Ben Gordon has revitalised Mothercare with better products, a strong online presence and a focused overseas strategy. Lisa Berwin reports

Last week, Office for National Statistics data showed that the number of children born in England and Wales last year hit its highest level since 1972. It was the same week that Mothercare revealed a tenfold increase in pre-tax profits.

Coincidence? Yes, says one man who does not buy into the theory that a downturn can lead to a baby boom, Mothercare chief executive Ben Gordon.

“I don’t know whether the baby boom is even because of the recession,” he says, and maintains there is little evidence to back up the theory. What he does agree with, which has helped the retailer achieve results that have surpassed those of many other store groups this year, is that the last thing people stop spending their money on in hard times is their children.

The social change that has most benefited Mothercare, according to Gordon, is older parents. “People are having babies later and later,” he says. “The average age of people having babies is now 30, where it used to be 25, so they tend to be better off and they are, perhaps, even more aspirational than they would have been earlier on.”

Gordon, despite the remarkable turnaround that culminated in last week’s results (see overleaf), has always maintained a lower profile than many other listed retailers’ chiefs. When he joined the then ailing business in 2002 he was unconcerned about criticism that he was not a well-known name in the UK, having spent much of his retail career in international businesses.

Before joining Mothercare he ran Disney’s stores in Europe and the Asia-Pacific region. “It was true there were some articles saying I was unknown, but I did not know the people saying I was unknown,” he says.

Before he joined Mothercare, Gordon could observe the problems that the business had. But when he arrived as chief executive things were far more critical than he had realised.

“When I first stepped in the situation was worse than I anticipated, with the cash situation much poorer. The company was in a very difficult situation,” recalls Gordon.

The first priority was to initiate a “cash-finding” exercise across the business. “We cut back dramatically on capital expenditure and moved out terms of suppliers to give us more time to increase capital,” he says. He also found that the retailer had £500,000 lying in its tills unnecessarily. Little by little, he managed to minimise the cash deficit and was then able to concentrate on moving Mothercare forward.

Product first

Gordon is a product man. Time and again he points to product as a defining factor that nearly broke Mothercare but which also brought the retailer back to life again.

“Once we started to get better product into the stores the customers were coming back to buy. The customers had not turned their back on Mothercare, we just weren’t giving them what they wanted,” he says.

The product was low value and low quality, and Gordon quickly changed that and introduced a good, better, best pricing strategy. “We had to put fashionability and quality back into the ranges,” he says. 

Gordon also got to work on Mothercare’s supply chain, its internet business and renovating tired looking stores  – particularly on the high street – that were not working for the brand.

Since the end of May last year Mothercare has closed 31 high street stores. About 50 per cent of the retailer’s leases are coming up for renewal in the next three years and Gordon will enter into negotiations with landlords. He hopes the process will give Mothercare better lease terms and allow it to move from its less profitable shops.

Gordon does want to maintain Mothercare’s presence on the high street – “an important advertisement for the brand”, he says – but will focus future openings more in out-of-town locations.

Mothercare refers to the out-of-town stores as “parenting centres”. As well as the fuller ranges across the board, such shops also carry the offer from the Early Learning Centre (acquired in 2007), a shoe shop, photo studios and advice for parents and parents to be.

Staff knowledge and maintaining the standard of customer service is also key to Mothercare’s success, according to Gordon. “Training is at the centre of everything we do and there is a lot of expertise in the stores as a lot of our staff have worked there for a long time,” he says. “It is our key defence against the supermarkets.”

He points to buggies and car seats as categories in which staff need technical expertise. “Does the customer live in a flat in a tall building that needs a lightweight buggy? Do they walk with it up and down pavements, so it needs to be robust? Do they travel in the car more? All these things you need to take into account to help a customer.”

Mothercare’s multichannel business has also been a big driver of sales and service. “Every single one of our tills is connected to the internet,” says Gordon. “If the customer does not like the pushchairs that she finds in-store the sales assistant can switch a button to connect to the internet and show every single pushchair at the tills – it’s a really brilliant system.”

