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Indian Giant Toying Around

An article I wrote for my university’s business society almost a year ago continues to be true. Republishing on a professional platform.

Earlier in May, Reliance Industries created a buzz by acquiring the World’s Oldest Toy Shop. Reliance Brands acquired Hamleys for £67.96 million (about ₹620 crore) in an all-cash deal. They signed an agreement to acquire a 100% stake in Hamleys Global Holdings Ltd from Hong Kong-based C. Banner International. This was the third owner the company has changed hands from in the last 7 years. Not a very promising deal? Read on.

Now, many seem to be pinning this as Reliance’s masterstroke to clash with the retail giants, Amazon and Walmart. Here is why the efforts may fall short to even make a dent in the retail ecosystem.

While Amazon happens to be an online retailer and Walmart an indirect competition, it is no secret that both these companies have tried to infiltrate the Indian market in one way or the other, but with this deal Reliance has taken this battle to a global scale. However, if Hamleys’ performance in India is a testament to its fighting ability, Reliance may have lost even before they start. Hamleys has been a loss making enterprise since the inception of its first store in 2010 in Mumbai. They have only been able to grow by 88 stores across India in the last 9 years which, honestly, isn’t a lot of growth. What is interesting to note is that Hamleys was already being operated by Reliance in India and this is not, technically, a massive change in leadership.

It is also rumored that Reliance might go all out in retail with Hamleys by including other products in their stores. This might not turn to be as successful as it sounds because it will increase the inventory costs and their lack of market reach might just make sales even more difficult.

The Indian toy market was worth US$ 1.5 billion in 2018, registering a CAGR of 15.9% during the year 2011–2018. The market is further projected to cross US$ 3.3 billion by 2024 (Imarc). However, the toy market in India is largely unorganized. Over 70% of the Indian toy industry is unorganized and the remaining organized sector is filled with a number of players already which include Funskool, Mattel, Lego, Fisher-Price, among others (Brand Equity, 2017). While no official number is out yet it isn’t difficult to assume that Hamleys has only captured a dismal amount of the organized market share. There might be many reasons for this but the lack of brand relatability seems to be at the top of this list.

It is well known that only last year the world’s biggest retailer by market share, Toys R Us, declared itself bankrupt leading to a huge void in the toy market share causing many giants to compete for it. It is interesting to note that the companies in line to take that coveted spot are Walmart and Amazon, and the credit for taking down Toys R Us is given to these two companies. They were able to do that because of the fact that Toys R Us and many other leading toy retailers do not have their own labels and often sell the products of other companies. Walmart picked up contracts from these suppliers and what one could buy at a limited Toys R Us store was now readily available at the Walmart next door. Amazon, on the other hand, by its virtue of being an online retailer was simply able to offer competitive pricing and a large variety of products. Hamleys is no exception to this rule and it should not be long before it shares the same fate. According to Bloomberg, the 100-page catalogue that Toys R Us used to produce every year is going to make a reappearance of sorts under the banner of Amazon and will be digital. This is a sign that the war has already begun.

In all of this, it is important to not discredit the fact that Hamleys in London was able to turn around its balance sheet by registering a profit of 2.44 million Pounds in 2018 after suffering a loss of 11.24 million pounds in 2017. Its Indian counterpart, on the other hand, registered losses of approximately $15.6 million that year.

What might happen with this rivalry cannot be predicted right now but it will surely make for a showdown in the country. Reliance, which has been known to make absurd moves that later turn out to be successful, might just end up surprising us.


IMARC, ‘Indian Toys Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2019–2024’, https://www.imarcgroup.com/indian-toys-market

Singh, R. (2017), ‘No Kidding: When Toys Mean Business’, Brand Equity, Economic Times, July 19, https://brandequity.economictimes.indiatimes.com/news/business-of-brands/no-kidding-when-toys-mean-business/59658547

Wood, Z. (2019), ‘Hamleys sold to India’s richest man in £70m deal’, The Guardian, May 9, https://www.theguardian.com/business/2019/may/09/hamleys-sold-to-indian-partner-in-70m-deal



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Prakhar Rathi

Prakhar Rathi


I like to write about data science, machine learning and finance. I document personal experiences and projects. I love to hike and swim! Reading when not coding