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Hamleys Gears Up to Build on “Experiential Retail”
From:
Richard Gottlieb -- Toy Industry Expert Richard Gottlieb -- Toy Industry Expert
For Immediate Release:
Dateline: New York, NY
Wednesday, January 25, 2023

 

Utku Tansel LLB, MBA

www.linkedin.com/in/utku-tansel-llb-mba-98231636

Utku has 18 years of success in driving global thought leadership, project and content management, delivering strategic business intelligence and insight to major international companies. Throughout his career, he has led many global research programs across a wide range of diverse and dynamic industries including Toys & Games, Licensed Consumer Products, Consumer Electronics, Apparel & Footwear, Homewares & Home Furnishings, and Personal Accessories & Eyewear. With solid market research background, Utku regularly writes for leading industry publications including Global Toy News, where he is a permanent author, focusing on the most recent trends and developments. A sought-after speaker, he also presented at world-renowned industry events including PlayCon, Hong Kong Toys & Games Fair, World Congress of Play, Walmart Global Toy Summit, and Licensing International Mind Mix Executive Conference highlighting key findings from the latest global research studies.

Hamleys’ new immersive and interactive store at Westfield London opened at the end of November 2022 just in time for the crucial festive season is a clear testament to the rise of experiential retail and the ‘Retailtainment’ store model. Supported by its entertainment team and toy demonstrators, the new in-store concept features an indoor slide, suitable for both children and adults, a Hans & Gretel dessert boutique, a Nerf target practice area as well as a Playmobil play area. Furthermore, the captivating retail space, dubbed as ‘magical’, also enables shoppers to experience meet & greets with Hamleys Bear as well as an array of other Hamleys characters, and special guest appearances from the TV/film universe.

The new branch opening is part of the expansion programme for the company, an iconic multinational toy retailer. Founded in 1760, Hamleys has become famous worldwide for its brick-and-mortar stores, captivating experiences as well as eye-catching shop windows. This approach also allows the company to command high prices. 

According to its financial statement, Hamleys’ total global revenue, which includes the sales of goods and franchise income, stood at £5.214 (US$6.36) million in 2021, down from £5.523 (US$6.73) million in 2020. In the UK, its London flagship store on Regent Street was forced to close during lockdowns like many stores deemed non-essential closed to curb the spread of COVID-19 around the world. Even when trading, the lack of tourism and lower consumer footfall made a big impact on sales while a big chunk of office workers also stayed away. It is clear that the company is fighting back with further investments in brand new and unique store experiences.

Hamleys’ latest retail space came after LEGO’s expansion of its London flagship store in Leicester Square in August 2022, which became the world’s biggest LEGO Store, boasting a Personalisation Studio, new LEGO builds reflecting British culture (i.e. Harry Potter and James Bond’s Aston Martin), hands-on unique LEGO experiences such as Tree of Discovery and an Interactive Storytelling Zone.

The store experience is one of its key USPs differentiating both Hamleys and LEGO from rivals and making their outlets a destination in their own right.

Experience where it counts

COVID-19 and confinement measures have accentuated many consumers’ cravings for experiences and entertainment. In an era where the price can often seem like the deciding factor, a return to experiences is more welcome than ever. Many consumers continued to turn to online even in the aftermath of the pandemic, as a matter of convenience or potential cost-savings. Where in 2020 much of the redirection of demand online was circumstantial given closures and the immediacy of disruption, it has now increasingly become a matter of choice. Physical retail could capitalise on this.

On the whole, retailers need to extend their offer beyond mere retail and act as a venue, not just a shop. Investments in human resources need to deliver the differentiation of a ‘human touch’ and stores need to avoid ‘showrooming’ through initiatives like redeemable in-store credits and in-store exclusives. With COVID-19 has forced consumers and brands to reimagine what an experience looks like, retailers are trying to meet the challenge and lure consumers back through exciting, stimulating, and fun in-store experiences.

Hamleys Westfield, White City, London

The future of retail requires an understanding of the new consumer

We are living in a hyper-connected world, however, consumers still crave in-person experiences. As such, they are expecting in-store experiences to carry on additional functions like entertainment and social interactions. Indeed, more than a fifth (21%) of US consumers say that they favour in-store experiences that make them feel like they are part of a community (In-store Experiential Retailing, US, 2021) while almost half (48%) of Chinese consumers always have a product trial offline before they buy products (Omnichannel Retailing, China, 2021). In the UK, 60% of consumers say they miss going shopping as part of a day out (COVID-19 – Retail and E-commerce: A Year On – UK, 2021).

