Interview with Niels B. Christiansen, CEO of The LEGO Group

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Niels B. Christiansen was appointed CEO of The LEGO Group during 2017 and the company has continued to grow at an impressive rate under his leadership, particularly in 2018 which saw revenue growth of four percent.

Brickset was invited to interview Niels at LEGO's annual results presentation a few days ago. Our discussion topics included Niels' personal experience with LEGO, the continued expansion into China and LEGO's approach to the adult market. You can read his responses to these questions, along with many others, after the break...

Brickset: What experience did you have with LEGO before becoming the CEO?

Niels: I actually grew up a short distance from Billund so visited LEGOLAND on a couple of occasions and I certainly enjoyed playing with LEGO as a child. I have particularly fond memories of a house that was available at the time and featured red windows. They were actually able to open which was a new function during the 1970s!

Otherwise, I did not receive many new sets but I inherited several boxes containing loose bricks. I can distinctly remember constructing houses and garages where cars were parked on the living room floor. Those projects could continue for two or three weeks so LEGO has always been an important feature of my life and now of my children's lives as well.

Brickset: Do you continue building today?

Niels: Yes, frequently with my children but also by myself. I generally favour advanced models such as 10256 Taj Mahal or the Technic and Creator Expert vehicles that have been released recently. Cars are probably my primary interest for LEGO actually.

Brickset: As the CEO, did you have access to an early copy of 10265 Ford Mustang?

Niels: No, unfortunately! I have seen the model but have not had an opportunity to build it yet so I am looking forward to that.

Brickset: Information distributed with the annual results confirmed that 60% of products available are new within each year. Does that represent an increase in relation to previous years?

Niels: Perhaps a slight increase but that figure has remained reasonably stable for a few years. Many people do not realise that means the entire range is refreshed every eighteen months, on average. Of course, there are some products with much longer lifespans and others which are only sold for a brief period.

Brickset: Does that suggest that the shelf life for individual sets has remained fairly consistent too?

Niels: I think so, on the whole. Managing our inventories to ensure a consistent transition is certainly a logistical challenge as we need to gauge what quantities to produce for each set. Poor judgments risks consumers not having access to a model or our retail partners being left with surplus inventory when a set reaches the end of its life. This is a delicate balance and is happening all the time so forecasting is important.

Brickset: The annual results also revealed that significant expansion in China and the Middle East is a focus at the moment, although certain established markets are not served by LEGO stores already. Are there any plans to expand in these areas as well?

Niels: We probably discuss China more often than certain established markets because our presence in those regions is already strong. LEGO already has good partnerships with retailers in New Zealand, for example. China, on the other hand, is a new market for LEGO. I believe brand awareness in large cities such as Beijing or Shanghai is high, almost matching Europe, but our research has established that smaller cities and rural areas are less familiar with LEGO so brand stores are more vital in those regions.

In fact, many of our flagship stores are probably more valuable as experience centres than as shops which sell LEGO products. Promoting the LEGO brand is necessary in a country like China, given its relative unfamiliarity for many consumers. I would anticipate that similar processes may take place in countries like India in the future.

However, I think there is also potential for further expansion in established markets such as Australia and New Zealand. Our ultimate ambition may be to open a LEGO store in each major country around the world.

Brickset: Some unique products were also designed for the Asia-Pacific market and they were very popular so their limited availability caused disappointment in other regions. Might similar exclusive sets be released in the future?

Niels: That disappointment is certainly something we are aware of. The production of these exclusive products was actually a trial as an import and export fair was taking place in Shanghai so we took that opportunity to create something new for the Chinese market. Of course, the reception to those models was incredible and far exceeded our expectations.

Our biggest lesson from this experience was probably the universal appeal of East Asian culture. We have often taken inspiration from Western history and culture but there is evidently significant interest surrounding Chinese, Japanese and Korean subjects. After all, NINJAGO is hugely successful around the world but its setting was inspired by Japan.

Brickset: LEGO brand stores are found in many countries while others are served by certified stores. How do you make this distinction when establishing a new branch?

