Mothercare UK was losing customers to competitors that offered more choice and more affordability when it went into administration in late 2019, new analysis suggests.
Mothercare itself has said that its stores were no longer financially viable in a discount-driven market when it took the decision to put its UK division into administration and close its 79 UK shops. But new analysis from GlobalData suggests that it had struggled to transition from a store-first to a digital-first business, while failing to make the most of its specialist status.
GlobalData runs a monthly survey questioning 2,000 people. In December 2019 it asked why respondents had switched away from retailers in the last two years. Among Mothercare shoppers, 58.2% said they had switched away from the retailer in the previous two years when buying children’s equipment, clothing and toys – although they may still have bought some items at Mothercare.
The most popular reason to change was to choose from a greater range of brands (47.3%), for lower prices (42.3%) and for greater product choice (36.2%). Fewer than a fifth said they had switched because their local Mothercare shop had closed down.
GlobalData analyst Amy Higginbotham said: “Mothercare made two fatal errors: it did not successfully promote its specialist credentials, which would have justified its higher price points, and the retailer struggled to transition customers online as it slimmed down its store estate.”
So where are shoppers buying instead?
Higginbotham said: “Non-specialists offering offering low prices have benefitted the most from Mothercare’s demise – 30.4% of Mothercare shoppers stated that they frequently purchase baby and children’s items from supermarkets, while 23.8% regularly opt for online general merchandisers such as Amazon. Department stores such as John Lewis and Next, which offer a wide range of both branded and own-brand products, will also have stolen shoppers looking for greater choice.”
Mothercare’s chief executive Mark Newton-Jones said last year that the Mothercare UK had gone into administration because while it provided 70% of UK store space for many leading brands in the baby category, the profit margin on selling them had reduce dover times until it was not enough to cover the retailers costs.
He also said that Mothercare, a Leading retailer in IRUK Top500 2019 research, had not made an annual operating profit in more than 10 years and had been hit by recent falls in customer confidence and spending.
Image courtesy of Mothercare