Home >Companies >News >Hamleys banks on Ambani magic in battle for survival

A struggling 261-year-old UK toy-store chain is seeking a new lease of life in the hands of Mukesh Ambani, who is 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 pandemic, according to Darshan Mehta, CEO of Ambani’s Reliance Brands Ltd. Besides the main growth market, the company is also adding stores from Europe to South Africa and China, Mehta said.

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," he 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.

In Asia, Hamleys is seen as “high class and it’s on par with Harrods in some ways", said Marc Alonso, a 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 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, said 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 and Flipkart in the local market.

With covid 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.

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, Ambani snapped it up for about $89 million in cash. Hamleys’ most recent books for 2019 show a loss of almost £9 million on revenue of £48 million.

The onset of the pandemic just months after Reliance took control compounded Hamleys’ financial distress in the UK, where it runs 21 outlets.

Mehta says UK operations will “come out very strongly" with non-essential stores reopening this week following the easing of curbs. Retailers like Hamleys are hoping that pent-up demand will translate into bumper sales.

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