Niels: That decision rests primarily upon how important the brand building aspect of a new shop really is. Somewhere like the Leicester Square LEGO store in London focuses primarily upon marketing and is run directly by LEGO. If we were only considering the direct financial value, we would probably take an entirely different approach. I expect the majority of our stores in China will be run externally as our partners are more familiar with their respective localities so can more easily achieve the best results.

Brickset: There is also interesting variation within Europe as stores in the UK or Germany, for example, are run by LEGO while others in Italy and Eastern Europe are administered externally. Why is that?

Niels: That is sometimes for historical reasons but more often because we have found an extremely capable partner. We are not necessarily determined to run every store ourselves but we do require a high level of service in those managed by external partners.

Brickset: Did the company encounter any particular surprises when entering the Chinese market?

Niels: There were not necessarily surprises but we did encounter certain differences. For example, data must be handled within China so running an international webpage is difficult in China and the LEGO Life app is not available there either. Instead, we have partnered with Tencent to achieve the same effect, wherever possible.

In addition, LEGO products have sometimes been copied by Chinese companies which is problematic as there are consumers who purchase sets, believing them to be official LEGO, but actually receive an illegal copy. Opening brand stores ensures that we can guarantee the same quality in China that we do around the world. We have taken legal action which is excellent, although the process takes too long in many cases and it can be difficult to enforce the ruling when our products are refreshed so rapidly.

View image at flickr

Brickset: A few years ago LEGO estimated that 5% of products are purchased by adults, for adults. Is any information about that available today?

Niels: I do not have a specific figure to share but would imagine it is probably around the same, if not even higher. That is difficult to estimate but we are aware of the adult market and its great importance, not only because of their creativity and excellent ideas but also as many adults really serve as positive ambassadors for the brand.

There are plans to cater even more for adults in the future as the occasions where we design products specifically for that market are usually quite successful. It is certainly something that we are seeking to focus upon. Something like 71043 Hogwarts Castle, for example, was primarily intended for adults but can also be enjoyed by children or any LEGO fan.

Brickset: Finally, what impact do you think Brexit might have upon LEGO within the UK?

Niels: I hope it will not have a significant impact but it is very difficult to say at the moment. We have been taking some precautions by placing additional stock in the UK but it is challenging to make any predictions. Of course, I am crossing my fingers that there will be little change after Brexit.

Brickset: Many thanks for taking the time to speak with us!

39 comments on this article

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By in United Kingdom,

Great interview. Very interesting, if a little short in my opinion.

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By in United States,

I enjoyed this and I am interested that the company is fully aware of our disappointment of not being able to buy the China sets so I will take the opportunity to ask here (pass this up if possible); are you interested in making more sets like Emmet House (fully enclosed)?

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By in France,

A few interesting reveals but would have liked a bit more depth of questioning (or maybe there was and it wasn’t answered...?)

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By in United States,

Great interview. Interesting to see some of the marketing strategy Lego employs, especially around the branding they’re doing in China and other regions.

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By in United Kingdom,

@Jdm, we only had 20 minutes...

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By in Netherlands,

At least I am glad they are finally bringing the first LEGO store to The Netherlands around the end of 2019 (Scheveningen LEGOLAND Discovery Centre).

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By in United States,

I want one of the brickset minifigures pictured above. Great interview!

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By in New Zealand,

New Zealand was mentioned twice :) Even the possibility of a LEGO brand store here :) :)

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By in United Kingdom,

The mini figure is his business card so you just have to meet him

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By in United Kingdom,

^^ We used New Zealand as an example, in our questioning, of a country that didn't have brand stores.

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By in Czech Republic,

I wish I could ask him why Prague doesn't have a store. Lego manufactures in Czech Republic and doesn't even have 1 store in the country.

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By in United States,

I remember a disagreement between TLC and AFOLs on how big a chunk of market share we represent. TLC was pitching a low single-digit figure because the AFOL customer base was so small compared to their target market of kids. Some (but not all) AFOLs were pointing out sheer buying power (thousands of dollars per purchase compared to tens of dollars) and put us north of 50%. Then the polls started, and they were able to get some hard facts instead of everyone spitballing all over the wall. I thought the final number they produced put the AFOL market at somewhere in the 25% range for overall purchases, worldwide.

