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Mountain Warehouse CEO: sustainability will overtake in-store experience

The ‘death of the high street’ and ‘retail is changing’ narrative may be somewhat tired, but it definitely isn’t disappearing from the boardroom table or conference agenda anytime soon. That said, a quick look at the wider landscape, away from the headlines dominated by Debenhams, House of Fraser and Arcadia, and you can spot a number of retailers on our high streets that are doing quite well. Take Joules, Hotel Chocolat, The Entertainer, and indeed, Mountain Warehouse and you see hope that traditional retail can still succeed from a robust in-store and eCommerce model.

Mountain Warehouse recently reported an increase in sales of 13% to £255 million, while like-for-likes increased 5.3% in its year ending 24 February 2019. Pre-tax profit increased 14% to a record £23.7 million, with its success put down to online and international growth, with eCommerce sales up 23%, now accounting for around 25% of total sales.

Store expansion

The outdoor retailer has benefitted from what CEO and founder, Mark Neal, calls a “relentless focus on value for money”, while trying to broaden its range and stay one step ahead of the customer by introducing activewear products as well as pushing into more casualwear in what the retailer calls its ‘country-to-coast’ range.

This and its popular childrenswear has seen the retailer hit a remarkable 22 years of continuous sales growth. This has allowed Mountain Warehouse to extend its store estate to 350 – 87 of which are outside the UK. In the last financial year it opened 33 new stores, with a further 50 stores planned for 2019 – 20 situated in the UK and the remainder across its international territories.

Sitting down with Essential Retail, Neale explains how he has been able to expand his store footprint by picking up shops which were set for closure – New Look, Woolworths, Blockbuster to name a few – often offering the existing store employees the opportunity to stay on and work for Mountain Warehouse.

He admits how the headlines are much more likely to concentrate on shop closures and job losses: “But of course we come along, [and other retailers], and take some of these shops, employing some of the same people and new people, and you read less about that, because obviously a big chunk of shops closing in one go is a better news story,” says the charismatic CEO, who grew up in the Welsh countryside.

“We took eight shops from New Look as part of their CVA last year, in some towns we’ve been trying to get into for yonks, so it’s not all one direction.”

With a very subtle lilt of a Welsh accent, Neale describes how, contrary to popular belief, he is finding it difficult to recruit employees to man his expanding business: “It’s not completely straightforward to find good people to be shop managers and assistant managers. We’ve got full employment. You might read about all these people losing their jobs when New Look or whoever closes down, but actually, finding people is challenging.”

Neale's first business was selling roller blades
Neale's first business was selling roller blades

Neale, who opened his first store selling roller blades after completing his degree in physics at Oxford, describes how he is pleased not to be competing directly with today’s high-street fashion players.

“Clearly the fashion market is very competitive and that is going through a big shakedown and Boohoo, Pretty Little Thing and Asos are taking a big chunk out of that and I’m quite pleased we’re not in the fashion market. Having said that, there are fashion retailers opening shops – Primark just opened the biggest shop in the world in Birmingham.”

He reasons: “Obviously, some streets are more challenging than others; we’re not opening shops willy nilly, we’re very selective, and we are looking for the vibrant middle class market towns where there’s a lot of life left.”

Experiential technology

While Neale admits the avocado-toast eating millennials who are apparently crying out for experiential retail are not currently his customers, he realises they may grow up to be in the next five to ten years. That said, this retailer is certainly not about to roll out a major in-store upgrade featuring the latest whiz-bang technologies to mimic the likes of Nike’s House of Innovation.

“Maybe I’m slightly behind the trend here, but I think that some of that experiential stuff is a bit overrated, and it’s a bit consultant-type people talking to each other at conferences about the store of the future. It’s all very well spending a lot of money on one store of the future, but what about your 350 other stores? I think it’s the industry talking to itself a bit and certainly where we are, with shops in Skipton, Barnstable, Abergavenny, St Andrews, people just want good quality product at sensible prices.”

Referring to Nike’s House of Innovation, which Neale visited in New York earlier this year, he says: “It’s fantastic, but that’s Nike, with one shop on Fifth Avenue and it’s great for their brand…but does that stuff sell because [the store] looks nice? Is it an effective use of that space?”

Sustainability

But the biggest transformational change coming down the pipeline for Mountain Warehouse – and indeed all retail and industry in general – has to be sustainability. Only very recently has Neale received a number of emails from both customers and employees quizzing him about the retailer’s sustainability efforts.

“We’ve been doing business for 22 years and we want to be doing business 22 years from now"Neale on the importance of becoming a sustainable business

“I’m changing my opinion on this because I have a 14-year-old daughter, and 12-18 months ago I would have thought [sustainability] was similar to experiential retail in that it’s something people are talking to each other about, but at the end of the day the customer doesn’t care. That’s definitely not where we are now and we’re changing a lot.”

Neale describes how, within the last year, Mountain Warehouse has appointed its first head of corporate social responsibility (CSR), planned to roll out LED lighting in its stores, while also making efforts in reducing plastic and packaging – which he admits is very difficult and costly: “We’ve been doing business for 22 years and we want to be doing business 22 years from now, and it’s increasingly apparent that if we don’t do some of those things, it’s a business risk.”

He believes these changes will benefit not only the environment, but his business in the medium-long term, as customers become more serious about choosing to spend their hard-earned cash with sustainable companies.

“Well, my 14-year-old daughter might be in Ambleside, Skipton or Barnstaple, and she’ll be watching David Attenborough and seeing all this stuff on social media and caring about all of this in a way she probably wasn’t two years ago. Whereas, realistically, she’s not going to see one store of the future that we’ve happened to open in a high-profile location.

“It’s the customer at the end of the day – and interestingly, our staff – who are driving this.”

Hygiene technology

Where Neale can see technology impacting the business is operationally. Currently, the retailer has a number of projects and trials running, overseen by his brother and CTO, Simon Neale. These include in-store tablets for stock checking, price changes and reducing queue times, as well as a front-facing tablet being trialled at a store near its Victoria headquarters to encourage customers to enter their email address at the point-of-sale to improve data collection.

Mountain Warehouse has also just finished a RFID trial in three stores as a proof of concept to help offer shorter click & collect periods. The next step is a bigger trial in 50 stores over the next year to analyse the benefits before rolling the technology out across the store estate.

“The stock level inaccuracy is astonishing, although not unusual, it’s amazing how overall the value of stock is very close to what it’s supposed to be, within a percent, but underneath the surface it can be 20% inaccurate. The problem is where the tag has fallen off [a garment] and it’s sold as a grey, but actually it’s a dark grey.”

Neale admits that perhaps Mountain Warehouse was a little behind the times with some of these technology developments, but from a comfortable economic standing, he isn’t in a rush to roll out the right (or wrong) technology, or indeed choose the right (or wrong) store. Shaping a business like Mountain Warehouse takes time.

“And I think time is a really important thing – I’m not a hired-in three-year CEO with a three- year plan to try and get the share price up, so we can take decisions for the really long term and sometimes that’s to do with not doing things, as well as doing things.”

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