Kids who like digital, combining the physical with the virtual, and open source innovation were three of the unlikely strategies that turned around a brand that is all about physical play. These, together with one magic word, were the secrets behind stellar financial results reported by Lego last week.
“It is about focus,” the legendary toy group’s CEO Neils B. Christiansen told us in an exclusive interview last week. “It was really about rallying an entire organisation behind a new direction.
“We had actually lost direction in where we were investing. We are now focused on not being more bureaucratic than we need to be. In the world of today, collaborating left and right, there’s always a risk that there are too many layers or too many meetings and we are trying to try to keep things as simple as we can.”
Although it is a family-owned business, Lego reports its financials every year, providing a deep insight into trends in the educational toy industry. Two years ago, those results spelled doom and gloom when the company reported its first revenue and profit decline in more than a decade.
Christiansen was brought in as CEO to reverse the decline, and by 2018 the company had rebounded with revenue and profit growth. Last week, he announced continued growth for 2019, with revenue for the year up 6% to 38.5-billion Danish Krone (R88-billion) and net profit up 3% to 8.3-billion DKK (R19-billion).
He told us after the release of the 2019 financial results: “That focus helps because, if it’s clear for everybody what the direction is and what we focus on and where we invest, then there’s a much bigger chance that we get everyone behind us. That’s powerful, if you can get an organisation with 18,000 people all pulling in the same direction.”
The strategy behind the revived Lego, said Christiansen, was built around the three most important megatrends in the industry: “How digitalisation plays a role in products and play; how we engage with consumers and how they connect to us on our digital channels; and utilising the growth of ecommerce to our advantage – while improving how people fall in love with the brand by getting their hands on the bricks.”
The key to the third megatrend was global expansion, which included South Africa. The main thrust was rapid expansion in China, establishing Dubai as a hub for the Middle East and North Africa, and establishing a presence in India. South Africa was included in the global strategy, with the opening of the first Lego certified store in Sandton City in 2018. Since then, three more have opened, in Cape Town, Durban and Pretoria.
Read more on the next page about how Lego remains relevant for kids, and for South Africa.
How retailers must respond to life under lockdown
As businesses settle into lockdown, South Africa’s largest second-hand retailer, Cash Crusaders offer other retail businesses – that have also been forced to close, some advice and recommendations on preparing for, and managing through the lockdown. The group that have been operating for over 20 years with over 220 stores nationwide, also offer advice on considerations retail store owners – and other businesses, should make as the country makes their COVID-19 economic recovery.
Follow the rules
Ensure that you follow the rules set out by our President for the lockdown. As bitter as this pill may be to swallow, the longer-term benefits for our country and our businesses far outweigh the frustration and anxiety you may be feeling now. This is not a time to break the rules. #StayAtHome. It is a time to practice human responsibility, not complain about Human Rights being compromised. Countries who initially implemented loosely managed lockdowns, have had to extend to get the pandemic under control, so strict rules from the get-go will prevail in the fight against the virus.
Secure your stores
By now you should’ve secured your valuable goods and should have ensured all your security systems are in good working order. If you haven’t already, make sure your security companies have your correct contact information. Make sure your necessary insurance cover is up to date.
Keep your staff informed
They are and continue to be your most important asset!
By now, you may have needed to investigate UIF benefits to compensate for your employees loss of income. The Minister of Employment and Labour, T.W Nxesi has recently announced measures that the Department will put in place under the current special circumstance relating to the Corona virus (COVID-19) and its impact on UIF contributors.
The Temporary Employee/Employer Relief Scheme (TERS) has been set up under the auspices of the Unemployment Insurance Fund (UIF). Employers apply for the TERS on behalf of its employees.
The TERS has two distinct advantages over UIF
- All employees qualify for up to 3 months of benefits, irrespective of how long they have contributed to the UIF and
- TERS will not pay any employee less than the minimum wage.
You can benefit from the TERS by sending an email to email@example.com. Applicants will then receive an automated response which outlines the steps you will need to take, as well as the details surrounding them – including the requirements to claim benefits. During the lockdown period, the Department of Labour will not accept manual applications (to reduce physical contact and risk of the virus spreading), this is to reduce contact between people to curtail the spread of the pandemic. A hotline number has been created by the UIF (012-337 1997) for Covid–19 TERS Benefit enquiries during the lockdown period.