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By in United States,

I like this guy, he seems to understand AFOLs, just judging from this interview alone. Definitely has my approval as CEO!

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By in Australia,

They estimate 5% of products are sold to AFOLs! I did not expect the number to be that high.

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By in United Kingdom,

I reckon 5% of total individual units sold could be for the adult market, but in terms of actual spend, AFOLs probably often buy 5 kids worth of Lego in a single purchase, particularly with the big proliferation of D2C massive sets less likely to be bought by parents for children except possibly for Christmas.

Interested in Niels’ response to the Brexit question. Would rather suggest that they don’t want anything to change and stockpiling a little is probably a good idea business-wise. But I expect that whichever way we leave the EU (assuming we still do) TLG’s products would then have another tariff stacked on top. New Star Wars set purchasing would be pretty unfeasible in that climate.

Also interested in the adult Lego response. Combined with that recent shopping survey TLG are obviously considering their options around adult branding or themes.

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By in United States,

@The Rancor:
Yes, I’m also very interested in seeing what TLG might come up with for AFOLs (I’m still just a TFOL, but will be an AFOL in a few years :) ) I think out of the current themes, Creator Expert (also my personal favorite theme) is the most adult-oriented - but yeah, that would be really awesome to see what else TLG could come up with for AFOLs....

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By in United States,

It's so cool Brickset was invited to do this! Thanks LEGO and thanks Niels, and of course thanks to the Brickset team as always! It seems like LEGO has a pretty cool CEO.

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By in United States,

With their awareness of the popularity of the East Asian culture, I wonder if they'll do a re-release of those sets for a wider audience.

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By in United States,

I still hold out hope they'll bring back the classic Pirates and Forestmen sets and/or new ones in those lines. They are sorely missed.

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By in United States,

Excellent questions make for an excellent interview, thank you for that! I have trouble with the distinction between AFOL purchases & children's purchases. How many children are driving themselves to a store and purchasing LEGO with their own money? Sure there's birthday & holiday cash, but I would wager that 90% of all LEGO purchases are by adults. Seeing how you wouldn't buy your kid some junk you don't like, doesn't that make anyone over 18, regardless if they know what AFOL stands for, an AFOL?

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By in Canada,

I have a Niels B. Christiansen minifig, how oh how do I get the coveted Brickset one?

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By in Germany,

In our household, about 80% of the LEGO sets are bought by AFOLS.
;-)

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By in New Zealand,

@AllanSmith, yes that sounds promising. I commented on another Brickset article last week about us in NZ wanting just one little store. Perhaps he read it in prepping for the interview!

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By in United Kingdom,

^ Probably not, but I did!

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By in Belgium,

@TeriXeri sorry to disappoint you, but that is a store operated by Merlin, not by TLG, so no VIP Cards and they do not follow the same promotions as the LEGO Brand Retail stores...

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By in United States,

@ bierregardless, the AFOL distinction is generally meant for an adult that buys Legos for themselves, for their own enjoyment and for their own purposes. That term doesn't really apply towards adults buying for someone else, either a child or just someone else in general.

I strongly disagree with the 90% figure you came up with, as I've seen a lot of kids in stores buying with their own money. But even so, if an adult is buying for a kid, it's not an AFOL purchase. I also strongly disagree about not buying junk for your kids you don't like. Half the stuff a parent buys their kids is "junk they don't like"...

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By in United States,

As a reminder of just how small our community is here at Brickset, we collectively own just over 6 billion pieces according to the Site Statistics below. Lego produces around 19 billion pieces per year, and has made over 400 billion pieces since 1949.

Kudos to Huw and the admins for making a site that brings together Lego fans from all around the world. I have visited several others, but Brickset is, in my opinion, the absolute best site for Lego news. If Brickset members are even 1% of Lego sales, that is still a very impressive gathering that I bet most companies can only dream of.

