Reliance Retail (RR) owned by Mukesh Ambani's Reliance Industries is eyeing a larger global footprint with the proposed acquisition of Chinese-owned UK toy chain Hamleys, according to reports. RR has been Hamleys' brand licensee for India but the acquisition will make RR an international brand owner.
The acquisition, market watchers say, is unlikely to make much difference to RR's bottom line, for now, considering the limited reach Hamleys has in India. It has a presence only in 21 cities in India through 49 stores. RR may have to open more Hamleys points-of across the country to increase its market share and reports say RR may increase the number of Hamleys stores to 200 in the next 2-3 years.
Headquartered in the UK, Hamleys is the world's oldest retailer of toys, games and gifts, a report in MoneyControl says. Its network of outlets (owned and franchise-run) extends across Europe, the Middle East, Southeast Asia, North America and South Africa. A deal with Hamleys will provide RR cross-selling opportunities while Hamleys will be on sale at existing RR outlets. RR's will get a base to work on expanding beyond India for fostering another phase of growth.
RR's strong warehousing and distribution network can ensure wider breadth and depth of Hamleys products throughout India. Reports suggest RR has about 8 million square feet warehousing space and 100 distribution centres across 23 states.
In the international market, RR will be able to tap the potential that foreign regions offer, according to the report. RR will be able to take to international markets its private labels across different categories and international licensed brands like Marks and Spencer, Superdry and Diesel limited to in Indian markets so far.
India's toys market was worth Rs 10,500 crore in 2018, growing at an average annual rate of around 16 per cent, according to market research firm IMARC. The market could grow to Rs 23,000 crore in five years, with a large and young population base that is growing. Thus the industry trends for branded toys appear positive and Hamleys and RR could benefit from them. The global toys market is expected to hit $120-billion turnover by 2023 from $89 billion in 2017, marking a compound annual growth rate (CAGR) of nearly 5 per cent.
Hamleys' market capitalisation is an estimated $86.19 million or Rs 598 crore. But the valuation could be much lower considering reports that Hamleys' turnover is much lower than that of its global counterparts affecting its profitability in the last two calendar years.