Be sure to be calm when addressing any concerns with your team – they are anxious and nervous of what the eventuality of this outbreak may be.
Communicate with your bank
Make sure you’ve been in touch with your bank (as they are still operational) and discuss any loan repayment relief or postponement over the lockdown period (the banks have termed this a “payment holiday”). Work with them on a cash flow plan as once the lockdown has lifted, trading businesses will need liquid cash.
Contact your landlord
Ensure you’ve connected with your landlord to discuss and agree on any possible repayment or rent relief/payment holiday they may be able to offer you. Keep the channels of communications open with your landlord and bank – rather over-communicate than not communicate enough.
Keep communication open with your customers
The country may be on shutdown, but the internet isn’t. Communicate with your teams and customers by whatever necessary and relevant communication channels you have available to you – website, social media, PR/Marketing teams, newsletter dissemination etc.
Use this time wisely
Amidst all the chaos this time brings, there is also a silver lining. We all have time at this stage, but how many of us make valuable use of that time? Particularly when it comes to family. Business is demanding most times so with a forced shutdown of business it give you the time to spend with your family, catch up on outdated maintenance around the house and a period of rest. This lockdown period will also afford you uninterrupted strategy time. Take the time to reflect on areas of your business you can improve or evolve. Strategise ways to do things better or differently. Use the resource available via your own business network as well as the countless online content that is available, to work on a plan for the way forward. Consider your financial, loan and other business administration processes you have in place and look at new ways to optimise the channels and areas you’re working with or within. A host of online learning facilities offer short courses – perhaps consider upskilling yourself or members of your team by signing up for one of these too.
“These are some of the steps we’ve taken within our own organisation,” says Sean Stegmann, CEO of Cash Crusaders. “Having been in this business for as long as we have has afforded us the wealth of experience we’re able to share with our franchisees and other retail business owners to help navigate the next few weeks and recovery period,” he says. “Take it one day at a time and know that the decisions we’re being forced to make today will mean a future for us tomorrow, both in business and in health!,” he concludes
Vodacom cuts cost of smallest bundle by 40%
The country’s largest mobile operator has kept to a promise made last month to slash the price of entry-level data packages
Vodacom has cut the data price of its lowest-cost bundle by 40%, reducing the price of a 50MB 30-day bundle from R20 to to R12. This follows from the operator’s promise in March, when it announced a 33% cut in the cost of 1GB bundles, to reduce prices of all smaller bundles by up to 40%.
Vodacom’s various 30-day data bundle prices will be cut across all of its channels, with the new pricing as follows:
|30-day bundle size||New Price||Reduction|
Vodacom confirmed it will provide free data to access essential services through Vodacom’s zero-rated platform ConnectU with immediate effect. The value of these initiatives, it says, is R2.7-billion over the next year.
“Vodacom can play a critical role in supporting society during this challenging time and we’re committed to doing whatever we can to help customers stay connected,” says Jorge Mendes, Chief Officer of Vodacom’s Consumer Business Unit. “Since we started our pricing transformation strategy three years ago, our customers have benefitted from significant reductions in data prices and the cost of voice calls. Over the same period, we invested over R26 billion in infrastructure and new technologies, so our customers enjoy wider 2G, 3G and 4G coverage and vastly increased data speeds.”
The latest data reductions will complement the discounted bundle offers that will also be made available to prepaid customers in more than 2,000 less affluent suburbs and villages around the country. For qualifying communities to access further discounted voice and data deals, they need to click on the scrolling ConnectU banner on the platform via connectu.vodacom.co.za
ConnectU – which is a zero-rated platform – also went live this week. It will provide content aimed at social development and offers a variety of essential services for free. Learners and students enrolled in schools and universities can access relevant information for free, with no data costs. The ConnectU portal includes a search engine linked to open sources such as Wikipedia and Wiktionary as well as free access to job portals; free educational content on the e-School platform; free health and wellness information and free access to Facebook Flex, the low data alternative to Facebook that enables customers to stay socially connected.
Vodacom’s popular Just4You platform has been a significant contributor to the approximately 50% reduction in effective data prices over the past two years. Substantial cuts in out-of-bundle tariffs and the introduction of hourly, daily and weekly bundles with much lower effective prices have also driven increased value and affordability, resulting in R2-billion in savings for customers in 2019.