Labelled a “strange beast” by the new chief executive, Seb James, who took over in 2018, the company has a footprint on UK high streets to rival the biggest supermarkets’ reach.
It is also experiencing their pain as competition in the beauty sector ramps up. Meanwhile, its pharmacy business is struggling to cope with cuts to the UK’s National Health Service, which have hit the reimbursements pharmacies would receive for providing drugs. Though it is still in profit, it is diminishing.
“It has this retail business and this pharmacy business – and we either will or won’t succeed in creating a symbiosis between those things that’s long-term sustainable,” James told the Financial Times in an interview.
Yet, Boots’ curious mix has also kept the company afloat, as the pressures on the high street, especially in the beauty sector began to crunch, the need for local accessible pharmacies around the UK has remained steady.
Boots is the second most trusted healthcare brand in the UK after the NHS, James says, and is among the top three most trusted retail brands. Ninety per cent of British people live within 10 minutes of a Boots store, 75% of all women over 15 are active users of the firm’s Advantage loyalty card. The brand commands reach, scale and trust.
“We have some incredible assets at Boots,” he said at an event earlier this year, “but we will not be immune to deep changes in customer behaviour unless we change as well – a lot.”
Beauty, in particular has seen competition arise from old rivals and new competitors in ways that Boots has struggled to keep up with. There is either greater specialisation at a higher price point from international firms such as Sephora (not a competitor, as it is not present in the UK), or from greater competition on price. Executives at the bargain company Poundland joke that stores near Boots outlets are strengthened by the contrast in prices, making the cheaper store appear far better value.
That physical footprint and the sheer mix of products within it has spurred James to pursue radical change, often looking to brands like Sephora for guidance. It has, as a result, expanded its range, pursued a higher price point, and recruited high profile brands like Rihanna’s Fenty Beauty for a limited number of flagships to keep up demand.
But the changes required to solidify its place in the beauty market for the future are great and radical. The brand is now investing heavily in its e-commerce offering in a way that leverages loyalty data, revamps the search engine, and a major redesign.
Sourced from the Financial Times, WARC