The two companies are close to signing a joint-venture agreement to open Toys“R”Us stores in India, a senior official close to the development said. “Reliance is still working on the nitty-gritty of the joint venture and is expected to close it in the next few months,” said the official on condition of anonymity.

A Reliance Retail spokesperson refused to comment: “As a policy, we do not comment on speculation.” The New Jersey-headquartered Toys“R”Us runs more than 1,500 toy supermarkets across 34 countries and has annual revenues in excess of $13 billion. It has the world’s largest toy store at New York City’s Times Square. It also owns brands such as Babies“R”Us, FAO Schwarz and KB Toys. Reliance Retail had in April opened the first outlet of Hamleys, the iconic 250-year-old British toy retailer, in Mumbai.

Analysts say the tieup with Toys“R”Us will not impact Reliance Retail’s plans for Hamleys as the US brand is positioned lower than the British toymaker. “Toys“R”Us is a much more scalable model, while Hamleys is more of an experience-based retailing form,” said Harminder Sahni, managing director of Wazir Advisors. “These formats would complement each other and help Reliance straddle different price points,” he added.

Interestingly, Reliance were in talks with Toys “R” Us even three years back, but later decided to partner Hamleys to enter toy retailing. But now the company is clearly toying with the idea of introducing more international brands to the Rs 6,000-crore Indian toy market, where unorganized players hold more than 60% share. “They earlier wanted to open mid-priced toy retail stores on their own, but now they seem to have found a strategic partner,” said the official who revealed the development to ET.

Other global toymakers such as Simba Toys and Ty Inc too have ambitious growth plans for India as a booming economy and strong consumer sentiment push demand for toys, children’s apparel and everything else. Reliance Retail is expected to bring a number of international brands across consumer product segment into the country as it looks to take full advantage of the boom in consumer demand. The company, which had paused its expansion plans during consumer slowdown two years back, is looking to scale up once again.

At Reliance Industries’ 36th annual general meeting in June, company chairman Mukesh Ambani had indicated that in the next five years, the group could grow its retail business ten-fold, becoming a significant value creator for Reliance in the coming years. Reliance Retail had revenues in excess of Rs 4,500 crore for the financial year ended March 31, 2010. It operates nearly 1,150 stores in 86 cities across 14 states.

It already has joint ventures with UK’s apparel retailer Marks & Spencer, Dutch optical firm Pearle Europe, US stationery chain Office Depot, Italian men’swear brand Ermenegildo Zegna Group and US-based Apple Inc, among others. There will be more.

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Reliance Retail, which has a 20-year-franchise agreement with the retailer, will set up 20 stores in the first seven years of the agreement.

Besides Mumbai, other cities on the retailer’s list include Delhi, Bangalore and Chennai in the first phase of the launch. The second store, says Bijou Kurien, president & chief executive, lifestyle division, Reliance Retail, will be launched in Chennai by June next year. This will be a smaller store, roughly 12,000-square-feet in size. “Stores in Delhi and Bangalore will come up next, but we will first monitor the performance of the first two stores,” says Kurien.

Hamleys’ flagship store in Regent Street, London, is a five-storey-structure, over 54,000-square-feet in size. Other Hamleys stores in the UK and rest of the world are slightly smaller. The franchise agreement with the 248-year-old retailer will allow Reliance Retail to use the latter’s branding, store design and best practices when setting up outlets in the country. “They will also provide training to staff in soft skills etc,” says Kurien.

Hamleys was acquired by Baugur, the Icelandic investor that also owns Oasis and House of Fraser, for £47 million in 2003 and has since set its sights on international expansion. However, so far, the group only has a small presence in Denmark but has opened a few stores in West Asia.

Brand experts said as a British institution that may possibly be as well known overseas as at home, Hamleys is likely to enjoy a head-start in many of its planned new markets. The Regent Street shop is in fact one of London’s 10 most popular tourist destinations and is visited by four million people a year. Moreover, Hamleys prides itself on a history of breaking down cultural barriers. In 1909, for instance, it became the first store in Britain to sell a novelty from China called ping pong.

Reliance Retail will not only stock Hamleys merchandise, but also products that are exclusively available to the UK retailer.

Besides, allied national brands from manufacturers such as Mattel, Funschool etc will also be available at the outlets. “The overarching branding will be Hamleys. But there will be space available in the store for allied brands,” says Kurien.

Some of the 20 stores will be located in tier-two cities as well.

The toy retail market in India is roughly Rs 2,500-3,000-crore in size. Of this, about 25 per cent comprises the branded market. The balance 75 per cent is made up of imported toys and products manufactured locally. The total toy retail market, say experts, is growing at 10-12 per cent per annum in the country. But the branded portion has the potential to grow even faster at 25 per cent, they add.

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