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Mukesh Ambani Plans to Quadruple Hamley’s Outlets

Hamleys, a British retail icon that hasn’t made a profit for a number of years, plans to quadruple its outlets in the former British colony to more than 500 in three years despite the pandemic.

April 14, 2021

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Image: Bloomberg

Hamleys, a British retail icon that hasn’t made a profit for a number of years, plans to quadruple its outlets in the former British colony to more than 500 in three years despite the pandemic, according to Darshan Mehta, chief executive officer of Ambani’s 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.

With a backer whose net worth is USD 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 USD 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 some 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.

Nailing online sales is key to avoiding the fate of other high-end toy chains, according to Reliance. As part of Ambani’s e-commerce and technology pivot, his group is building Jiomart, a shopping portal, to take on giants such as Amazon.com and Walmart Inc.’s Flipkart in the local market. Reliance Industries has roped in Facebook Inc. and Google as investors to fuel those ambitions.

With Covid-19 accelerating the group’s digital strategy, Mehta expects 30% of Hamleys’ sales coming from orders online in five years, versus 20% now. Direct selling over the phone or via WhatsApp would account for 20% in the same period, he said.

Prior to the acquisition of the chain, Reliance had the master franchise for Hamleys in India. The retail unit of Reliance is also the local partner for over 45 international brands including Burberry, Hugo Boss, Jimmy Choo, and Tiffany & Co., according to the company’s website.

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The pandemic has limited Hamleys’ India target to just about 50 new stores this year before the rollout picks up pace. The toy retailer is looking at outlets in the U.S. this year or next, depending on travel restrictions, as well as in tourist hot spots in European countries, including France and Italy, the Reliance executive said.

Ambani bought Hamleys in 2019 to strengthen his presence in retail. Still, India is likely to be a key market, said Arvind Singhal, chairman of Indian retail consultancy Technopak Advisors. 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% of the population can afford to shop at its store, he said.

Sourced via: Bloomberg