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By in United States,

@datsunrobbie:
Yeah, very interesting thing to think about (what percentage of LEGO sales Brickset members make up). I would absolutely love to see the statistics! I also agree with you 100% about Brickset. Brickset is, and will always be my No. 1 LEGO website, hands down. I'm so happy and proud to be a member! (I joined a few months ago. I had always used to refer to Brickset a lot, but for some reason never actually thought of all the benefits of becoming a member!)

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By in United States,

@Your future president, @andronicus:
I know, I'd absolutely be delighted to be able to own a Brickset minifig! Eventually I really want to start making a "sigfig wall", as some fans have done, and I think it would look great!

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By in United States,

@bierregardless:
When they run polls, or ask you to answer a few questions regarding a recent purchase, one thing that generally comes up is asking what age range you fall into. Then they ask how much money you spend on LEGO sets in a specified range of time. They ask if those purchases are usually for you, or for someone else.

So, if you answer anything in the 20+ range, large amounts of money, and usually for your own use, they can assume you're an AFOL, even if you've never heard the term before.

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By in United States,

Great interview! There are a lot of really cool insights that I wouldn't have known if it weren't for you publishing this, which I think speaks to the informative quality of both Niels's responses and the questions you chose. I feel like sometimes interviews with high level LEGO executives (especially from more mainstream press organizations, but also sometimes from fansites) don't tend to be quite so insightful, since the questions are either ones that have predictable or well-known answers, or design and future product related questions that a CEO is unlikely to be able or willing to give a straight answer to.

The news about the Chinese New Year sets being produced in order to have them ready for an import/export fair is new to me, although I had read someplace else (I forget where; maybe a tweet from the designer) did imply that they were developed too late to schedule for global production and distribution, since those schedules for other parts of the world were already largely nailed down.

It's also good to hear that they are impressed with the amount of positive reception these sets have gotten abroad. Both those factors mean that the case for making sets like those more widely available going forward is pretty strong, provided that they sell well in the countries where they're currently available.

The comment about the choice between focusing on LEGO Certified Stores rather than LEGO Brand Stores depending on how well local retailers are already representing the brand is also pretty interesting, at least to me. And it's neat to know how much the opening of new LEGO Flagship Stores is driven not just by potential sales but also raising awareness of the brand among people who might not have as much firsthand experience with it.

That certainly helps explain why they tend to be located not just in big cities but also tourist destinations within those cities (Rockefeller Center, Leicester Square, Disneyland Shanghai and Orlando, etc), which will be frequented not only by locals but also tourists hailing from more far-flung locations where it might be harder to open a LEGO store.

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By in United States,

@TheRancor: I think a lot of AFOLs underestimate how much parents can spend on toys for their kids. You have to consider that there are a lot of parents buying their kids toys or games that are just as expensive as many bigger LEGO sets, whether or not they have as much lasting value.

I'm thinking in particular of electronic "learning toys" like LeapPads or the "Alphie" toy robot. Even if they have a lot of preloaded content or expansion packs, most of this content is designed for a very particular age range and will have little value once the kids outgrow it. Not to mention how tech products in general (including more mainstream video game consoles and the games themselves) can lose a lot of value with age because it's no longer as cutting-edge or revolutionary as it was new.

Plus, I suspect that if AFOLs really had that much more buying power than kids and their parents, then we'd see a lot more Creator Expert train sets aimed at the extremely vocal and visible subset of the AFOL community that collects them, and fewer Duplo and City train sets, which frequently have much higher prices than most other sets from those themes.

Even among adults who do buy sets for themselves, I suspect a lot of them are not really comparable to communities like ours that participate on forums, go to conventions, and closely follow LEGO-related news. A lot are probably purchased by people who might buy them because they align with their more general interests — Star Wars fans, Harry Potter fans, classic car buffs, tourists shopping for souvenirs, etc. — and who might only learn about new sets by seeing ads or posts from friends about them on social media.

These types of buyers are certainly a no less legitimate audience than Bricksetters or LUG members, and might even be less reluctant to indulge in specific high-dollar sets like the Death Star, Hogwarts Castle, or Mustang than many of us, since they might think of it as a one-time purchase rather than something they have to make room for in a clearly defined "LEGO budget/wish list" for the year. Not to mention, they aren't necessarily clued into the nitty-gritty details that are a big determining factor in some of our purchases such as price per piece, number of new molds/recolors, compatibility with other sets and themes, etc.

