International Strategy

Hamleys: Failure
Miniso: Success

Submitted by:

Konika Gupta
Roll No. 1802102
• Hamleys was started in England in 1760 by William Hamley who
dreamed of opening the best Toy Shop in the world.
• Hamleys Entered the Indian Market in 2010 with Reliance Retail as its
Franchise Partner.
• It is currently the largest toy retailer in India with 100 stores in 36
cities.
Why Hamleys is a failure
in India
• Hamleys currently operates 190 outlets globally and
more than half of them are in India.
• For retail chains like Hamleys, India has the best
demographics. Despite becoming a very popular
brand in India, it failed to convert customer’s interest
into sales.
• As a result, deal value of Hamleys decreased from
£ 100 million in 2015 to £ 67.96 million in 2019. Also,
Hamleys had posted a £9.2 million loss, across its
global operations, in 2018. It does not publish India-
specific numbers.
 Indian Market
Demand Conditions
• Indian toy market : It was valued around $1.5
billion in 2018 and is expected to grow $3.3
billion by 2024 at 13.3% CAGR (Source: Imarc
Research Report).
• Price Sensitive: The availability of good quality
toys is still a huge issue in the price-sensitive
Indian market.
• Culture: Buying toys is still not a culture or
habit in India and spending per kid is too less.
• Spending per kid: Hamleys is an expensive
choice over Chinese made toys.

2016 Data

Factor Conditions favourable in
China: Cheap Human and Capital
resources.
Threat from China: Unbranded products from
China account for up to 90%of the $1.5 billion
domestic toy market. Low-priced Chinese toys are
either mass-produced or are rejects from other
countries that are diverted to the Indian sub-
continent (or) Africa.

Threats and Retail Trouble: Rentals at leading shopping

malls in India can be as high as Rs1,000-1,200
Weaknesses in per square feet. It’s very steep and most of
the time does not justify the investments vis-
India à-vis revenues.

Digital Play: India’s online games market

is expected to reach Rs11,900 crore by
the year 2023, according to KPMG.
Hamleys lags in this area.
 Reforms done by Hamleys
Improving the demand conditions and trying to overcome the difficulty posed by unfavourable factor conditions

1 2 3
It has tweaked the mix of Earlier it had only Large Hamleys India doesn’t make
Products at stores according stores measuring around toys but brands those
to Locations. 10,000 square feet. sourced from manufacturers .
E.g. Average unit value for Now it operates in several Now, it’s emphasising on in-
their Dwarka store in Delhi is formats: Flagship, regular, house or exclusive toys as
different from its tonier express and airport. they offer better profit
neighbourhood Khan Market The size of the airport stores margins.
store. can be as small as 500 sq ft.
Strengths & Opportunities
According to the latest census figures, India accounts for
approximately 25 million live births per year. Even if you look at
the top 10% of that number, that’s 2.5 million new families, or
potential customers, being added each year.

