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Posted

I have absolutely no idea BUT I may still be able to contribute to this thread.  From what I've seen the Lego store locations seem to be high end shopping centers or malls.  For a business to succeed in these types of locations they need to make at the very least 1 to 1.5 million a year which translates to just below $20k a week on average.  Also during the middle of the day there are three Lego employees which means that a store needs to make at the very least $1.5K to $2k a day to justify that labor.  I used to work for a very popular Forbes 100 company and whenever we planned to open a new retail location this was a portion of the model that we would use.

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Posted

LS, thanks for the insight. In your former company's model, do retailers have to make $20k per week in profit or sales?

 

At high end shopping centers and malls, yes.  At lower end shopping centers and strip malls, no.  One of the things that peeked my interest when I visited my local Lego store for the first time was their business model.  All they are selling is boxes of retail items that require less insight as other retail chains.  Not to take away anything from Lego employees but it doesn't take much to become knowledgeable in their products as other retail chains.  These are products that a Lego employee should be able to master on a Tuesday afternoon when the customer count is pretty low.  So since there is less training involved Lego may be able to get by with having a location that makes less than a million a year but I doubt it.  Rent is always a big issue too.  The Lego store I visited in Ohio was in a high-end shopping center and I'd be surprised if the rent wasn't at least $5k a month.  If you pay $5k or more for rent a month then you better be pulling in at least 1 mil a year.  And then you have specific agreements that Lego may or may not have in the lease.  I'm sure Lego has some sort of agreement in their lease saying that they can be the only merchant that can sell Legos or the other merchants can only sell certain sets of Legos.  Keep in mind I'm just speculating here but I can give you a specific example of another business, Buffalo Wild Wings.  If you were a commercial property owner and you wanted a BW3's in your shopping center, well they have a list of 20 things that they exclusively demand. They have to be the only business on the property that can have televisions, they can be the only sports bar, etc.  Hope this helps provide a bit more clearer picture.

Posted

LS, thanks for the insight. In your former company's model, do retailers have to make $20k per week in profit or sales?

 

I reread your question again after I posted the above response.  It's $20k in sales not profit.  I've been intimate w/ business that were making close to 1 mil in sales and only $40 a day in profit after all the bills are paid.  Talk about flying fast and low to the ground.

Posted

Thanks for your insight. I am famiar with high end retail and figure they are in the 2-4 mil area with some doing much better in premium locations...would still be curious to know if anyone has some hard numbers...I know some of you all are close with lego stores managers so thought they may be able to chime in too. Thanks everyone

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