New Mothercare boss Simon Calver’s candid assessment of the challenges that face the retailer in its core UK market has bought him valuable breathing space.
New Mothercare boss Simon Calver’s candid assessment of the challenges that face the retailer in its core UK market has bought him valuable breathing space. Mothercare may have plunged into a full-year loss, but in the hours following the chief executive’s first analysts’ meeting shares in the company leapt over 20%.
Calver’s intention to be “ruthless” in cutting non-store costs by £20m in three years, reduce the store portfolio to around 200 and drive international and multichannel growth were enough to swing City sentiment his way.
The ex-Lovefilm boss has asked for three years to return the UK business to acceptable levels of profitability – not unreasonable given the scale of the challenge. Calver’s endgame may be 2015, but the market will be demanding clear evidence of progress within months.
The Mothercare chief’s early focus is on cutting prices and extending the range. However, price competitiveness is not necessarily enough – in the digital age of price transparency it’s the very least you need to compete.
Of more concern should be customer perception and the experience of Mothercare’s UK shoppers. It is said 80% of all UK mums visit Mothercare. That may still be true, but too few are coming back.
Calver made positive noises about improving baby feeding and changing facilities in store, but more is needed to convince UK shoppers Mothercare has the same aspirational characteristics it enjoys overseas. Online too, the performance betrays the faltering brand credentials, with total direct sales up only 0.8% in the year.
A new website launched in May and how Calver will leverage his own digital pedigree remains keenly anticipated. But should the retailer suffer setbacks on its road to recovery, fears will return that the pace of market change has accelerated beyond the retailer’s grasp. If that proves the case, a far more radical reinvention will be called for.
For Queen and country
The sun shone last weekend and UK shoppers finally gave beleaguered retailers – the grocers at least – something to cheer. Retailers will hope it was but a dry run for this Jubilee weekend. One estimate suggests shoppers are planning to spend a combined £823m over the four days, compared with the estimated £480m spent over the royal wedding weekend last year – enough to make even the staunchest republican raise a glass or two to the Queen