Mothercare, a British retailer, revealed its close discussion with both international franchise and manufacturing partners to modernise and improve its commercial relationships to mutual benefit, with the objective of improving pricing and quality for its franchise partners and reducing financial and operational risk for its manufacturing partners.
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Mothercare has launched a more sustainable and less capital-intensive business model going forward, with effect from the Autumn/Winter 2020 season. This new model results in its franchise partners contracting to pay for products directly to its manufacturing partners, thus removing the timing mismatch it was experiencing with the reduction in its 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,” said in the company’s press release.
On 19th August, Mothercare completed the detailed contractual arrangements for the appointment of Boots UK Limited as its UK and Republic of Ireland franchise partner. This will be for an initial period of ten years and the terms and royalty rates arrangements are commensurate with those of the company’s other franchise agreements.
Mothercare branded clothing will be available in a large number of Boots stores across the UK and Ireland from this autumn with home and travel products (including pushchairs and car seats) available in larger Boots stores, as well as online.
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.
Mothercare also has entered into a new twenty-year franchise agreement with the Alshaya Group.
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“We highly value this long-standing and continuing strong commercial relationship, and we look forward to contributing to an extended period of mutually beneficial partnership growth in the future,” said in the press release.