Reliance's acquisition of Hamleys takes the retail war to global shores
One needs to wait and watch if Reliance Retail through its Hamleys acquisition will affect the Walmart and Amazon in the same way they affected Toys R Us globally.
Reliance Industries' Rs 620 crore buyout of British-origin Hamleys gives it access to the Hamleys' network of 167 stores in as many as 18 countries. In fact, this acquisition is the Indian retailer's first move to fight Amazon and Walmart on the global turf. The last year has seen the bankruptcy of the world's biggest toy retailer, Toys R Us, which is known to have clearly lost out to Amazon and Walmart. Amazon, by virtue of being an online retailer, was able to offer far more stock keeping units (SKUs) and variety to the consumers than Toys R Us could, while Walmart clearly superseded the retailer by bagging all the important merchandising deals. The consumers didn't feel the need to visit a Toys R Us store, as they found it all in Walmart. They preferred shopping under one roof for both groceries as well as toys.
Back in India, one needs to wait and watch if Reliance Retail through its Hamleys acquisition will affect the Walmart and Amazon in the same way they affected Toys R Us globally. While Hamleys in India clearly plays at the premium end, it will be interesting to see how Reliance will take the Hamleys brand to the nook and corner of the country through its e-commerce platform. One of the reasons Amazon had a clear advantage over Toys R Us was its ability to offer far more SKUs than the latter and Reliance Retail is already looking at making inroads into the farthest corners of India where e-commerce doesn't reach through its network for Jio stores.
Availability of good quality toys is a huge issue in the Indian market as the Rs 4,500 crore toys market is virtually stagnant. Over 80 per cent of branded toys in the country are imported and hence are expensive and therefore the price sensitive Indian consumers often resort to cheap Chinese-made toys. To add to that, mobile games have taken a fair share of attention of kids away from physical toys. This has resulted in the closure of many mom and pop toy stores, while organised retailers have cut down space for toys as the footfalls have dipped by close to 60 per cent. The only serious toy retailers in India are Hamleys (Reliance had the licence to retail Hamleys in India) and Crossword.
Will Reliance Retail be able to grow the stagnant Indian toy market through the acquisition of Hamleys? The sprawling Hamleys stores in the big cities indeed do their bit of making toy shopping magical. Whether Reliance can recreate the same magic across the country is something that one will eagerly wait to unfold. Its biggest task would be to offer quality toys at affordable prices.