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The Drapers Interview: How Mountain Warehouse hiked up its sales

Founder Mark Neale explains why more and more British families are heading for the great outdoors – clad head to toe in Mountain Warehouse gear

Aw mark neale mountain warehouse 190r

Aw mark neale mountain warehouse 190r

“I went to Glastonbury this year, for my daughter’s birthday,” says Mark Neale, CEO and founder of outdoor brand Mountain Warehouse. Knee deep in the Somerset mud, he found himself standing in front of the festival’s Pyramid stage, drenched by rain and surrounded by festival revellers sporting jackets, backpacks, and waterproofs created by the brand he founded back in 1997.

“There were literally hundreds of people standing around me wearing Mountain Warehouse gear,” he recalls. “I’m never going to be standing on the stage belting out a rock anthem, but that came pretty close.”

The mud-caked festival seems a fitting excursion for the founder of what he calls the UK’s biggest outdoor lifestyle brand, and his rock star moment seems well deserved. Since opening its first store in Swindon in 1997, Mountain Warehouse stores have been popping up in “outdoorsy” towns across the UK and worldwide, such as Whitby, Keswick, and Chester, and, for the past four years, Mountain Warehouse has reported record sales increases.

There was an opportunity for our activewear with people who weren’t typical Mountain Warehouse customers: who were younger, female, more urban

Last week, the brand opened its 200th UK store in Exmouth. This takes it to a total of 250, which includes 50 international stores across Poland, the US, Canada, Ireland and Germany. The brand’s new venture, activewear label Zakti, which launched November 2015, is also thriving, a kidswear line is set to launch in October and four new stores will open before the end of the year.

Blades of glory

Mountain Warehouse may now be a force in the outdoors market, but it has been a long journey from Neale’s early days in business. After reading physics at the University of Oxford, Neale quit his job in management consultancy aged 25 to start his own business. Before Mountain Warehouse, his first foray into the retail sector was a chain of five rollerblade shops opened in the early 1990s.

“I sold a pair of rollerblades personally to [Sir] Mick Jagger in our Kingston shop,” says Neale proudly. He sold the business but subsequent ventures – an educational toyshop and a greetings card store – did not go to plan, so Neale turned his attention to the outdoor market, opening Mountain Warehouse’s first store in 1997.

From this point the company has continued to go from strength to strength. In its latest set of results, released in May, sales for the year to 28 February 2016 had risen by 28.7% to £141.4m, and like-for-like sales were up 19.3%. Pre-tax profit increased 36% to £16.2m. Its results for the year to August are yet to be announced, but Neale says trading has continued to be strong, predicting double-digit like-for-like sales growth.

Mwh aw16 03 family 0286

Mwh aw16 03 family 0286

Mountain Warehouse Autumn 16

The ethos behind Mountain Warehouse is simple. Neale saw a gap in the market for an accessible, affordable brand catering to the less extreme side of the outdoors market – targeting the “outdoorsy” types who go on long dog walks at the weekend and take the children hiking in the Lake District.

“Nearly all of the big outdoor brands have pictures of a bloke with an ice axe hanging off a glacier, which is great, but our marketing is for everyday outdoor people.” He gestures to the Mountain Warehouse catalogue lying on the desk in front of him, on which a family of four walk through the countryside with their dog: beaming, rosy-cheeked and realistically wrapped up against the cold.

“The word I quite like using is accessible,” he says. “I want my mum to feel comfortable in the shop. My mum is 75, she’s never heard of Gore-Tex, she’s never heard of North Face, she’s certainly not going to spend £300 on a jacket – but she has got £39 to get herself a coat so that she can keep herself dry when she walks the dog.”

 

 

This approach has resulted in some of Mountain Warehouse’s most impressive figures. When the store first started, it sold multiple ranges from different brands. However, following an early test run, it now sells solely own-brand items, “with the exception of Kendal Mint Cake, of course” Neale adds. Overall sales for the Mountain Warehouse brand currently sit at £141.4m.

Similarly, a kidswear collaboration with children’s TV presenter and adventurer Steve Backshall for spring 16 – Mountain Warehouse’s first –  led to kidswear sales rising by 53% in the first 10 weeks of the year. It was so successful a second collection will be released this month.

Group long sleeve tee

Group long sleeve tee

Mountain Warehouse Steve Backshall kidswear

Overseas expansion has also been a strength for the brand. Its 50 overseas stores account for 20% of the business and it aims to increase this to half.

Online makes up a further 20% of total sales, and is another area of focus for Mountain Warehouse. It delivers content and advice through its blog, as well as offering click-and-collect and home delivery on all items.

Strolling through Belgravia close to Mountain Warehouse’s offices, where coffee shop terraces are populated by Lycra-clad yogis, it is easy to see the inspiration behind Neale’s latest experiment with Mountain Warehouse. Launched last year, Zakti is an activewear brand focusing on high-performance sportswear at high street prices. The idea came about thanks to strong sales of activewear in Mountain Warehouse stores, an offer that was first made available began in 2010 as part of the brand’s “weatherproofing” strategy. Net sales of activewear at Mountain Warehouse have risen steadily – there was an increase of 79% for the year to 28 February 2015 and 87% in the same period in 2016.

For Mountain Warehouse, we have a list of 75 towns where we’d like to be

“I thought there was a significant opportunity for our activewear with people who weren’t typical Mountain Warehouse customers: who were younger, female, more urban,” says Neale. “To really make the most of it, we had to create a separate source.”

Zakti currently has four stores and an ecommerce site. Alongside the original in Islington, the brand has shops in Chiswick, Reigate and Summertown in Oxford, locations with high levels of the largely female, urban and active community Zakti seeks to target.

Similarly to Mountain Warehouse, Zakti aims to provide a quality value activewear offering, and Neale believes the brand’s competitors rangie from H&M and Superdry to Nike and Adidas. Zakti prices range from £15 for a basic yoga vest to £28 for neon leggings and £150 for a waterproof, breathable ski jacket.

With the launch of Zakti, Neale is tapping into a lucrative and growing market.

Andrew Hall, analyst at Verdict Retail, believes Zakti’s combination of performance technology and fashion-focused design means they are well placed in the current market: “Activewear is definitely a growing market and what Zakti have done is really identify the niche where they can perform well. It’s increasingly popular and different retailers are approaching it in different ways. Fashion players like Next, H&M and Primark have introduced it in a very fashion focused way, whereas sports specialists like JD Sports have used their expertise to stand out from the field.”

Although Neale declined to give exact figures, he describes himself as “quietly confident” with Zakti’s performance. Since launching in November 2015, Zakti has expanded into menswear, and a collection of kidswear will launch in October. Four additional stores will also be opening for the brand before the end of the year, in the US as well as the UK.

Zakti aw16 29 kids 2277

Zakti aw16 29 kids 2277

 

While Mountain Warehouse and Zakti continue to grow – online, internationally and in UK stores – Neale has ambitions to expand further: “For Mountain Warehouse, we have a list of 75 towns where we’d like to be.” His medium-term target is to have 300 UK stores, and for international to form half of the business – meaning an eventual goal of 600 stores globally.

“But we’re not in a particular rush for that,” he explains. “It’s much more important to get the right shop”. His current wish list includes a store in Betws-y-Coed, a key location for Snowdonia National Park in Wales.

As Neale continues to test new directions for the business, while Zakti begins to flourish and overseas and online sales grow for Mountain Warehouse, there is no sign that the brand’s momentum will slow any time soon, a fact Neale appears to relish.

“If you think about it,” he says, “we’ve got quite a lot on at the moment really.”

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