Monday, September 23, 2013
LEGO Is Now a Four Letter Word To Me
We discovered LEGO and BRIO decades ago when our sons were young. They had replaced the Lincoln Logs, Tinker Toys, and A. C. Gilbert Erectro Sets of my generation eventhough those are still on the market. The boys were losing interest in LEGOs and Brios so we gave them away when we moved to California in 1996. I rediscovered LEGOs two years ago with the Architecture Series of prominent buildings – some of the most famous in the world, such as London Bridge, Big Ben, Falling Waters, the White House, Space Needle, Rockefeller Center, the Guggenheim and the Brandenburg Gate. Alas, I was too late to acquire the Taj Mahal. LEGO was in a near death experience a decade ago, losing money in three of the five years through 2004. It survived under revamped management, and then thrived. It is now the second largest toy manufacturer in the world with $4.09 billion in 2012 sales, exceeded only by Mattel, but its valuation exceeds Mattel’s. The company was founded in 1932 to build wooden toys and introduced interlocking brick blocks in 1949. The modern brick came in 1958, Duplos in 1969, mini figures in 1978, and video games in 1997. It operates 48 retail stores and owns an interest in 6 amusement parks. The tie-ins with movie studios, such as Star Wars, are extremely profitable. LEGO constantly changes its product line. LEGO sold 45.7 billion bricks last year, reaping a gross profit margin of 71%. The plastic bricks are profitable than Apple’s IPhone. LEGO has brickbuilders, but also bean counters. LEGO can engage in excessively avaricious moves that reek of bean counters. LEGO just released a large version of the famous Sydney Opera House, 2989 pieces compared to the 270 brick smaller version. LEGO included a 10% off coupon in its latest mail order catalog. I went to one of the two LEGO stores in Orange County to buy the kit and save 10% on a LEGO unavailable at an independent retailer. The ebullient, warm, friendly LEGO clerk (even more chirpier than Disneyland workers) checked with a supervisor and said the coupon could not be used at the store. He explained that he manager decided a month ago that the store would not honor these coupons on “exclusives.” I unsuccessfully objected to the clerk, who started acting like a friendly, programmed robot. However, I figured nothing would be gained by making a scene, arguing false advertising in front of a crowd of young LEGO buyers. I could easily afford the extra $32 dollars. Instead, I emailed LEGO with a complaint. The essence of my complaint was “The store clerk refused to honor the 10% off coupon, explaining store policy (apparently decided a month earlier) is not to accept coupons on “store exclusives.” This is unsatisfactory. If that is the policy of the store, the store manager should be fired. If that is corporate policy, and is not disclosed in the fine print on the coupon, then LEGO may have a legal problem.” I should have added that goodwill is easily lost, and lost goodwill is not easily regained. It’s corporate policy. I received this email response 8 days later from Jessica in LEGO Service: “I can certainly understand your frustration with the new policy regarding the 10% coupon and our exclusive sets. Understandably, this was upsetting for you so please accept my sincerest apology. We would never want to do anything to upset anyone in any way, intentionally or unintentionally. This is one of our newer policies and was effective immediately. The LEGO® Group is dedicated to providing a consistent price and experience with our most exclusive items. Therefore, these items can no longer be discounted. The coupon does state that the LEGO store has the right to exclude other items.” Now comes the boilerplate, probably straight from the word processer: “Listening to what LEGO fans and their families have to say helps us get better and better so I am going to pass your comments to the team in charge of these policies. In closing, we appreciate your input as your feedback will help us improve our product experience for all customers.” Jessica then asked me to complete a four question survey. Why? The coupon’s fine print should have said the coupon is not good for “store exclusives” and then denote the “store exclusives” in the cataog. I don’t partake in other people’s boycotts. If we did, we would find little to eat, wear, drink, buy our gas, bank, fly. In short, so many sponsored boycotts exist, that we could not live if we observed them all. I simply personally stop doing business with companies I’ve had issues with, such as consistently poor service, misrepresentations, or a sense of being ripped off. Few businesses are on my list, but LEGO is now on the small, exclusive list. LEGO is free to charge whatever it wants for its products. It is free to put some on sale and to exclude others from sales, as well as deciding to whom it will wholesale its products. LEGO is not free to engage in seemingly deceptive marketing, intentionally or unintentionally. The store practice, as a matter of corporate policy, does not comport with the marketing. We live in a litigious society in the United States. Every company doing business in the United States needs to understand that reality. If LEGO wishes to exclude a product, or product line, from what seems to be a general discount, it should clearly spell out the restriction. Anything short of that disclosure is an invitation for a trial lawyer in one of our states to bring a class action suit for consumer fraud or misrepresentation. That lawyer will not be me. I will simply no longer purchase any LEGO products for myself or as presents to others. Could a trial lawyer win the lawsuit against LEGO? Perhaps, but the costs of litigation for LEGO will probably exceed the 10% savings LEGO has achieved.