Retail Titans Unite on Health & Beauty Front

09 July 2001

Boots, the UK’s leading health and beauty retail chain, is joining forces with the nation’s number two supermarket group J Sainsbury in a bid to fend-off competition from Britain’s largest supermarketeer Tesco and Wal-Mart owned Asda – number three in the supermarket pecking order.

The joint venture will initially launch six ‘stores within stores’ at major out-of-town Sainsbury outlets. On offer will be an array of branded health and beauty products alongside Boots’ extensive multi-product private label range. Some stores many also feature a pharmacy. Sainsbury will withdraw all products from these stores that compete with Boots’ merchandise.

The alliance is a defensive measure against aggressive price cutting by Tesco and Asda – especially in the recently-deregulated non-prescription medicines sector.

According to Boots, whose fiefdom is the British high street where it has 1,400 stores, the partnership is a cost-effective alternative to setting-up its own out-of-town infrastructure. It will also, added a spoke, “help us get out of this incessant price cutting”.

The venture is not a precursor to a full scale merger, insisted the spoke, although Boots is expected to sell Sainsbury a number of its high street stores.

News source: The Times (London)