Maternity retail: What do retailers need to know?

Why are we talking about it now?

Online maternity retailer Kiddicare is rapidly expanding its bricks-and-mortar offering after snapping up 10 former Best Buy big box stores last week. The etailer is owned by grocer Morrisons, which has paved the way for the expansion, and a £15m investment in the stores is planned.

How large is the market?

The UK kidswear market is worth about £5bn – infant wear is a £1.5bn market, and toys is worth £2.9bn.

Who are the key players?

While Mothercare has been finding life tough in the UK, it is still the market leader with over 300 stores. Kiddicare has emerged as a force to be reckoned with, particularly after its acquisition by Morrisons last year.

Although predominantly online, Kiddicare does operate one store at its head office in Peterborough, which turns over £10m a year.

Mamas & Papas offers a more premium, targeted range of products. It has 60 stores within the UK. Outside the specialists, supermarkets and online giant Amazon have contributed to price pressures in the sector.

How is the market performing?

It is getting more competitve and pressure is mounting on Mothercare. Its global business is doing well, but domestically it is suffering, and has put plans in place to close 110 in-town stores after it issued three profit warnings last year.

Peel Hunt analyst John Stevenson points out that about 90% of pregnant women in the UK visit a Mothercare store, so for the market leader conversion is a problem.

As Mothercare is closing stores, its smaller rivals are expanding. Kiddicare’s expansion in out-of-town stores pits it directly against Mothercare. Meanwhile, Mamas & Papas aims to open 30 across the UK and overseas in the next five years.

How important is value?

Value is critical if maternity retailers are to attract cash-strapped families, particularly with the stiff competition of the supermarkets and Amazon.

Stevenson says part of Mothercare’s problems are down to its pricing. He notes that Mothercare’s prices last year were “substantially more expensive than John Lewis on a variety of lines”. One buggy was selling for £80 in John Lewis, but for £100 in Mothercare, for example.

But Mothercare is taking action and has been ramping up the promotion of its price-match scheme in an attempt to attract more sales, while rival Mamas & Papas has attempted to attract more consumers with a value offering.