Online Mothercare has a range of 500 pushchairs, but can only display 75 in its biggest store, and it is gradually increasing the products carried online across all categories. 

He says: “We have worked really hard on making ourselves a true multichannel retailer in the past five years. 20 per cent of our sales are through the internet channel, which is a significant part of our UK sales, and it is continuing to grow at 25 per cent a year.”

He says that in 10 years he believes up to 50 per cent of Mothercare’s sales will be generated online. “I can see shops becoming more like showrooms than they are now. That is a guess and that is retail in general, not just Mothercare,” he says.

Mothercare is also one of the few high street retailers to have fully embraced social networking, through its separately run Gurgle.com site, which has doubled its registered users in the past year to 91,000.

“We have kept it separate because our customers did not want to go on and use a corporate site,” explains Gordon. “It has worked really well and from a commercial point of view it is near break-even as we have a lot of customers on it and advertisers are paying to go on.”

The retailer is working on how it can learn more about its customers from Gurgle.com, but it is still its online store that is providing the most lessons. Using the pushchair range as an example again, Gordon says: “We know at any one time which are the ones performing best and so put them in stores and remove ones not doing so well. It is a fantastic test bed for our products.”

Mothers of the world unite

Mothercare will also launch its website overseas next year, initially with two of its franchisees, using local languages and fulfilment. If fruitful, online will be rolled out to other markets.

About 600 of Mothercare’s 1,000 stores are now outside the UK. When Gordon joined the group international was a small part of Mothercare’s business, but the only profitable part.  

It has continued to be of the most successful elements of the retailer since then. In the year to March 28, international sales rocketed 40.9 per cent and profits surged 47.9 per cent to £13.9m.

“Needs of mothers and babies are the same wherever you are – at least up to preschool,” says Gordon. “So whether you are in Manchester, Moscow or Mumbai you will feed your baby the same way.”

Mothercare has continued to thrive in developing markets despite the challenges that have floored so many other retailers. Gordon says there are several reasons for overseas success. “We have a great network of franchisees now around the world – 22 franchisees all working hard and they are experts in their local retail and rental markets.

“The other reason is we have a fantastic infrastructure to get the right product to the right franchises at the same right time. We have warehouses in China and India, Singapore and Jebel Ali (near Dubai) and these are delivering very directly to our franchises and that works very well.”

Each country Mothercare enters has its own rules and regulations that bring particular challenges. For example, he says: “In India we went with Shopper’s Stop and they already have stores in different states in India, we need a warehouse for each state we are in.”

Problems encountered along the way also include extreme weather. In Russia the retailer has had ships stuck in ice for two to three months at a time. 

However, Gordon believes that international retailing is getting easier. “The great trends in retailing now are multichannel and the globalisation of retailing, so as you go around the world the infrastructure for retailing is advancing incredibly fast.”

He adds: “They are building the best malls in the world right now – all of them are in places like Turkey, India and China that you would not have dreamt of five years ago.”

He says that the Americas, where Mothercare has no presence yet, could be a big opportunity as could parts of Africa – at present it has a handful of stores in Egypt and Nigeria.

Mothercare has also been rolling out the Early Learning Centre business to all of its international markets and it has largely completed this integration ahead of the original schedule.

This has brought cost-saving benefits as well as opening up more opportunities for its Mothercare ranges. “The nice thing about the Early Learning Centre is that it has brought an older clientele into our stores,” says Gordon. “Our ranges there are aimed at slightly older children than Mothercare, so that gives us the opportunity to put some more older children’s fashion ranges into stores.” 

In terms of new opportunities and growth Gordon shows no sign of slowing despite the economic uncertainty. He may not buy  the baby boom theory but his focused approach to the mother and baby market in the UK and Mothercare’s continued march into other markets means that sustained growth, despite a backdrop of global recession, looks likely.

Mothercare Financial year to March 28

Total sales:

£723.6m

(2008: £676.8m)

Group pre-tax profit

£42.2m

(2008: £4.5m)

UK like-for-like sales

+1.4%

International like-for-like sales

+6%

Net cash

£24.8m

Stores

1,014

Countries

51