Fake snow is falling and a hyperactive elf is hopping around on the pavement, geeing up the crowd pressed against the windows of Hamleys toy store, which is filled with a Christmas scene of sledding Beanie Babies.

“It’s an institution,” says Tamara Maddrell, an Australian tourist trying to restrain her young sons, who each have £25 to spend and are in ecstasy as the countdown to the store’s opening begins. “We don’t have anything like this in Melbourne.”

About 5 million shoppers a year visit the store on London’s Regent Street, which is one of Toyland’s great survivors. The toy trade has changed dramatically over the past decade, a period bookended by the collapse of Woolworths and Toys R Us. While many adults reminisce about childhood visits to toy shops, they are rarer treats today as nearly 40% of toys are bought online.

This year, Hamleys itself was sold and became part of Reliance Industries. This is the business empire of India’s richest man, Mukesh Ambani, whose $61bn (£45bn) fortune, according to the Bloomberg billionaires Index, makes him the 12th richest man in the world.

Its new owners have ambitious plans for the toy store which, to its detriment, has been passed like an unwanted toy from one absentee foreign owner to another over the past 16 years.

Will it be different this time? Yes, says Darshan Mehta, the chief executive of Reliance’s upmarket fashion business, which operates stores for Burberry and Jimmy Choo in India. “We will do whatever it takes to make it [the Regent Street branch of Hamleys] the finest toy shop in the world,” he says.

Reliance does indeed have big plans for Hamleys. It is aiming to expand into major markets such the US, where the failure of Toys R Us has left children with fewer places to spend their pocket money. It has already built a successful chain of more than 100 Hamleys stores in India under a franchise deal that predated the purchase.

The Regent Street store, with its bright red colour scheme and creaking escalators, appears old-fashioned. Mehta insists it isn’t but concedes that the last serious investment took place more than 20 years ago. “That’s the difference between adult and children’s eyes … because a child is in a candy shop,” he explains. “It’s still a beautiful store and has five million customers walking in, which is a hell of a lot of footfall.”

Nevertheless, the company is working on a redesign and the urbane 58-year-old, who spends his time flitting between London, Mumbai and Delhi, promises that within two years it will be the “toy retailing reference point in the world, whatever that takes”.

The revamp, however, is not just about writing a big cheque and turning Hamleys into another London department store aimed at the wealthy. It is about introducing theatre and turning it into a store where people shop regularly.

“We’re not going to put Swarovski chandeliers in, which can cost a lot of money, because that’s not required,” he explains. “You have to be careful not to create something that is intimidating because one of the Hamleys’ secret ingredients has been that it welcomes all and sundry, from the super-rich – someone recently bought a £5,000 reindeer – to someone buying a £5 soft toy.”

The waiting crowd mainly consists of overseas tourists but on the third floor five-year-old Jake is sitting holding the reins of a life-sized sleigh pulled by two nodding reindeers. His nanny confesses the boy “knows the store very well”. In the basement “wizarding world,” which is devoted to Harry Potter, a teenage boy informs his bemused father: “I really want to get a wand but there might be something I want in the Apple store.”

Mehta says the revamped store will embrace the convergence between toys and film, be it Harry Potter, Frozen 2 or Star Wars, and provide a stage for events designed to draw people in. “The store should magically (from a child’s eyes) have a new look every three months … so it is more a design challenge than a money challenge. It is not as if, if I put the most expensive stone on the floor, which Harrods would want to do, it would make a difference [to a child].”

Today, specialists such as Hamleys, The Entertainer, Smyths and Toymaster account for a quarter of the UK’s £3.6bn toy market, with a bigger chunk of sales hoovered up by supermarkets and online firms such as Amazon. Like the rest of the high street, it has been a tough year with toy sales running down 9%, according to market research firm NPD.

Mehta says Hamleys Christmas sales are up on 2018, and does not believe that bricks and mortar retailing is doomed. “If your proposition is price as the only lever then you will lose the game,” he states. “We are not selling the cheapest toy from a box.”

The store, he says, has to be a better experience than buying on the internet “even in India, because 500 million people there have access to the internet. My own parent company has 360 million 4G subscribers.”

“As a brick and mortar retailer I have to stand up to that onslaught,” he says. “People will not remain closeted in their homes. They go out for experiences. A visit to a Hamleys store is an experience.”