James Moore: Expensive and out of touch - it's child's play to see what's wrong with Mothercare
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Friday 13 April 2012
Put the name "Mothercare" into the search box at Mumsnet, a favoured online hangout for much of the retailer's target market, and it is very easy to see that this is a company with deep-rooted problems. And to identify what those problems are.
The unflattering comments – "Mothercare is to customer service what Katie Price is to natural beauty" is a particularly good example – can be found in no time.
Whether Alan Parker, the executive chairman, has found the formula to fix them is open to question.
Yesterday he was gushing about the chain's "transformation and growth plan". Giving that sort of title to a programme that involves shutting half your stores and firing 700 people is rather like using the expression "friendly fire" for killing your own troops or "minor collateral damage" for knocking off innocent civilians.
To be fair, the City loved it, but then the City does tend to get excited when macho executives try the shock-and-awe approach to fix failing businesses. The trouble is, analysts in their air-conditioned offices live in a very different world to people who take broken bits of plastic from shoddy products into shops only to run into stroppy store managers who refuse refunds.
But it doesn't stop there: compared to supermarkets and online rivals Mothercare is expensive, and its stores are so chock full of pricey products (this includes Early Learning Centre) that they fail a crucial test: it's often impossible to get a pram around them.
Of course, this isn't the first time we've been here with this retailer. Ten years ago it nearly went bankrupt. Ben Gordon appeared to have done a remarkable job in turning it around. But in recent years he became so focused on racking up air miles – Mothercare's international stores are doing ok – that he took his eye off the ball back home.
At the same time his non-executive directors seemed more concerned with doing their best to hide the truly vast sums they were paying him (£5.2m last year, £6.5m in 2010; the details are squirrelled away in an appendix at the back of the annual report) than in asking questions about why the UK operations were falling off a cliff. Mothercare could now serve as a case study for excessive and badly thought out long-term incentive schemes.
Good luck, then, Simon Calver, the former boss of LoveFilm who inherits his mess and will have to implement the transformation and shrink plan when he gets to his desk. He's going to need it.
It does sort of make sense to hire an online guru when you are one of the only retailers whose sales through the internet are declining. Mr Calver likes to talk excitedly about hiring "grade A people", which is fine and dandy until, as Mothercare demonstrates, these people lose touch with the businesses they are supposed to be running.
You don't actually need a grade to see what Mothercare's problems are because you don't need a grade to push a pram. Maybe, as a new father, Mr Calver will have started to realise that.
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