But even if you consider them AFOLs (which in a literal sense they might be), that doesn't necessarily mean a stronger case for more of the kinds of sets AFOLs like US want… because some stuff like revivals of specific LEGO themes from our childhoods might not have any meaning to them, let alone even catch their attention while they're scrolling through Facebook or whatever.

@Koolbrix2018: Some other themes that seem to be generally more targeted at older buyers than younger ones are BrickHeadz, Architecture, Ideas, and Mindstorms. Also Technic, at least in the case of the bigger sets. Besides the recommended age range, a good clue is whether the packaging and marketing are trying to look "classy/sophisticated" or just "fun". The big Technic sets (especially the licensed ones) tend to heavily push the "classy/sophisticated" angle — smaller sets like the pullback race cars, not so much.

That said, one of the intents of even those younger-targeted Technic sets (including more fanciful subthemes like Cyber-Slam/Competition and Throwbots) has been to introduce the building system to people who might be on the cusp of "growing out of" more conventional LEGO themes, so that they'll be primed to continue enjoying Technic well into their teen years.

@bierregardless: While my parents weren't so cynical and condescending as to think the stuff I enjoyed was "junk", I can promise you my parents (and I suspect also many others of their generation) neither understood nor personally cared about stuff like Bionicle, Pokémon, Yu-Gi-Oh, or Beyblade that were crazes I enjoyed when growing up in the 90s and early 2000s. Let alone stuff like Tamagotchi, Furby, Ninja Turtles, and Power Rangers that I didn't get into but many other kids my age did.

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By in Czech Republic,

@ waywerd

funny.. I can see what you had on mind but LEGO Brand Store in the Czech Rep would be totally useless - and the management of LEGO Trading s.r.o. knows that pretty damned well.. the amount of sets being sold at the factory store in Kladno for 50 % of their original price to be later re-sold by the very LEGO Kladno workers on local classifieds speaks for itself.. to give you some precise figures:

there is currently around 2200-2500 LEGO employees in Kladno. Each of them entitled to annual "purchase limit" of up to 1000 GBP. Within this limit they can apply 50 % discount on ANYTHING in the factory store..

now.. more than 2/3 of those employees are simply using that as another kind of a "corporate benefit" and flip the sets on all over the web.. for a gain of 5-15 GBP depending on the competition, size, popularity..

if we were to take into calculation that there are 1800 employees that have access to sets priced at RRP 1000 GBP per each worker ANNUALLY, that gives us 1800 x 1000 = 1.8 million GBP worth of the sets that are being purchased at HALF PRICE or even lower..

why do you still need LEGO brand store?? Are you so naive to think that brand store could compete with that... ????

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By in United States,

@Aanchir:
And it speaks volumes about their opinion regarding TRU that there are so many LEGO Stores now in the US even before TRU went bankrupt.

@crayxmp:
Maybe the rules are a bit different over there, but in the US, any LEGO employee is banned from selling any LEGO merchandise. That means you can't sell your childhood collection, you can't unload extra copies at cost when you need to make room, nothing. This is specifically aimed at two things, from what I understand. The first (and biggest) is to deter the abuse of the employee discount as a way to source cheap sets to flip for a profit. The second is to discourage people from trying to scoop up some of the rare promo items so they can rake in huge profits off of freebies. I've met a few people who have been able to just acquire some of the SDCC minifigs (particularly the early ones), but if they were drawing a LEGO paycheck they were only allowed to give them away for free.

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By in Australia,

Great interview!

So after 60 or so years Lego has finally realised Australia and New Zealand exist. I highly doubt they will do any further expansion. Especially when they consider Aus and NZ 'established markets' when Australia only got its first actual Lego store very recently and NZ hasnt got one at all while there is a large apathy towards Lego in Australia and we are always the last to get sets (and when we do get them there at ridiculous prices)

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By in France,

Good interview, thank you :)

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