The famous Danish toy company Lego started in Ukraine in 1993. It is shooting for Hr 500,000 million in sales for 2015, says Anatoliy Kuzminsky, 51, the general manager of Lego Ukraine. Russia's war in in eastern Ukraine has already cost Lego Ukraine an estimated Hr 25 million.
Lego is popular in Ukraine. Minicity, for example, a Lego-theme play center for children and adults, is located in Kyiv. One can even find a YouTube video called Stop War in Ukraine, which depicts events in Ukraine out of Lego parts.
With only one office in Kyiv, Lego Ukraine is a miniscule part of the global parent company with some 12,000 employees. The Ukrainian office has about 15 workers. The company targets cities with more than one million inhabitants. Ukraine’s Lego office reports to Prague.
The company has contracts with Ukraine’s major toy chains such as Antoshka and Budynok Igrashok. Its only distributor Belleville Ltd cooperates with smaller toy enterprises. This enables Lego to save on warehouse costs and makes less mess in contracts.
“We recommend them to work with the wholesaler so they can take by pieces and not by cartons,” says Kuzminsky.
A Ukrainian native from Lyubar in Zhytomyr Oblast, Kuzminsky joined Lego in 2010. He received his education from Taras Shevchenko National University in Kyiv in 1985 and spent two years at military service in Iraq.
Right now Lego’s plan is to continue cooperation with mono-brand stores, which sell only Lego products but are not certified by the company. Lego does partner with legally certified stores in Germany and Denmark but not in Ukraine, though one is expected to open by the end of 2015.
One of Lego’s main marketing strategies is collaboration with the education system. For example, the Danish company signed a memorandum with the Ministry of Education in 2010 to supply 73 kindergartens with Lego toys. The program called Promoting Education educates teachers how to use the toys. So far the program covers 16,000 children. “We are ready to expand the program further,” says Kuzminsky.
On Jan. 19, Deputy Education Minister Pavlo Polyansky met with the director of the charitable Lego Foundation Michael Renvillard to extend the memorandum by another two years.
Ukraine’s economic crisis pushed Lego to adjust its pricing policy. “We became extremely price competitive,” says Kuzminsky.
EY, an audit company, says that the Ukrainian child care product sector has substantial growth potential. Stable growth of sales in the sector has been reported since 2010 and is expected to remain at 3 percent until 2016.
Like many other businesses, Lego has a digital strategy — with Lego games and movies on the internet. Its most recent digital move is product animation. With a smartphone Lego app, all one has to do is put the phone over the company’s catalogue and each product will come alive on the screen, making sounds and movements.
Lego’s product development comes straight from Denmark. The company does not develop unique products for specific markets. Kuzminsky says that there was a higher demand for Ukrainian-themed Lego parts in 2014.
“We are a global company. We trade in more than 130 countries now. That’s why we are out of politics.” If some customers want to add Ukrainian themes to their characters, then “it’s completely up to them.”
Despite the difficulties, Kuzminsky believes that Lego has a strong foot on the ground. “We managed to build a solid network of partners, very robust partnerships…”
The CEO says that the main mistake that foreign investors in Ukraine made was underestimating Ukrainians.
“People. Start with people. If you have the right people, you will succeed.”
Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].
