What happened to Mothercare?
Update 5 November 2019
BBC News online reports All Mothercare UK stores to close:
“Troubled baby goods retailer Mothercare has called in administrators, putting 2,500 UK jobs at risk.
There will be a phased closure of all of its 79 UK stores, administrators from PwC said.
The UK firm “has been loss making for a number of years”, but international franchises are profitable, PwC said.
On Monday the baby goods firm said it was “not capable” of being sufficiently profitable and that it had failed to find a buyer.
Joint administrator Zelf Hussain said: “This is a sad moment for a well-known High Street name,” adding that Mothercare “has been hit hard by increasing cost pressures and changes in consumer spending.”
“It’s with real regret that we have to implement a phased closure of all UK stores. Our focus will be to help employees and keep the stores trading for as long as possible,” Mr Hussain said.”
Mothercare calls in the administrators
Mothercare announced today (4 November 2019) that it plans to bring in the administrators, putting 2,500 jobs at risk. So what happened?
BBC News back in May 2018 reported that Mothercare was finalising a rescue deal with its creditors after years of falling sales and profits. Mothercare: What’s gone wrong at the struggling retailer? It had already gone through a company voluntary arrangement (CVA), which allowed it to shut 55 shops.
Mothercare was once the place to go for parents-to-be. It was perhaps the only place to go when it was founded in 1961. Parents-to-be and new parents, friends and family wanting to make a gift to the new arrival, all went to Mothercare for the baby’s needs.
However in the last ten to twenty years or so Mothercare has not kept up with its competitors. It rested on its laurels, believing that it could go on as it always had being the market leader in baby goods. But it couldn’t.
Next, H & M, Primark, Matalan, supermarkets all started to compete in the same marketplace bringing both convenience and competitive prices. It almost goes without saying that Amazon has certainly played its part in Mothercare’s demise with the huge range of baby products and speedy delivery that it offers.
Even ten years ago online shopping sites for baby equipment were already doing great business and were at all the baby shows pushing their wares. I remember when I was pregnant 12 years ago and did my research on which came out best. The pushchair, the car seat, the cot all came from new online shopping sites and not Mothercare, simply on price for the same items and Mothercare did not offer any added value.
Whilst other stores increased their offerings, Mothercare did little to move with the times. It didn’t change its pricing structures and didn’t invest much in online services.
At Tesco, the company expanded and profits fell before a new CEO drew in the reins and sold off parts of the business. In similar fashion Mothercare increased the number of shops and has been reducing outlets in the last few years but without the same impact on the company’s bottom line.
The company had already shut 58 stores out of 137 only last year. While Mothercase’s remaining network of 79 UK stores has been hit by this shock news of administration, overseas activities remain profitable and more than 1000 stores will continue to operate. [ref: http://www.mothercareplc.com/who-we-are/global-presence.aspx ]
In the past Mothercare was not only best on its range and price. It was also known for the expertise offered by its friendly and knowledgeable staff, many of whom had been with the company for years, as experienced mothers and grandmothers.
However, Mothercare stopped being the place where people went for advice some years ago. It could have been a unique selling point that online stores cannot offer, but was no longer seen as the place to find an “expert” to help with a baby question.
What customers say about Mothercare and why it is important
I asked people on my The Complaining Cow Facebook page what they thought of Mothercare’s demise. Analysts don’t seem to ever ask consumers questions about why a store is in decline and yet it is the consumers who stopped shopping there. Isn’t it obvious that that’s where the answers lie?
They told me quite clearly that price was a big factor and that it had ignored competition and had not kept up with the times. It should be offering advice and support and customer service that you can’t get online and, by doing that, build up loyalty. Consumers said that the company’s own brand items did not live up to the price being charged. They became old fashioned and seemed to be busy and understaffed, so ordering online is more simple and quicker. Mothercare’s own online systems had a variety of issues which put off prospective customers.
It is the 21st century. Mothercare missed a trick. As well as not keeping up with the times in stock, prices and delivery the actual name is outdated. It isn’t just mothers shopping for families anymore! Imagine the publicity if they changed the name to cover to something like Parentcare or Familycare.
And, of course, not looking after price and customer service are not the only factors. The other is common to many other company failures: Greedy and ineffective executives.
The Evening Standard reported on executive appointments and pay at the company in its May 2018 article Mothercare to pay for two top salaries as boss Mark Newton-Jones rejoins. It said:
“Mark Newton-Jones, who was ousted by its then chairman Alan Parker last month, is now back, on a £480,000 salary a year. This is the same as he was due to be paid, but down on the £612,000 he earned last year.
David Woods, brought in to succeed him, will now be managing director, earning £430,000 a year. Parker has since left the business.”
That’s two very expensive bosses!
It seems odd that Mothercare should bring someone back who was not part of Mothercare’s success and also keep David Woods. Why? Neither of them have secured any growth. In fact they have been part of Mothercare’s decline, as the company continued to be overtaken by competitors and did not keep up with changing times.
Mothercare needs to Listen and Learn
Perhaps, just for once, a chain could listen to its customers and learn what they want. Update its name, service and whole model. In the meantime it seems there is unfortunately no clear future for this former family favourite.