Mothercare unveils new business model

Mothercare has announced the launch of a “more sustainable and less capital-intensive” business model going forward.

The new model comes into effect from the Autumn/Winter 2020 season, and follows “constructive” discussions with its international franchise and manufacturing partners.

The discussions were held in a bid to modernise the business and improve its commercial relationships to “mutual benefit”, with an end-goal to improve pricing and quality for its franchise partners, whilst reducing financial and operational risk for its manufacturing partners. 

The new model will see franchise partners contracting to pay for products directly to its manufacturing partners, removing the “timing mismatch” it was experiencing with the reduction in its payment terms. 

The group said that this new way of working will “ultimately have the added benefits of improving pricing for franchise partners, which in turn should better incentivise retail sales growth and assist our manufacturing partners in reinstating credit insurance for future seasons”.

In its latest update, the group also confirmed the completion of detailed contractual arrangements for the appointment of Boots UK as its UK and Republic of Ireland franchise partner. 

The partnership will be in place for an initial period of ten years, and will see Mothercare branded clothing available in a large number of Boots stores across the UK and Ireland from this autumn, as well as online.

In a statement, Mothercare said: “Boots is at the heart of one of the largest healthcare businesses in the world and Mothercare will dovetail well as the specialist brand for parents and young children in both Boots stores and online.”