The man with all the toys: Why Mukesh Ambani bought Hamleys
With 167 stores spread across 18 countries, the 259-year-old British toy store chain Hamleys gives Reliance Retail a much-needed global footprint.
On Thursday, Reliance agreed to purchase the 259-year-old British toy store chain Hamleys from C.Banner International Holdings for $88.5 million in cash in a transaction that will “catapult Reliance Brands to be a dominant player in the global toy retail industry,” said a statement.
The 62-year-old businessman is quietly piecing together a network of partners through stake purchases or outright acquisitions in his push for consumer business, which Ambani says will contribute nearly as much as to the conglomerate’s total earnings as its core energy business by the end of 2028.
A Hamleys in pocket will give Reliance 167 stores across 18 countries. Hamleys gives Reliance Retail a global footprint which the company currently lacks. Despite its huge sales network in India, Reliance Retail so far has no overseas presence.
Ambani is clearly in a hurry and he has the right reason to be so. India will have 829 million smartphone users by 2022, according to Cisco Systems, from a projected half a billion this year. That means a potential surge in demand for online services and products from music to food delivery, electronic gadgets and clothes.
Ambani outlined his plan to shareholders in July, saying the effort will involve the group’s unlisted businesses Reliance Retail and Reliance Jio Infocomm. He has already spent about $36 billion on Jio, which has rolled out a nationwide 4G network and fiber broadband infrastructure, causing some established rivals to pull back.
The platform will use augmented reality, holographs and virtual reality to create an “immersive shopping experience,” said Ambani.
The service will seek to get on board the millions of mom-and-pop stores that dominate the Indian retail market, providing heft to its operations. Chains and large department stores account for only 10 percent of the market. The Reliance e-commerce platform would enable small merchants to “do everything that large enterprises and large e-commerce players are able to do,” Ambani said. A spokesman for Reliance Industries declined to comment on the progress of the plans.
The acquisitions will help bolster this network of partners. Last week, Reliance said it would spend $101 million to buy and fund the expansion of Haptik Infotech Pvt., a company that provides customer support chat services using artificial intelligence.
Radisys Corp. will help Reliance in enhancing its presence in the so-called Internet of Things and 5G in a bid to launch its broader e-commerce business, while Vakt Holdings will build a digital ecosystem leveraging block-chain technology. Grab a Grub will help Reliance deliver food, groceries and other merchandise using bikes as a delivery method in a hyper-local approach. Infibeam Avenues will help create e-commerce market places, Mint reported on its website.
The “acquisitions will help Reliance create a unique and a very powerful digital economy ecosystem for Reliance, which is way beyond simple merchandise e-commerce,” Arvind K. Singhal, chairman and managing director of Technopak Advisors, a management consulting firm, was quoted as saying in Bloomberg report.
While Ambani puts together the building blocks to take on Amazon and Walmart, the broader fight is already taking shape in India. In a move widely interpreted as extending a helping hand to home-grown business, the government imposed late last year restrictions on the global giants, requiring them to cut cash-back payments and discounts -- methods that have been criticized by smaller sellers who’ve accused the companies of predatory pricing.
To adjust to the rules, Amazon and Walmart have removed thousands of products from virtual shelves and must redraw contracts with merchants and brands as well as brace for a full-fledged e-commerce policy that is being reviewed.
As the battle lines are drawn, clues to how Reliance could use its might in its latest venture may be found in the way Ambani reshaped India’s telecommunications landscape with Jio over two years. That approach led many rivals to retreat, including brother Anil’s Reliance Communications.
“With its own telecom network, Reliance in India can go way beyond Amazon and Flipkart,” Technopak’s Singhal said. “The Reliance ecosystem -- still in progress -- for digital economy has multiple, very powerful components that include retail, entertainment, education and financial services.”