Mothercare is emerging from a challenged period of trading and operating, and for a long time has been an example of a retailer that lost its way. Like many retailers, over the last decade Mothercare has faced the retail-trinity of problems: aggressive competition, unprofitable store estate and digital disruption. But if the figures released in May are anything to go by, it has also overcome them.
Firstly competition in this market has become fierce and Mothercare is at the centre of a range of alternatives, each winning market share for a different reason. For the grocers the range extension has been a convenience play, driving prices down in commoditised items and loss-leading on big tickets. For established department store brands such as John Lewis, the combination of range and quality within a heritage brand provided a direct threat, whereas the fashion retailers from Next to H&M took a chunk out of the clothing share. Direct competitors such as Kiddicare and Mamas & Papers sought to differentiate on the same lines, and ended up pressuring price most of all. And finally, the ever present threat of the pure-plays headed by Amazon combining share of market with share of wallet, entered and dominated new categories that cut across the full Mothercare range.
Secondly, there’s the legacy of the retail parks and big-box formats. As consumer habits shifted and the recession hit Mothercare along with many high street retailers faced an excess of floor space and unprofitable stores. It’s arguably the combination of the digital and international strategies that created the space needed to re-set the store base. As these new revenue streams took-off, in parallel Mothercare has been pursuing a relentless programme of store closures, from 2012-15 closing 184 stores and returning to an estate that is profitable but also renewed – at the same time as closing 19 stores last year a further 54 were refurbished. More than that however, the programme has led to a step change in the store estate that provides another platform for differentiation against the competitors. Stores designed to support a range of customer needs from social events to baby classes and coffee breaks have moved Mothercare out of commoditisation into a new value proposition. In addition, the digital first strategy has led to an omni-channel proposition that supports cross-channel customer journeys, as well as range extension in-store enabled by digital tools.
Finally, digital disruption hit Mothercare on two fronts. As with every traditional retailer, the pure-plays took the first mover advantage and the legacy of analogue retail took time to shift into the digital age. However, regarding its value proposition Mothercare was hit twice with shifts in digital media and communications exacerbating the challenge. For a brand built on a combination of quality and expertise, the growth of peer-to-peer networks and magazine content sites put the position of trusted expert at risk as new parents increasingly got their advice from Mumsnet and Facebook. Mothercare provides an example today of what a brand can achieve when it embraces digital and the opportunities it opens up, learning from the disruptors and combining the best of the new with the brand promise of a heritage retailer. The digital estate of Mothercare is the first strategic pillar for its strategy, and integral to both the store and international retailing strategy. Understanding the shifting role of content, Mothercare has established its own content platform – Gurgle.com that covers everything from pregnancy tests to buggy buying guides. Services like click and collect start to bridge the physical/digital divide, and the cross-channel mobile/tablet/web experience delivers. More importantly, it delivers commercially – last year, online contributed 30% of sales, up nearly 19% YOY – impressive stats in a channel that has been levelling off in recent years for many retailers.
Scoring
The simple scoring from Transform is based on whether or not five services are offered by the retailer in the UK with a score of 0 for no and 5 for yes. On this basis, Mothercare scores 25/25.
Collection in-store: Yes
Mobile app: Yes
Mobile web: Yes
iPad app: Yes
In-store tech: Yes
