This week Soren Torp-Laursen will take over the helm at Lego Europe North’s head office in Slough. His appointment follows the sudden departure of managing director Gordon Carpenter, who is said to have left after a spat with Danish bosses over the company’s marketing strategy (MW last week).
Torp-Laursen, described by one Lego insider as a “heavyweight”, will be expected to play his part in implementing what Lego bosses refer to as the company’s “fitness programme”.
The initiative was devised after Lego’s announcement in 1998 that it had suffered its first loss since it was founded by Danish carpenter Ole Kirk Kristiansen in 1932. Forced into a programme of rationalisation, the company cut its global workforce by ten per cent to 6,700 employees. Several offices, including its UK division in Wrexham, were shut down. Carpenter was on the seven-member committee which proposed the closure of the Wrexham plant.
According to a source close to Lego, it came as no surprise that Carpenter’s departure was immediately followed by the decision to appoint Torp-Laursen.
He says: “The rationalisation programme stirred up a lot of politics at Lego. There were many people jostling for fewer positions and it was common knowledge within Lego that Carpenter had become quite unpopular.”
He adds: “At the time there was a lot of talk about a big marketing guy coming over from Denmark to knock Lego Northern Europe into shape. But the thinking had been that he would work alongside Gordon.”
Competition from multimedia toys and the emergence of other brands, such as K’Nex and Mega Bloks, had caught Lego unaware. The company, previously able to rely on the sales of its trademark plastic studded bricks, was beginning to struggle in the competition to win children’s attention.
A toy industry source says: “Nowadays the core Lego brands have a short appeal to children. They seem to be growing up much quicker and by the age of three, are discarding Lego for Action Man or the equivalent. By the age of eight, children are hooked by shoot’em computer software.”
An insider, who worked closely with Carpenter during his reign, says: “Lego had become impervious to its competition. The general feeling was that Lego hadn’t got to grips with the Nineties.”
In 1998, Lego chief executive Kjeld Kirk Kristiansen announced that he aimed to make Lego the world’s number one brand among families with children by 2005.
But the rationalisation programme also had an impact on the company’s marketing strategy. A source close to Lego’s marketing department during this time says: “In the mid-Nineties, Lego
Northern Europe was spending about &£6m a year on advertising. In 1998, the spend was cut to &£1.5m.”
However, observers believe Lego is beginning to make amends. Lowe Lintas & Partners in New York is handling the creative for a global advertising campaign aimed, not at raising the profile of its core products, but at making the Lego name synonymous with the family.
Neil Mason, consultant at research company Mintel, says: “Lego’s move into clothes and leisure parks is a means of diversifying. It represents a brand extension of what they are already doing.
“Lego struggled a couple of years ago but things are beginning to turn around.”
Following its year of streamlining, Lego announced in 1999 that sales were up 25 per cent, giving a pre-tax profit of &£60m.
In 1997, Lego launched new product ranges in an attempt to catch its multimedia competitors. The Lego Technic Nautilus, sold with a CD-Rom giving instructions on how to build the model, was followed by a series of launches which illustrated the company’s determination not to be left behind by the new generation of toys.
In 1998, Lego launched Mindstorms, an “intelligent” brick fitted with a microchip that can be built into a moving robot. And last year, Lego unveiled a product aimed at widening the appeal of the brand to girls. Lego Scala consists of pastel-coloured bricks used to build dolls houses.
But Lego did not want to be restricted by its reputation of being the world’s number one toy brand. The success of its Legoland theme parks in Denmark, the UK and the US encouraged the company to look at new markets.
Earlier this year, Lego announced plans to develop its interests in the children’s clothing market. Kabooki, LegoWear’s licensee, plans to open stores in Spain, Portugal and the Republic of Ireland. LegoWear currently has 25 standalone stores and 1,275 wholesale accounts across the world.
Torp-Laursen will be responsible for the development of the Lego brand in the company’s eight North European markets. He will oversee the work of several brand – or “segment” – managers, each responsible for a Lego product.
His previous role as vice-president of special markets stands him in good stead. Based in Denmark, his role was to introduce the Lego brand into previously untapped markets, such as Russia and Eastern Europe.
To rectify Lego’s turning fortunes, the Danish bosses were keen to make sweeping changes and to bring in people with new ideas. Torp-Laursen seems a safe bet. Well known to the Lego chiefs, he also has the advantage of being removed from the streamlining of a couple of years ago.
Few toy brands can claim to have caught the imaginations of as many children as Lego. Since the first plastic studded brick was introduced in 1949, the family-run business has sold more than 200 billion bricks in over 140 countries.
But Lego bosses are more than aware that the toy market is changing. They also know they are in possession of a phenomenally powerful brand. Their job is to extend the brand into new areas, using it to exploit untapped markets.
The toy industry source says: “Despite its recent problems, Lego should be given credit for its forward thinking. It is trying to diversify and build on its heritage as a parent’s favourite.”
She adds: “No other toy brand can claim such a prominent place in the toy chests of so many children born since World War Two.”