Evidently, consumers still value the advantages of shopping in-store, which include the ability to try products in person and to be helped by customer service associates. This trend is not about countering online sales, but instead turning shops into enjoyable experiences that promote purchases—either in-store or remotely. Shops are windows and adverts as much as places to purchase stock and need to extend the time people spend there as well as the frequency of their visits.

Online and physical are complementary to each other and embracing digital shopping experiences doesn’t have to mean cutting the brick-and-mortar retailers out of the equation, or even their digital equivalents. By offering consumers a direct manufacturer’s storefront, toy & game brands can offer customers exclusive offerings, pre-order notifications, and crowdfunding opportunities they can’t get in stores. The majority of parents (61% married and 60% single) in the US prefer shopping at dedicated toy and game retailer stores over mass merchandisers (Traditional Toys & Games, US, 2022). Hence, the importance of specialists cannot be overlooked despite the rising popularity of online which was turbocharged by the pandemic.

Target and expand the growing “kidult” market

Going forward, Hamleys can look into expanding its consumer base beyond kids actively targeting adults as LEGO has very successfully done while capitalising on comfort and nostalgia. Mintel Trend Extend My Brand validates that brands are expanding into new categories and demographics to find new business as well as intrigue consumers. Toys and games remind adults of their own childhoods, likely times when they had a lot less stress on their minds. While children remain the primary recipient of traditional toys and games, adults shopping for themselves make up a surprising 55% of consumers, surpassing those buying as gifts for others (Traditional Toys & Games, US, 2022).

Adults have limited time due to a multitude of factors and largely enjoy engaging with other forms of entertainment. Those adults who do purchase toys and games may be inclined to make such purchases because they sparked some fond childhood memory. Premium versions of classic toys may be the ideal product for those consumers; with no need to develop play features, these products can focus on high production quality or realistic likenesses.

Brands in the toys & games business that have not considered developing a line of products with appeal to adult collectors may want to rethink their position, as it could greatly expand a brand’s consumer audience. It remains to be seen how Gen Z will react to parenthood, but they are typically expected to delay adulthood and may remain toy and game purchasers for themselves longer.

What’s next?

Inflation and energy prices are rising in many regions, leading to consumers changing their spending habits, as explored in Mintel’s Value Trend Driver. With inflation and the conflict in Eastern Europe intensified, value becomes an increasingly important factor in purchase decisions for consumers who are trying to mitigate the impact and stick to a budget.

Brands that target the premium sector such as Hamleys and LEGO need to demonstrate their products’ high quality, proving that they are worth investing in. Consumers living in unprecedented times will be looking for trustworthy and reliable products, so retailers should highlight these qualities and make consumers feel confident that they won’t come to regret their purchase or be left unsupported. As also highlighted in Mintel Trend Experience is All, experiences will always have a role to play in consumers’ lifestyles, but that doesn’t mean what an experience looks like won’t evolve. The most important component to keep in mind for brands is that an experience whether in-person or digital has to offer value.

As experiences become more accessible with technology, consumers will become more selective with how they spend their time. A shopping day out will continue to be a leisure activity for consumers and it will increasingly be a choice rather than a necessity. There is a huge opportunity and good retailers will continue to do well. Both Hamleys and LEGO are in prestigious positions where they can leverage their heritage and reputation.

However, it is important to note that, in the backdrop of the current cost of living crisis, if consumers rein their discretionary spending further, retailers who charge premiums for their products, may see their sales decline in the short term. They may also need to adopt new pricing strategies to increase sales and compete with Amazon and other online retailers.

Standing out in a crowded place will be more important than ever to succeed, moving forward. Therefore, retailers are also strongly recommended to collaborate with other brands to create a buzz, and make experiences stronger, more worthwhile, and unique. Hamleys’ immersive Playmobil and Nerf stations in its new store are excellent examples that show how this could be achieved.

Richard Gottlieb

Global Toy Experts / Global Toy News

646 675 3019

richard@globaltoyexperts.com

 

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