Mountain Warehouse is on the cusp of its 20th anniversary, and during that time it has consistently defied the downturns that have tripped up its rivals.
The outdoors goods specialist – which has just posted an 18% jump in half-year pre-tax profits – has been quietly building a retail empire over the last few years.
The retailer has 200 stores in the UK and 80 overseas, which chief executive and founder Mark Neale says will be upped to 300 stores in the UK and overseas respectively in the coming years.
Retail Week spoke to Neale about how he plans to keep up momentum and how the retailer has outpaced the competition so far.
The looming arrival of Brexit and subsequent fall in sterling’s value has made many businesses examine their sourcing costs and margins.
Mountain Warehouse has exclusively sold own-brand for 10 years, and Neale says they have benefitted from this strategy in several ways.
“Selling own-brand allows us to offer better retail prices and achieve better margin and, critically, means we’ve got the direct relationship with the customer,” he says.
“It also means we are ruthlessly focused on commercial and if anyone is going to buy the products we make. We ask our customers what colours they want, the length of jacket they want, how much they want to pay for it and then we just get it made, which I think works a bit better.”
For some, the outcome of the EU referendum meant putting international expansion on ice. However, Neale says that the opposite was true for Mountain Warehouse.
“Because of Brexit it will be helpful to have a more diverse portfolio of stores and be less dependent on any one market,” he says.
“Selling own-brand allows us to offer better retail prices and achieve better margin and, critically, means we’ve got the direct relationship with the customer”
Mark Neale, Mountain Warehouse
“We buy a lot in US dollars and if we have more revenue [arriving] in other currencies, it will be useful to flatten that risk for us.”
The retailer currently has stores in seven countries outside the UK including the US, Canada and Poland, and plans to launch in the Netherlands and the Czech Republic early next year.
Neale said the value-led retailer has also benefitted from the lower consumer confidence and economic uncertainty in the past.
“We are very much at the value end of the market and that’s not a bad place to be over the last period and, if you believe what you read, doesn’t look like a bad place to be over the coming period,” he says.
“I think we benefitted from some customers trading down to us [in 2008] and hopefully they’ve stuck with us.”
One of the key challenges facing the outdoors sector is its appeal to the wider shopper market outside of avid outdoorsmen, and men in particular.
When asked who Mountain Warehouse’s customer is, Neale says he wants the shopping environment and product range to appeal to everyone from his mother, who is in her 70s, to his 13-year-old daughter.
“The whole accessibility word is really important – we’ve got an accessible price point, accessible stores in busy places and accessible staff and service,” he says.
In a further effort to make the specialist retailer a broad church for shoppers, a capsule collection from sister brand and activewear retailer Zakti is being rolled out across Mountain Warehouse stores.
“We are very much at the value end of the market and that’s not a bad place to be over the last period and, if you believe what you read, doesn’t look like a bad place to be over the coming period”
Mark Neale, Mountain Warehouse
Neale says that if the tie-up proves successful, it could lead to Mountain Warehouse setting up shop in a different kind of store.
“I’m not saying we won’t open any more Zakti standalone stores, but it’s not an immediate priority – it might mean over time that we do bigger Mountain Warehouse stores though.”
Going it alone
Mountain Warehouse had previously mulled a £200m stock market float, but put the plan on the backburner last year after the Brexit vote.
Neale also bought out the retailer’s private equity backers in recent years – and says he has no appetite to drum up further investment, either in the form of a sale or IPO.
“It’s not on the agenda at all, we’re quite big enough and we don’t need to do it,” he says.
“We flirted with [a float] and then decided it wasn’t the right thing to do. We’ve got plenty to do and we don’t need any money – this way, we can roll it out as fast as we need to rather than being slaves to arbitrary targets.”
Mountain Warehouse is in a rare position of being a self-sufficient retail operation – and considering the lack of private equity appetite in the market following the EU referendum vote, it’s also an enviable one.
The current environment has given retailers more than enough mountains to climb, but Mountain Warehouse seems to well kitted out for the ascent.