Retailers must keep customers and pricing at the centre, but trying to be the cheapest if you are not selling in Primark volumes is “a mugs’ game”, warned Mothercare boss Mark Newton-Jones.
Speaking at Drapers Next Generation event in London today, Newton-Jones said the four key pillars for business success are product, pricing, presentation and service, and retailers that fail have usually lost sight of these and their customers.
He said: “Most things in retail are common sense as the customer doesn’t think in a complicated way. If you design or produce anything that’s in any way tricky it won’t work as the customer doesn’t think that way. We are customers ourselves so we can look at things and say ‘Will it work?’ So it’s all grounded in common sense.
“Every business that’s broken that I’ve walked into has forgotten one thing – the customer. They haven’t produced the product, pricing, presentation and service for the customer. If you can say I am better at those four pillars [than competitors] in your field, you will win.”
He added that pricing has to be right for customers, warning that “trying to be the cheapest is a mugs’ game”. “It just doesn’t work unless you have huge volumes going through the business like Primark. We are about quality, style and value for money, not the cheapest.”
He said Mothercare has now increased its pricing and quality architectures to make it mass-market but aspirational. The turnaround of the baby and maternity retailer’s UK operation was demonstrated today as it recorded a 1.5% rise in total UK sales during the fourth quarter and saw its UK like-for-likes increase 5.1% during the 11 weeks to March 28.
Newton-Jones, who joined Mothercare on an interim basis last March before becoming permanent, went on to say he knew the business could be turned around because “the DNA was really strong and it was still massively trusted as a brand name”. He said it is the third most trusted business in the UK behind Marks & Spencer and John Lewis.
“The business wasn’t broken beyond fixing, as it had the desire still from the customers.”
He added Mothercare had become “confused” about who its competitors were and had dropped prices to better compete with the likes of George at Asda and Tesco F&F, but he warned the market wasn’t big enough for everyone to do the same. He said customers would have bought the product at a higher price, but the business had lost its confidence.
It had also forgotten that it was number one in the market and was not seeking exclusivity from suppliers. “It wasn’t leading the market, it was following,” he said.
On Black Friday discounting he said Mothercare “absolutely, categorically will not be taking part” because the best two weeks of trading in the year are the last week of November and first of Decmeber. “It makes no sense to me to discount in that period.”
Tthe scenes of people fighting over products last year “made me feel embarrassed to be a retailer”, he added.
Newton-Jones predicted that a big opportunity for Mothercare would be international stores and online growth, since currently 30% of turnover in the UK is online, but internationally it is just 1.5%.
International store growth opportunities he highlighted are in countries like China, where it already has 96 stores but has the chance to grow this to “a few hundred”, as well as across South America, North America and Scandinavia.