• Increasing geographic footprint in India: Reliance’s retail will help

Hamleys with its supply chain management and distribution
network as it is already the country’s biggest bricks-and-mortar
retailer in terms of sales and store numbers.
• Retail plus digitalization Strategy: Reliance will be able to grow in
the Indian toy market through Hamleys and channelise it through
its retail plus digitalisation strategy.
• Favourable New e-commerce Policy: Amazon and Walmart have
taken a massive hit recently when a new e-commerce policy was Chance
instituted in India, giving an open opportunity to Reliance to
dominate the e-commerce and retail space.
• Dealing with Chinese Toys: Reliance can also pressurize the Indian
Government to impose higher import duty on Chinese toys and
bring in stricter rules to check illegal imports.
Dealing with Threats & Weaknesses
Changing company strategy to improve factor and demand conditions
Mall Infrastructure
• Sports Gear maker Decathlon has
shunned the mall-based model.
• It has created warehouse stores with
value-for-money pricing.
• Hamleys may be ripe for a similar
disruption and focus more on
standalone stores at high streets.
• It will increase margins as well
maintain visibility for the brand.
Online Games
• Funskool and Mattel have started co-
creating online games by engaging
with various age groups.
• They use targeted communication to
market products that combine the
digital with physical tactility.
• Hamleys can adopt a similar strategy.
• Hamleys cannot keep relying on
physical toys. It needs to work on
creating digital toys which will be
more attractive to todays’ generation
Digital Presence
• Econsultancy critiqued the Hamleys
site for its basic approach in 2013
and felt that it "doesn't do a lot to
represent the brand; in fact, it may
even detract from it“.
• Toy “R” Us completely lost out to the
online giants
• Amazon and the retail giant Walmart
are able to offer far more variety and
SKUs to the customers under one
roof with great deals to grab.
• Hamleys can counter this by
leveraging its premium brand image
and refurbish its website to offer
variety, convenience and fast delivery
to its high-end customers.
• Miniso was founded in 2011 by Chinese entrepreneur Ye Guofu. The
company is headquartered in Guangzhou, China, under their Chinese
holding company Aiyaya.
• It entered the Indian Market in 2017 and currently has 110 stores in
India Tier 1 and Tier 2 cities. It plans to open 800 stores by the end of
the year 2020.
November 2018 Data
Indian Market
Demand Conditions in India: Favourable
• Consumer spending in India is poised to grow from $1.5 trillion now
to nearly $6 trillion by 2030, according to a report released by the
World Economic Forum.
 Indian Market
• India has a $790 billion retail market.
• A rapidly growing middle-class along with an
increasing number of youngsters have allowed
brands across the globe to penetrate swiftly in
India more than in any other nation.
• Any international brand tends to have a
premium tinge in India even if it is a
mass/midmarket brand in its home country.
• There are multiple reasons for this. Average
household incomes in India are far lower than
those in markets like Europe.
• A surge of Asian retailers entering India over
the last few years has given a fresh uplift to the
modern retail market.
Why India is an important market for Miniso?
We expect at least 10 per cent growth in terms of brands entering India
over the next one year as compared to a year ago: Franchise India Holdings

Mass-market and low-

US trade conflict
• The impact of US trade
conflict has been a
particular concern for
investing in China
recently.
Growing young shoppers
cost positioning
• The growing young • Miniso’s mass-market
shoppers keen on and low-cost
spending on western positioning suits the
trends has also fuelled Indian consumer
the interest of smaller requirements
global brands that rely
on the franchise system
for global expansion to
tap the Indian retail
space.

Demand Conditions for Miniso: favourable

Why Miniso is a success in India

1 2
Miniso has won the hearts of
consumers as well as mall
owners, garnering more sales
per square foot than anchor
retailers and global fashion
giants Zara and Hennes &
Mauritz. India is one of its
top three fastest-growing
markets.
Since its arrival in August
2017, Miniso claims to have
generated sales of Rs 700
crore in its first year from 26
outlets. Currently it has 110
stores in India. It plans to
open 800 stores by the end of
the year 2020.
3
Owing to the splendid
response towards its
products, it has continued
to add newer categories to
their portfolio -
manufacturing some in
India itself.
What Miniso did right?
Pricing Problem Keeping Customers interested Streamlined Supply Chain

Weekly Upgradation of
Great Shopping Keen focus on
High quality Product at Product Categories.
experience for its developing local direct
Competitive prices Everyday it launches 16
customers mining resources
products

Customised products Rather than owning its Doesn’t add very high
for Indian Market by own stores, it has margins on its products
sourcing from Local started a franchise and has changed pricing
Manufacturers policy in India for India

High Rental and Mall Infrastructure Issues

Future Strategy
Factor Conditions in India: Favourable
Supply Chain Pressure and Local Sourcing Indian Online Market

• Miniso currently purchases products from 40 • It has already partnered with Shopclues, Paytm,
countries Flipkart, B2B online distributor Acchacart and
• Now it wants to shift purchase orders to India Snapdeal to offer its products online.
for cosmetics and textiles • As of now, only 1% of its sales come from online
• India is the second biggest purchase country for market in India.
Miniso sales arms with products getting • It needs to understand why people opt for
exported to Indonesia, Malaysia and China online and study the Indian ecosystem.
• In 2019, it has hit $3 million purchase from India
and by next year, it is expected to reach $25
million.
• Products will be bought and manufactured in
India followed by a design finish in Europe and
Japan and then exported to other countries
References
• Business to you blog: https://www.business-to-you.com/porter-
diamond-model/
• India retailing Website:
https://www.indiaretailing.com/2019/08/29/retail/the-rise-and-
growth-of-the-indian-retail-industry/
• YourStory blog: https://yourstory.com/mystory/indian-retail-market-
on-the-way-to-glory-58zdqio8b6
• Economics Times, Business Standard Articles
• IBEF Website