Mothercare launches ‘sustainable’ business model to boost international growth

Baby and children brand Mothercare has confirmed it has launched a “less capital-intensive” business model to improve links between franchise partners and manufacturers.

The new system, which will go live in the Autumn/Winter 2020 season, will see franchise partners paying manufacturers directly for products.

The news comes as the Watford-headquartered firm announces the securing of pharmacy and beauty retailer Boots as a franchise partner.

In addition, Mothercare has entered into a new twenty-year franchise agreement with the Kuwait-based business Alshaya Group.

In a statement this morning the firm commented: “This new model results in our franchise partners contracting to pay for products directly to our manufacturing partners, thus removing the timing mismatch we were experiencing with the reduction in our payment terms and so improving the group’s working capital requirements.

“We believe 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.”