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Wal-Mart Stops Selling Legos in Canada After Price Dispute
Wal-Mart’s Canadian division has stopped selling Legos, a Dutch-made toy consistently cited as one of the safest toys available. As a piece in the Edmonton Journal pointed out:
According to a survey published last May by the New York-based Reputation Institute, Lego is not just the most respected toy firm in the world—no lead paint here!—but the world’s most respected and trusted company, period.
Lego refused to cut product prices to meet Wal-Mart’s demands, a fact which only bolsters the toy company’s reputation for good quality. Wal-Mart has consistently sold children’s products with unacceptable flaws - lead paint, unsafe components and irregular recall practices have made Wal-Mart’s toy department a mine field. The departure of reliably-safe Lego only exacerbates the problems Wal-Mart faces with its toy safety.
Click here for an archive of news stories on Wal-Mart’s toy safety problems, or click here (PDF) to download “Danger for Sale,” our in depth report on Wal-Mart’s unsafe toys.
Wal-Mart Canada, Lego Pull Apart Over Price Tiff [Wall Street Journal]
Lego and Wal-Mart Canada are refusing to play nice.
Wal-Mart Canada Corp., a unit of retailing giant Wal-Mart Stores Inc., confirmed yesterday that it discontinued its business with Lego Group at the beginning of the year in an apparent tiff prompted by the appreciation of the Canadian dollar.
According to National Bank Financial analyst Benoit Caron, Wal-Mart Canada asked Lego to align its Canadian pricing with that of the U.S. due to changes in the exchange rate, but Lego’s response wasn’t satisfactory.
Wal-Mart Canada’s vice president of corporate affairs, Andrew Pelletier, said the company doesn’t discuss details of its business with suppliers, but said in a statement: “We were very clear with all of our suppliers that we would not tolerate unfair pricing for our Canadian customers. In some cases, that led to difficult decisions about the products we would stock.”
For three decades, Canadians were accustomed to paying higher list prices for products than U.S. consumers because of the low value of the Canadian dollar. But after the Canadian dollar reached parity with the U.S. currency in the fall, consumers started raising a fuss, prompting the Canadian government to call on retailers to lower prices.
Retailers fought back, putting pressure on suppliers to lower their wholesale prices in order to help pass on the benefits of a stronger Canadian dollar to consumers. Without naming names, retailers said some suppliers were more willing to comply than others.
Officials from Lego weren’t available to comment.
Posted by Alex Goldschmidt on Wednesday, February 06, 2008
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COMMENTS
Leave it to Alex G. to make it look like “Wal-Mart is putting pressure on its’ suppliers"…
If that’s the case, then why are Lego products still being sold at U.S. Wal-Mart stores??
A Reuters article on the street, today summed it up like this:
Canada’s government has called on retailers to lower their prices as the Canadian dollar appreciated, and retailers in turn have asked suppliers to lower wholesale prices.
Obviously, it’s a Canadian thing that some of us weren’t meant to understand.
By the way, Alex Goldschmidt—terrible headline—didn’t you know The Lego Group frowns-upon its’ trademark name being used in plural form??
bbrd in
Wednesday, February 06 at 01:17 PM
From CNNMoney.com
But it noted that, because Lego is headquartered in Europe, its fixed costs are in Euros. “It is therefore erroneous to look to U.S. pricing as a means of measuring anticipated Canadian price equivalencies. The prices of Lego products vary around the world, and are determined by careful evaluation of local factors such as government taxes, transportation costs, exchange rates, market conditions and the cost of doing business,” the statement said.
Lego added that recent exchange-rate “dynamics” have eroded profitability at the company, and that Wal-Mart Canada’s request would make Lego’s business “ unprofitable in their stores.”
I applaud Lego for not allowing Walmart to dictate their business. Walmart doesn’t like it because they don’t have control and it shows that companies are starting to walk away from WM’s ‘Our way or the Highway’ attitude.
There are other retailers who carry Lego products and there are Lego stores. I would never buy anything from Walmart anyway.
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Alex in Ontario, Canada
Wednesday, February 06 at 01:57 PM
I applaud Lego for not allowing Walmart to dictate their business.
Looks to me that it’s your government who is doing the dictating…
bbrd in
Wednesday, February 06 at 05:09 PM
“Looks to me that it’s your government who is doing the dictating…”
bbrd in
The government was asking, not telling. This all has happened because of your sinking dollar. For three decades, the Canadian dollar was worth a lot less than the American. At one point it was worth 62 cents American. Your dollar has sunk and for a short time the Canadian dollar was worth $1.10 to the American $1.00. So I will tell you what pissed off people. The price of magazines and books in Canada (and possibly the States) had both the Canadian price and the American price inside the covers. People could not figure out why (when our dollar was on par or even stronger)the Canadian price was still more money. That was the big issue. What is the government going to say? Anyway the issue is calmed down.
Once again I applaud Lego for being its own boss and not letting Walmart bully them like they have done to so many companies. Walmart needs to be knocked down a few steps.
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Alex in Ontario, Canada
Wednesday, February 06 at 10:00 PM
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