The toughest market conditions on record mean supermarkets are having to diversify and differentiate to attract shoppers. Suppliers can help with differentiation if they are minded to offer exclusives on product, promotion or even merchandising. But diversification is a problem for the retailers themselves, who are all wondering what to do with all that space.
So who else spotted this one? Baby goods specialist Mothercare has this month called in the administrators. And while at first sight its demise might not seem relevant to grocers and their pursuit of target shoppers, take another view and things get a little more interesting.
Mothercare fell into crisis because it failed to adapt its operating model in the face of the online shopping revolution, or to create a bond of unbreakable trust with a younger generation of mums and dads, who want to touch a pushchair before then buying it at the lowest possible price, be that in bricks or online.
Grandparents might still prefer to go into a Mothercare store and buy their gifts of a high chair, a cot, baby clothing, nappies and toiletries, but today’s parents just want great products at a great price and with minimum hassle.
Mothercare may be on its last legs in the UK in its current form, but it has a profitable business outside the UK which could become a ‘nice little earner’ (in Euros) for a future owner. What’s more, a grocer could buy the brand name now at a bargain price and integrate some form of Mothercare offer into its bigger stores and online – thus leveraging the brand to attract current, or future, ‘dream shoppers’.
The power of baby-related categories for a traditional grocer should never be underestimated. In these days of mix management, the improved margin on non-food categories is truly meaningful. Nappies, baby toiletries and babyfood are destination categories.
For most grocers ‘dream shoppers’ are young mothers or fathers with one to three children, who do a big weekly shop and lots of additional ‘top-up’ shops. Tired, time starved but highly cost-conscious parents are still looking for a convenient one-stop shopping solution. So they hit the bullseye in terms of most food categories, plus the highly profitable health, beauty and babycare categories, and have a higher propensity to dip into clothing, electrical and other non-food categories.
When you look at supermarket diversification so far, you’ve got Morrisons and Amazon, Tesco and Booker, the Co-op and Nisa, Asda and… oh yes. Now their ‘merger’ has been rejected, either Sainsbury’s or Asda could be the grocer to make the Mothercare ‘opportunity’ their reality. I’d argue it represents an inspired way to access a greater share of the ‘dream shoppers’ they both so desperately need.