Mothercare to take online sales hit as it shifts to full-price focus

Mothercare expects to take an online sales hit in the short term as new boss Mark Newton-Jones puts full-price sales at the heart of strategy.

Full-price transactions will be at the heart of Newton-Jones’ turnaround programme and the switch from the typically promotional nature of online trading will be reflected in ecommerce performance while under way.

The effect was evident during the first quarter, when sales at Mothercare’s direct division fell 6.4% while the core UK business managed a 0.9% like-for-like rise.

Newton-Jones is determined to bring an end to the rampant discounting that has characterised  Mothercare and specialist maternity retail more widely in recent years, undermining performance.

The retailer has already reined in price-cutting since Newton-Jones joined, originally on an interim basis.

The summer Sale started a fortnight later than last year’s and markdown decisions are being made by individual line rather than across broad categories.

Newton-Jones said: “We’re changing the way we’re trading and weaning ourselves off the level of discounting and markdown, which had become quite aggressive. That means we’ll see some pain on the online line.”

Improved product quality, a focus on the middle section of the ‘good, better, best’ price architecture rather than the bottom, and exclusive product are among the ways in which the retailer is shifting to an improved price position.

Newton-Jones said: “We’re really gaining confidence in full-price trading.

“It’s a weaning-off process rather than bringing the guillotine down and just stopping, and we have a more confident approach and are reestablishing styling, quality and value for money.

“There were often promotions on top of discounts and before long you’re selling below cost.”

He launched his strategy amid turbulent conditions in the specialist maternity market following the sale of troubled Kiddicare to turnaround investor Endless and the acquisition of a majority stake in Mamas & Papas by Liberty owner BlueGem.

Newton-Jones said: “The sector has got itself into a bit of a price war.

“It reminds me a lot of sports retail about a decade ago.

“If everybody sells the same product and starts discounting that product then people won’t make money. I think there could be a bit of consolidation or a shake-out.”

As well as the full-price focus, Newton-Jones, who formally took over as Mothercare’s permanent chief executive today, intends to invest in the retailer’s infrastructure and systems, improve service and enhance the customer experience and journey in-store and online.