Baby products displayed at a Mothercare store in Shanghai. The British retailer plans to open 15 new stores annually. Provided to China Daily

British mother and baby products retailer plans stores in smaller cities to push growth

British mother and baby products retailer Mothercare plans to aggressively expand its business in China in an attempt to cash in on the country's vast baby population and higher purchasing power.

The company intends to set up 15 new stores every year in China over the next few years. That, indeed, is an ambitious target considering that Mothercare debuted in China in 2008 with a store in Solana Lifestyle Shopping Park, Beijing. The company had 11 stores in China, especially in the affluent areas of big cities like Beijing, Shanghai and Hangzhou by the end of last year.

Ann Leong, general manager of Mothercare in China, says that the company is also contemplating expansion in the second-tier cities of prosperous provinces. But that expansion will happen only after the company resolves the logistics issues related to supplies, she says.

"We plan to have stores in second-tier cities this year. But logistics is an issue," says Leong. The British company has set a target of having 26 stores in China by the end of this year.

To achieve this, Mothercare has tailored its business strategy to suit the local market. Unlike the UK, where most of its stores are in the suburban areas, the Mothercare stores in China are in urban centers and cater to mostly high-income consumers.

As part of its growth plan, the company sources some of its products from China. However, the products are still priced higher than most of local brands. Mothercare products are also about 20 percent higher than they would cost in the UK because of local taxes and distribution costs.

That also to some extent explains the rationale behind the store locations in China. "The locations of the stores (in China) are an indication that our products are aimed at the more up-market consumers who are willing to spend more on clothing and other childcare items," says Leong.

In China, Mothercare operates through a joint venture with the Kunshan, Jiangsu province-based Goodbaby International, one of China's largest producers of baby strollers with annual sales exceeding 2 billion yuan (225 million euros). Leong says Mothercare, however, has retained management control at all its Chinese stores.

The British company, of course, is not the only foreign baby care product manufacturer to tap the Chinese market. "We have seen double digit growth in sales during the last three years," says Leong, without revealing any numbers. "We are confident that we can do even better in the future in this big marketplace."