tempt them or they are probably buying for resale. Its been said before by others but not all customers are good for business and not even all big spending customers are good for business.
Im trying to think of other shops that also have a multi-national shop presence, also manufacturers and also sell in other retail outlets. Oh and are also not franchises. I can't think of many out there and those that I can aren't known for any kind of large scale discounting.
If a customer is not willing to pay 2-5% more to get something worth probably 10% of the threshold value, then they probably don't want the extra item.
I'd prefer to have a set limit (be it £50 or £49.95, even if advertised as £50) with no discretion rather than £50+ you get it and somewhere between £47.50 and £50 it's at the discretion of the manager. Simply because you know if you will get it or not. If you spend £48 and get one and next month you spend £48 and don't get one, then it looks bad.
Customers are not logical, they are emotional creatures who make decisions based on almost everything but logic.
There's also confectionary companies like Cadbury and Thorntons (though that's UK only afaik), or gaming companies like Games Workshop, or toy stores like Disney.
Some technology brands like Sony still do, there's Apple although they specifically tend not to have sales, but do offer things like student discounts, and do have some offers on sometimes. Microsoft do also, though their multi-national presence is still limited.
As I say there's really little that's unique to Lego's retail operation.
One thing that we don't know is what TLG has told store staff they can do, with all the changes being made lately for all we know corporate may have explicitly told them they can not give freebies away unless the meet the conditions.
But this isn't about sales and mark downs, this is about discounts on current ranges for some people. Sales and mark downs apply to all customers, discounts through coupons do not. Will they have sales (available to all) on exclusives that they are having trouble shifting? I assume yes. Will they have sales on things that are selling well without discount? I assume no.
If they got together with kreo etc and fixed the price of brick based construction toys that would get them in trouble. Similarly if a number of retailers got together and decided to fix the price they are willing to buy sets from LEGO then that would get the retailers into trouble.
I also think it is important to keep mentioning growing Asian markets. It is a huge change and opportunity. China will have a bigger economy than the US somewhere between 2016-2018, and although they may not be addicted to consumerism like the US there will be major changes as new markets are captured. Entitled customers in other regions may become far less appealing. Win for Asian markets, loss for the rest of us. :/