Mothercare throws baby out with bathwater

There are enlightened individuals in every retailer in the land who will recognise that the journey from simply running stores to operating a seamless multi-channel business is very painful and extremely long (and getting longer it seems).

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It’s what enlightened retailers hit

What it also requires is support and commitment from the very top. The big problem here is that there are far too many examples of the ‘top’ simply not understanding it or failing to grasp the enormity of the revolutionary change engulfing them.

The appointment of Simon Calver as CEO of Mothercare from Lovefilm almost two years ago was a move that signalled a possible change in thinking at the top of retailers. It represented a move away from appointing pure trading, gut-instinct type, retailers to bringing in people with digital skills.

Sadly this particular example has had an abrupt ending with Calver tending his resignation this week. In attempting to rid the business of its out-dated practices and systems he finds himself heading out the same exit.

We can only assume the chairman Alan Parker and Mothercare’s senior shareholders had had enough and thought Calver had been given enough time to turnaround Mothercare. Maybe we should look to Thunderbirds for a precedent here – Parker was driving  but he wasn’t in charge.

Either way, this short-termism is the fatal mistake that afflicts those at the very top of retailers and the City. Calver’s fate seemed to have been sealed on one quarter’s weak numbers at Christmas!

Let’s get real here. This is not a five minute exercise, in the case of Mothercare it was not even a two-year exercise either. The fact that when Calver took the job half the City thought his task couldn’t be done and the other half thought it was easy says it all really.

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Mothercare on a long journey

This means that those like Calver, entrusted with turning rusty old boilers into shiny multi-channel maidens, face an impossible task. Retail Insider recalls a meeting some years ago with Nick Robertson, CEO of internet poster child Asos, who was bemoaning the City’s lack of understanding of his business. I call this my 240p meeting as that’s where the share price then stood. Not today.

How much has the understanding increased? For the pure plays like Asos and Ao.com clearly something has filtered through about the power of the internet. But for established retailers there remains a serious lack of recognition of what it takes to create a multi-channel business from a stores-based operation.

There needs to be a serious re-assessment of the time-frames required of CEOs at the big retailers. Look at Tesco – only this week Philip Clarke, CEO of Tesco, was going on about how more commitment was needed for it to deliver on its company’s multi-channel aims – and this is a business that has been hard at this task since it started offering online grocery home shopping in the late-90’s.

There have been suggestions that Calver’s failing was that he was not really a retailer. So does this mean that under-pressure retailers like Mothercare will turn to old-school retailers to address their multi-channel challenges?

I’m sure that would have Mr Robertson at Asos and Mr John Roberts, CEO at AO.com (note: they are not father and son) laughing into their spreadsheets highlighting their company’s lofty valuations.

Having digitally-savvy chairmen is a vital ingredient today – to act as a buffer with the City, among other things. This is why the likes of Peter Williams, Brian McBride and Mark Newton-Jones are valued beasts and are getting snapped up as board members of pure plays.

This is great but arguably their expertise is most needed at traditional retailers. There is clearly plenty that the industry could learn from the arguably premature departure of Calver.