Mothercare Faces Administration In The UK

November 14, 2019

Despite efforts by the brand’s leadership team, Mothercare faces administration across the UK. The brand, once the go-to shop for new parents and grandparents, has faced a turbulent year, having to close 55 stores in the past 12 months in order to try to rescue the company.

However, that has now failed and the brand is facing an uncertain future in the UK.

UK Market Is Completely Different From Foreign Markets

Mothercare is a leading international brand for parents. Its foreign stores are very profitable, and in 2018 recorded profits of about £28 million. However, during the same period, the UK trading arm made losses of around £36 million. These losses are unsustainable.

The marked difference can’t be easily explained. However, there are several factors that could contribute to the vastly different performances. For instance, the UK brand is facing very tough trading conditions. There have been many new entrants to the market, including supermarkets who offer similar products and often at far lower prices.

In addition, Mothercare UK has faced challenges from online suppliers like Amazon and even Argos who in some cases are offering same-day delivery.

Location, Location, Location

Another problem that has hit Mothercare hard is the location of their stores. High-streets are continuously seeing lower footfalls but higher rents. This has led to many of their town stores from becoming unprofitable. Thomas Cook’s collapse has also been partly blamed on a decline of high-street traffic.

Another problem is the out of town retail villages. These were once popular with shoppers but, as Toys ‘R’ Us found in 2018, many families are not venturing to these locations when most items can be bought online.

Bleak Future For Staff

While trading continues at Mothercare, there is little hope that the brand will remain on the UK high-street for long. This puts about 2,500 jobs at high risk. Most of these are part-time workers but there are a lot of full-time jobs that could be lost, especially at their head office.

This comes at a bad time. Research at the end of October found that there are potentially 85,000 jobs at risk on the UK high-streets alone. The study found there were just under 3% fewer jobs now than this time last year. And this was the 15th successive year where retail sector jobs had declined.