Like most children, William Hamley had a genuine passion for toys. As he grew up, he realised that toys could be a lucrative business opportunity too, since parents would be happy to splurge on anything that distracts their children. To that end, the businessman from Cornwall opened his first toy store in 1760. Located in Holborn, London, Hamleys attracted affluent shoppers around Bloomsbury. Overtime, it even became the shopping destination for nobility and royalty.
The oldest toy store in the world has changed hands many times since. In 2003, Baugur Group acquired the toy chain for £59 million. It was then taken over by Landsbanki when the Icelandic retailing group collapsed in 2008. More recently, in 2015, Chinese footwear retailer C.banner purchased the iconic British toy store chain for £100 million ($135.6 million).
It should come as no surprise that the new owner acquired Hamleys in the hope of expanding the chain aggressively in China. To that end, the toy store recently opened a colossal flagship outlet in Beijing’s Wangfujing area (it already has two stores in Xuzhou and Nanjing) right before Christmas.
“We want the parents to get the feeling of how we celebrate Christmas in the UK and in other countries. We want to bring that culture to Beijing,” says Jason Ji, chief marketing manager of Hamleys China. The new megastore, at 10,700 square metre, is Hamley’s biggest store globally (it’s almost double the size of the iconic London store on Regent Street). Spanning five stories, Hamleys Beijing even contains a miniature merry-go-round within the store. Magic shows and toy demonstrations are scheduled around the clock to amuse children (and their parents, perhaps), says Beijing Youth Daily.
It is not only the future of the new Hamleys store that is at stake here. Major toy makers are also struggling amidst a slowdown in global toy sales as children are spending more and more time on smartphones, tablets and watching TV. Mattel, maker of Barbie and Hot Wheels, expects sales in the fourth quarter of this year to fall 6%, which sent the company’s share price plunging 45%. Danish toymaker Lego, too, slashed 8% of its workforce after reporting that revenue in the first half of the year was down 5% from a year ago.
Thankfully, China brings a glimmer of hope. Even though Toys “R” Us has filed for bankruptcy in North America, its business in China is still thriving. In fact, the toy chain dominates the $20.7 billion Asia-Pacific market for traditional toys and games, according to retail consultancy Euromonitor. Lego, too, reported that sales in Asia-Pacific, of which China is a major part, were up double-digits in the first half of last year. Similarly, Mattel said sales in Asia-Pacific went up 16% in the second quarter of 2017.
The end of the country’s One-Child Policy is expected to boost annual toy sales by Rmb75 billion ($12 billion). At the moment, Chinese parents spend less than $45 each year on toys and games for their children, compared to $330 in Japan, which suggests that China’s toy market, already the second-largest in the world behind the US, still has spectacular room to grow.
But the toy market is also cutthroat. Of the top five largest toy manufacturers in the country, three are domestic enterprises – namely, Alpha Group, which is the largest toy manufacturer in the country, commanding 5.3% of the market, followed by Yaoji and LCDX. Meanwhile, Lego and Mattel accounted for 3.5% and 2.2% of the market, respectively.
Local manufacturers also have a cultural advantage over foreign toy makers, says 21CN Business Herald. For instance, instead of Barbie dolls, children in China are obsessed with Kurhn Dolls, which have more Chinese-looking eyes and wear delicate embroidered silk dresses. It also helps that it is priced cheaper than a similar Barbie.
“I bought two Chinese dolls for my three year-old. Compared to their blonde counterparts, Chinese dolls may convey more cultural connotation, providing my daughter more knowledge about her own country and culture,” one shopper told the South China Morning Post.
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