Mothercare one of the great British high street institutions announced last week that it would be closing up to 50 stores; a third of its UK operation in an effort to prevent the company going bust, with more store closures planned for 2019. Mothercare who employ 3,000 staff have 137 outlets across the UK and it is thought that up to 800 jobs will be lost. They have said that they are in a perilous financial position with debts that have risen from £38million to around £50 million. Mothercare also operates through franchises in Europe, the Middle East, Asia and Latin America.
Along with the planned store closures Mothercare is also taking part in a financial
restructuring plan through a company voluntary arrangement (CVA) which will allow the firm to close shops that are making a loss and obtain shop rental discounts. It seems the writing was on the wall after Christmas as like-for-like sales fell 7.2% year-on-year and online sales fell by 6.9% despite end of season sales and discounting. Mothercare announced a profits warning in January 2018.
Where did it all start?
Mothercare founded by Selim Zikha and Sir James Goldsmith first opened its doors in 1961
in Kingston, Surrey and was the Sixties Mum and Mother-to-be’s first port of call for all things maternity. Staffed by knowledgeable sales staff it was trusted by generations of parents as the place to go. Over the years it merged with other well-known high street names: Habitat, British Home Stores and Children's World. In 2007 Mothercare bought the Early Learning Centre and in 2010 Mothercare bought the trademark and brand of privately owned rival Blooming Marvellous a designer and retailer of maternity and children’s clothing. In 2005 Mothercare held 24 patents for products it had developed.
What went wrong?
Fifty-Seven Years later and the retail world has changed beyond recognition. Many
Mothercare stores have been struggling to make a profit and Mothercare has seen
increased competition across the Mother and Baby sector not just from cheaper online
retailers like Amazon but also marketplace sites like Ebay and Facebook where people sell
and recycle baby goods. Baby goods are quite often only used for such a small amount of
time and many people choose to buy second hand rather than new.
Mothercare also faces strong competition in the children and baby clothes sector, as many
supermarkets now sell good value children’s ranges of clothes: George at Asda, F&F at
Tesco, Tu at Sainsbury’s, Nutmeg at Morrison and Waitrose Mini. Why would you make a
special trip to Mothercare if you can buy your Babygro’s with your weekly shop?
It has also been said that Mothercare has lost touch with what Mums need; that the staff
don’t have the knowledge that they were once famed for and that stores just don’t have the space in the aisles to walk around with a wider double buggy.
Too much rapid expansion of stores has also been partly blamed for its downfall also adding
to their difficulties as well as high business rates on retail premises. This general trend of
higher operating costs of both rent and business rates for retailers with shop premises
compared to online only retailers has forced many High Street and out of town retailers to
reassess their business model.
It would seem it’s not just Mothercare that are feeling the brunt of the online competition.
This follows a general high street trend Toys R Us closed its doors after 33 years and of
course who can forget Woolworths closing in 2008 after almost a century on the high street.Carpetright and House of Fraser have also announced closures of some of their stores in recent weeks too.
Hopefully the restructuring programme will help to put Mothercare back on the right track.
What do you think have you been into a Mothercare store recently or do you buy all your
Mother and Baby shopping online or with your weekly shop?
“Creative Commons: Mothercare image” by Indi Samarajiva licensed underCC BY 2.0