As 2019 comes to an end, it would seem that no brand is safe on the UK’s high streets. The recent closure of the long-established parenting store Mothercare reflects the harsh realities of today’s retail landscape, as the focus continues to shift from physical stores to online channels. This article will examine the reasons behind the loss of some of the UK’s most beloved high profile brands.
Cost cutting
Mothercare was an extremely popular parenting store in the UK which had been operating since 1961. It also operated internationally, with franchises in Europe, Asia, the Middle East, and Latin America. Administrators were called in on Monday 4th November after the company said it wasn’t capable of continuing to trade at a profit.
Mothercare will phase out its remaining branches after owners failed to find someone to take over its assets. Almost 2,500 jobs are at risk within the business, contributing to the striking statistic of over 85,000 retail jobs disappearing within the past year. The number of employees affected by failing companies has experienced a stark increase in the period 2017-2019. While the figure is yet to match the 74,539 that were affected by administration processes in 2008 in the height of the financial crisis, a staggering 42,105 have been hit by the downturn in their roles since early November 2019.
Challenging times
The last financial year saw Mothercare report losses of over £30 million. This, along with excessive rent bills, wage increases and booming business rates increased the company’s outgoing expenses.
The retailer had already closed 55 stores within the UK. The company said: “Since May 2018, we have undertaken a root and branch review of the group and Mothercare UK within it, including a number of discussions over the summer with potential partners regarding our UK Retail business”. These moves came to no avail, and they’re representative of the struggle that many other retailers have attempted to tackle. Brands such as New Look, Homebase, and Carpetright have all sought restructuring plans to try and avoid mass closures, and each occurrence of company liquidation sends the same troublesome shockwaves across the industry.
Chris Horner for voluntary liquidation specialists Business Rescue Expert said: “Sadly, today’s news isn’t a surprise for keen watchers of business and financial news. It also looks unlikely that someone could come along and buy the brand in its entirety without looking to make further cost-cutting measures across the board.
“People can find the same products online for a cheaper price and don’t have to visit the store physically, which can be a difficult juggling act for new parents”.
The parenting sector has faced widespread losses in general, with Mothercare competitors Mamas and Papas reporting heavy losses.
The past decade has seen the number of high street shoppers drop dramatically (falling by almost 10%) as brands find it increasingly difficult to stay afloat. Shopping habits are changing, and by failing to acknowledge this the consequences for a business can be difficult to salvage.
