Mumbai: The one thing that Gudjon Reynisson, chief executive officer of Hamleys of London Ltd, is certain of is that the iconic 256-year-old toy store chain will hold its own in the face of whatever the Internet brings. In an interview, Reynisson talks about why it’s important to create a magical experience in stores, what children in India and across the world want this festival season, and how the company is well prepared to deal with competition from e-commerce brands. Edited excerpts:
Where does India feature in Hamleys’s scheme of things?
India is extremely important as a market. What was clear from day one was that we were never going to do anything other than the best we could for this market. There was never going to be a version of Hamleys for India. This has been a journey, some things a little complicated, some straightforward. We have taken our time to get things right, we haven’t been in any massive rush to roll out 50-100 stores. It is the fastest growing market in terms of store numbers. Twenty-six of the 88 stores we have worldwide today are in India, making it the largest number for any country globally. That number is expected to grow to 32 stores over the next six months. So it is a huge part of our overall business. The market for India’s $1.2 billion toy industry is growing at a fantastic 20% year-on-year, and Hamleys as a retail and toy brand is outpacing that. This is being fuelled by several factors—the pace of urbanization, bigger cities are getting bigger allowing us to set up more stores. Delhi, for instance, will have 10 stores by the end of the current fiscal year. Double-income families also tend to spend more. Moreover, with the rise in the number of nuclear families here, kids now have three sets of people— parents and grandparents who indulge them, and not just on occasions. Also gifting is becoming a fairly big phenomenon, here.
What are the top trends you are seeing globally? Are conventional toys giving way to high-tech versions?
What I have experienced in the industry is that things tend to stay the same more often than change. There are toys that become hits for a short period and then they go away and things settle. And then if you see the changes ushered in by the social media revolution, the Internet and iPads of the world, still we see massive growth in traditional toy sales. There is something very new and exciting happening for all ages. Toys that have more dimensions in play value are increasingly popular, like little figures you can collect and then play with together. I hope it is a trend that will continue. While children are not playing less with conventional toys, they are probably younger when they experiment with or take to electronic toys or tablets. Four years ago, we saw a surge in toy manufacturers coming up with tablets for two- and three-year-olds. But they didn’t take off. When your child wanted a tablet, you handed them a real tablet. Another new trend is that consumers place a lot of importance on quality and safety, which wasn’t the case 10 years ago. Consumers want the toy that ends up in their child’s mouth to be safe. It’s something we take very seriously. Moreover, one major trend, particularly in the Indian and Chinese markets, is that parents want to ensure that their kids have fun but if they can also learn something at the same time, through edutainment, that’s preferable.
What are the trends you see in the Indian market?
In India, we are seeing a decline in sale of dolls; girls are more interested in do-it-yourself kits and role play, that has become far more important than dolls. Ninety per cent of boys’ toys are battery-operated or remote-controlled. In fact, the fastest and number one category till the government banned it, was drones. Also, for slightly older kids, there is a whole new category called STEM (science, technology, engineering and math) toys. Interestingly, even the popular board games are those which are brain-teasers and can be played by a single child, which is unique. Even reimagined versions of classic board games such as Monopoly, the latest one is electronic and instead of cash you also have the option of buying a house with a credit card! Bigger dimensioned toys, especially in the plush category, tend to sell more as consumers see it as more bang for their buck. Also, as much as confidence and safety play a role, novelty also plays a big role in driving purchases here. You have to have the “it" toy. Figurines also do very well here.
Is there any single must-have item this year?
Star Wars as a licence is really big in markets such as the US and Europe, and is already showing 60% growth over last year. While drones are not allowed in certain markets, the Star Wars-branded radio-controlled drone could potentially become a must-have product, even more so because it’s limited edition. Beyond that, toys such as a magic showcase, Code-a-pillar—a caterpillar with segments that can be re-arranged, an interactive puppy, Vtech Kidizoom smart watches, Nerf guns, Pie-face Showdown—a game which involves having whipped cream smashed into your face, and a Beanboozled Giant Spinner Game with jelly beans that taste like spoilt milk and dead fish are expected to do well. Lego mini figures, Hot Wheels cars and Pokémon will continue to do well. And Star Wars multicopters, and the UBTECH Alpha 15, a customizable robot which can read stories, play football and do Tai chi, are expected to impress consumers this season.
The advantages of selection and price that big stores have has now been obliterated by the Web. How do you compete with discounted rates from e-commerce sites?
Globally, close to 70-80% of the overall volume (of toys) is now sold through big supermarkets—the Walmarts and Targets of the world—and online. The fact that such a big volume has shifted to low-value, low-margin outlets is not good for the industry as a whole. It squeezes the life out of it. So, on a macro level, that is a worrying trend and all of the big international brands are concerned about it. At Hamleys, we are at the other end of the spectrum. Our true point of difference is the visit to the store and the memories you take from there, of watching a demonstrator, having your kids play there, the human interaction that you would get in a store, the Internet cannot offer any of that. We are very well equipped to be successful in retail. Our competitors who may have a supermarket of toys, a big shed out of town but no experience, will find it very difficult to survive in a world where the Internet takes over. We do sell online through our own site in a few markets and also use Amazon and other platforms. In the UK, online sales account for less than 5% of total revenue.
There is a lot of talk about breaking down gender stereotypes in the toy industry. In-store signage, the way toys are laid out—sections aimed at girls are an explosion of pink, while those for boys are dominated by cars, guns and science. What is Hamleys doing to change that?
There has definitely been a conscious move away from stereotyping toys, in general. I don’t think we ever say “girls" section and “boys" section. We don’t do that as a business. But retailers need to lay out merchandise in a way that is easy to shop. Which means that you might see a wall that looks suspiciously like a “girls" wall, but we don’t say “girls" above it. And we don’t put science toys under the “boys" section. But I don’t want to be a hypocrite and say we distribute the toys evenly across the store and you just have to figure out what the child wants. That’s not possible. Most toy retailers have stopped such stereotyping. One brand we sell here, that I really like, “Tim & Lou"—a role-play brand which has drills and hammers, building stuff, and then you have an ironing board and a cooker. On the packaging they have a picture of a boy and a girl.
Culturally do consumers buy toys differently? How do you adapt to local preferences?
As a toy retailer, almost 90% of what Hamleys stores offer across the world tends to be the same. But we do have to adapt to local markets. For instance, in certain countries you are not allowed to sell certain toys owning to religious reasons. The word magic is not allowed in Saudi Arabia, among other things. In Scandinavia, they don’t like malls very much, while they are very popular here in India. Chinese consumers are very technologically savvy and might spend a couple of days researching an expensive electronic toy before they buy it. In India, consumers are very value conscious. Russia leans heavily on local brands, some of which we wouldn’t know of. They also frequent cinemas more than any other market. So consumers are much more interested in licences such as Star Wars and Superman than other European markets.