"As technology within the retail sector continues to improve, stores have progressed from physical channels to digital and the number of stores on the high street has continued to decline."
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As technology within the retail sector continues to improve, stores have progressed from physical channels to digital and the number of stores on the high street has continued to decline. Several well-known UK brands have gone into liquidation and closed down, with Mothercare becoming the latest in a long line of retailers to meet this fate. In this article, we will analyse how the retail landscape is changing and give insight into the difficult times that have led to the closure of many of our favourite high street stores.
Store closures and job losses
Founded in 1961, Mothercare was a household name in the UK. 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.
The remaining 79 Mothercare branches in the UK will be phased out after owners failed to find a buyer for its UK 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.
The tough retail landscape
During the last financial year, Mothercare reported losses of more than £36.6 million. This, along with excessive rent bills, wage increases and booming business rates increased the company’s outgoing expenses.
Mothercare was already in the middle of a CVA process and had closed 55 stores across the country. 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.
Insolvency Director Chris Horner for 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”.
There are widespread losses across the entire parenting and pregnancy sector, with Mamas and Papas also reporting profit losses for the second year in a row.
Over the past seven years, the number of UK high street shoppers has dropped by 10%, as an increasing number of well-known brands struggle to keep up with the tough retail landscape. Shopping habits are changing, and by failing to acknowledge this the consequences for a business can be difficult to salvage.
