Mukesh Ambani rebuilding a 261-year-old British icon
A struggling 261-yearold UK toy-store chain is seeking a new lease of life in the hands of billionaire Mukesh Ambani, who’s looking to India where about a fifth of the world’s babies are born to fuel its revival.
Hamleys, a British retail icon that hasn’t made a profit for a number of years, plans to quadruple its outlets in India to more than 500 in three years despite the Covid-19 pandemic, according to Darshan Mehta, chief executive officer of Reliance Brands Ltd. Besides the main growth market, the company is also adding stores from Europe to South Africa and China, he said in an interview.
Ambani, 63, 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 behemoth. The deep pockets of Asia’s richest man and India’s demographics could help breathe new life into Hamleys, whose share of global toy sales was estimated at 0.6% last year by Euromonitor International, and see it avert the pitfalls faced by rivals such as Toys “R” Us.
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% are children under 14. The country accounts for just 1% of the $90 billion global toy industry, meaning the potential for growth is high, Mehta said.
“There is a lot of headroom and India is no way near saturation,” Mehta said. “We are now mulling how we can roll out stores in newer geographies and new formats.”
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. Product prices appealing to buyers of modest means as well as the super-rich make Hamleys an “elastic brand,” said Mehta.
In Asia, Hamleys is seen as “high class and it’s on par with Harrods in some ways,” said Marc Alonso, a London-based senior research analyst at Euromonitor. “So it’s attracting that customer base, which is why in places like India and China, it has been seeing some good sales growth in the past few years.”
While the pandemic has been hitting parts of India’s economy, Mehta sees the toy industry as “recession proof’’ because many families choose the happiness of kids over anything else.
But other chains have struggled before the virus. Toys “R” Us was the biggest victim of the US retail apocalypse when it filed for bankruptcy in 2017, crushed by debt and felled by competition from online sellers such as Amazon. com Inc. Though it is on a recovery path now under a new owner, a protracted pandemic points to an uncertain future for retailers.