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Challenges and changes

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FSB: Did the business take off from there?

RM: No. I almost didn't put out a second catalog because the initial results were pretty dismal. I think I received $3,600 worth of orders from the first mailing. It didn't take a financial genius to figure out that this wasn't a good formula: Spend $10,000, make $3,600. But my husband thought it was a great start, and he had more experience than I did. He was my cheerleader - if it hadn't been for him, I wouldn't have gone any further.

For the second run, I set out all the return address labels from my first slew of orders and called the women who'd sent for a catalog. I must have called a hundred of them - it took me almost a whole week. I camped out in my little office (my bedroom) and I'd ask each one: "What did you like? What didn't you like?"

Looking back on it now, they talked about really obvious things. I had created a black-and-white catalog to save money, but customers couldn't tell what the clothes looked like. So the next one was a combination of black-and-white and color, which was much more expensive but clearly necessary.

I learned that I was putting my catalog out too late in the season, in March. In the apparel industry, spring catalogs go out in December. I learned about sleeve length and weight of fabric - pregnant women didn't want their arms exposed because they all worked in air-conditioned offices. I learned about marketing and how to listen to your customers. These early lessons have very much followed us through the business. We're very focused on customer feedback.

FSB: You and your husband are partners in the business. When did he join the company?

RM: We moved to my hometown, Philadelphia, about a year after I started the company. At that point, my husband sold his shares in his business and retired to write a novel. We moved in with my parents: they lived on the first floor, my company was on the second floor, and we lived on the third floor. Every morning my husband would start telling me all the things I was doing wrong with the business. Eventually I said, "Here's your desk, here's your chair: Stop talking and start doing." We became partners a year and a half after I started the business, and we've been partners ever since.

I feel like my parents were partners, too. My father stepped in and worked full-time on the business for almost half a year when I was laid up after back surgery. My mother helped with the kids. It was fun and horrible all at once. The first three years, we didn't take a salary and we kept dribbling our savings into the company. We kept saying, "What if we go bankrupt? What are we going to do? What about our kids' college savings?" I guess that's why we succeeded. We had no other choice.

FSB: Eventually you transitioned the company from mail-order to retail. Why?

RM: Mail-order for the maternity market turned out to be a bad model. Your biggest asset is your customer list. In our market, there isn't a set customer list - you have a customer for a while, then you lose her.

FSB: What were some early challenges in dealing with retail customers?

RM: We had to acknowledge that each woman who comes into our store is a different person with a potentially different stylistic point of view. Before she got pregnant she may have shopped at Talbots (TLB) or Bloomingdales - she may have been more style-conscious, or she may have been more conservative.

We had to deal with getting this huge assortment of clothing styles into this tiny space. The stores have no back rooms; every square inch is used for display. The way we solved the puzzle was through a rapid inventory replenishment system: When a store sells an item, the next day a new one gets shipped back. The items are shipped from a big warehouse, which is cheaper to rent than store space.

FSB: Eventually you acquired your two biggest competitors, A Pea in the Pod and Motherhood Maternity. How did you deal with owning and running brands that competed against each other?

RM: In the early 1990s we were battling it out - all three stores would be located in the same mall right down the hall from each other. In 1995, we acquired Pea and Motherhood, which gave us the opportunity to clean up the mess. All these brands overlapped, so we reorganized. We designated A Pea in the Pod as the high-priced brand, Mimi Maternity as middle-priced, and Motherhood Maternity as the 'price leader' of the industry.

FSB: Your stock price has dipped in the past few years. Why?

RM: New players entered the market. Maternity is not a market that grows a lot every year. It's been at 1% growth annually for the past few years, so when new companies come in, it squeezes everybody.

The only way to deal with it is simply to get better. We studied the competition and thought, "What's our strength, how can we compete better?"

A lot of our competitors don't exclusively deal with maternity gear - usually, maternity is just one department in a larger store. So we came up with a new retail shop, Destination Maternity, that brings all of our brands together in one store, and sells everything else that a pregnant woman thinks about: accessories, stretch-mark cream, lingerie, outerwear, etc. Today we have 15 Destination Maternity locations.

It's in times of adversity that you really have to think hard - that's when some of the best ideas come. I think that's been true throughout the life of our company.  To top of page

Editor's note: An earlier version of this article described Rebecca Matthias as Mothers Work's CEO; her actual title is chief creative officer. FSB regrets the error.

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