Morrisons chasing babywear sales bounce

Growth in the fourth quarter disappoints but Morrisons has one card left to play: could the expansion of its Kiddicare brand save the day?

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013

Morrisons today announced its latest figures: not bad, but not great either. In the last fiscal quarter, the supermarket’s sales grew just 0.7%, down from the forecasted 1.3%. It’s a poor showing after the market-defying 2.4% growth it posted in the previous three months but the best it could do in the circumstances, said Morrisons. ‘In a challenging Christmas period for the consumer, the group has delivered sales growth in line with the market,’ it sniffed.

Despite the supermarket’s pragmatic response to the sales slowdown, there’s no doubt that the pressure is on to add a few more noughts to its takings in the coming quarter. But how?

After all the noise about its new bag - online shopping - last year, Morrisons has gone all quiet on the 'fresh food, online' front. Instead, it has shifted its focus from e-commerce to baby commerce. With Mothercare closing half of its stores, leaving a gaping, talcum-scented hole in the high street, Morrisons has decided to take a gamble on the babywear market.

It acquired Kiddicare, the £37.5m-turnover baby products business for £70m in February last year. Morrisons’ reasoning was clear: squeezed consumers may be rather more prudent with their food shopping, but no one scrimps on toys and clothes for their beloved little ones. Morrisons believes that with a speedy roll-out, strong marketing and Kiddicare's slick back end, it can secure a slice of this lucrative market where other, more established, baby products brands have failed.

First up: a big push through several out-of-town megastores. The supermarket has been eyeing up the 11 - soon to be defunct - Best Buy megastores as prime locations for Kiddicare outlets. The sites are being closed by Carphone Warehouse following the winding up of the ailing retailer last year.

With consumer confidence on the skids, there’s no doubt that diversification is a smart strategy. Mass discounting hasn’t delivered the sales growth that supermarkets need – as evidenced by Morrisons’ figures – so it’s time to try a new tack. But only time will tell if the babywear business will grow up to be a money-spinner.

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