Mothercare falls into administration

Categories: Salford Business School

As yet another famous retail giant looks set to disappear from our High Street, Dr Gordon Fletcher, retail expert at the University of Salford Business School, looks at what is behind the decline of Mothercare.

Dr Fletcher said: “With Mothercare's UK physical operations going into administration we are witnessing the final decline of mass consumption high street retailing. The business model of filling large retail units with a consistent and regular offering that focuses its attention to a specialist sector is now proving to be highly questionable. The end results have been the same already for Maplin as well as ToysRUs. With ecommerce retailers now filling these sector niches without any financial or property legacy they are also consistently beating the high street on price. This combined threat of ecommerce exposes the weakness of the now dated 'pile it high' approach. The constant need to open new stores as the mechanism to drive company growth is also now proving to be a type of false economy.

“None of this is a surprise to Mothercare who have been trying to sell their high street operations while still seeing strong profitability outside the UK with their franchising model. But with high rental and wage bills there have been no buyers coming forward who felt sufficiently confident that they could profitably leverage the brand or even the retail spaces that were on offer. 

“Local and personal expertise combined with a high-quality offer remains a hallmark for an excellent high street experience. A combination continuing to be evidenced by the success of independent and small-scale retailers across the UK. However, as a result of the drive for growth fuelled by the demands of investors seeking returns in a flat retail market Mothercare lost sight of the importance of this experience and moved instead towards emphasis on volume sale with 'own' brands items. The challenge now is for the unit owners to find a sustainable use for their properties and to hopefully enable at least some of 2,500 people whose jobs are at risk to continue to contribute to the economy in a meaningful way.”

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