Hamleys, a 261-year-old British retail icon that hasn’t made a profit for a number of years, is seeking a new lease of life in the hands of Indian billionaire Mukesh Ambani.
The toy-store chain plans to quadruple its outlets in India to more than 500 in three years despite the pandemic, said Darshan Mehta, chief executive officer of Ambani’s Reliance Brands. Besides the main growth market, the company is also adding stores from Europe to South Africa and China.
Mr. Ambani bought Hamleys in 2019 to strengthen his retail footprint as part of the ongoing transformation of his oil-and-chemicals conglomerate Reliance Industries Ltd. into a consumer and technology giant. The wealth of Asia’s richest man and India’s demographics (where about a fifth of the world’s babies are born) could help breathe new life into Hamleys.
With a backer whose net worth is $72 billion, Hamleys is seeking to tap into what it sees as an inadequately serviced section of India’s almost 1.4 billion people, of which about 27 percent are children under 14. The country accounts for just 1 percent of the $90 billion global toy industry, meaning the potential for growth is high, Mr. Mehta said.
Hamleys stores are famed for the carnival-like experience, allowing children to race toy cars, enjoy model train sets and play various games. In a country like India, with its densely packed cities and limited entertainment options, such an environment could be a hook to get customers to visit again. Experts opine that product prices appealing to buyers of modest means as well as the super-rich make Hamleys an “elastic brand.”
While the pandemic has been hitting parts of India’s economy, experts see the toy industry as “recession proof’’ because many families choose the happiness of kids over anything else.
Nailing online sales is key to avoiding the fate of other high-end toy chains, according to Reliance. As part of Ambani’s eCommerce and technology pivot, his group is building Jiomart, a shopping portal, to take on giants such as Amazon and Walmart’s Flipkart in the local market. Reliance Industries has roped in global tech mammoths like Facebook and Google as investors to fuel those ambitions.
With COVID-19 accelerating the group’s digital strategy, Mr. Mehta expects 30 percent of Hamleys’ sales coming from orders online in five years, versus 20 percent now. Direct selling over the phone or via WhatsApp would account for 20 percent in the same period, he said.
The toy retailer is looking at outlets in the US this year or next, depending on travel restrictions, as well as in tourist hot spots in European countries, including France and Italy.
Still, India is likely to be a key market, analysts predict. With about 26 million children born in the country each year, Hamleys is unlikely to be short of customers there even if only the top 5 percent of the population can afford to shop at its store.
Founded by William Hamley in 1760, Hamleys has seen its share of troubles. Ownership of the London-based chain has changed at least three times in the past decade alone, from an Icelandic bank to a French group and then to a Chinese fashion retailer. Two years ago, Mr. Ambani bought it for about $89 million in cash. Hamleys’ most recent books for 2019 show a loss of almost $12.4 million.