AGENDA: Boots focus helps revive optimism - Boots is concentrating its efforts on its core strengths in health and beauty. It is also planning to put the space in its range of stores to better use. Sue Beenstock looks at the growing confidence of the high

When Boots’ half-year results are announced on Guy Fawkes’ night, they are unlikely to prompt any financial fireworks, but they’ll nevertheless bring smiles to many readers’ lips.

When Boots’ half-year results are announced on Guy Fawkes’ night,

they are unlikely to prompt any financial fireworks, but they’ll

nevertheless bring smiles to many readers’ lips.



The reason is simple: the high-street retailer, which experienced

unspectacular 8% growth last year, is, according to some analysts, at

last exploiting its huge store space and adopting a more dynamic culture

in Britain’s pounds 9bn healthcare market.



It is three years since the appointment of Steve Russell as managing

director and one year since Richard Holmes became marketing

director.



Insiders say the duo’s impact is about to be felt.



’Russell’s not changed the corporate culture,’ says one. ’He has just

concentrated on our specialisms: health and beauty. Focused on that and

not wavered.’ There was a time in the 1970s and 80s when Boots appeared

to lose its way, with unsuccessful forays into selling TVs, videos,

gardening equipment and pet food.



By contrast, the initiatives announced in the past 12 months have stuck

pretty firmly to Boots’ health and beauty portfolio. This summer saw the

chain move into health and travel insurance with five off-the-shelf

policies, through Royal and Sun Alliance, supported by an pounds 8m TV

ad spend.



It expects to sell 250,000 policies by this time next year. In-store

opticians are doing well and Boots the Dentist is being trialled in the

Midlands with six stand-alone and in-store surgeries.



There are also plans afoot to open a chain of sandwich bars in its 20

largest stores, possibly leading to a series of Boots cafes on the high

street. A home-shopping catalogue came out last year and there are

rumours it could be the first high-street store to go into digital TV.

It is exploring e-commerce and in-store kiosks.



Finally, nine million customers are said to use their Advantage Card on

a regular basis - one million more than expected a year after launch.

Customers collect a point for every 25p spent, which can be put towards

treats, such as health spa breaks, or Boots products.



Launched two years after most supermarkets brought out their loyalty

cards, the Advantage Card is capable of storing and downloading

everything from medical details to shopping habits.



Baby drive



Patient confidentiality means that medical information isn’t yet stored

on Advantage Cards, but it exploited the data for its Mother & Baby at

Home catalogue in March, pinpointing those who had bought relevant

products.



The 148-page book had an initial print run of 500,000, which Boots aims

to increase to three million over the next few years.



However, some believe the pounds 52m Boots invested in the Advantage

Card project has so far amounted to no more than an expensive way of

amassing customer data and a poor way of attracting and keeping

shoppers.



Nevertheless the information will be invaluable. With an average

shopping basket of just pounds 6 compared with a supermarket shopper’s

pounds 75 average spend, the data could be crucial in determining what

their customers want from a large store as opposed to the proliferating

small stores.



’Boots has long had the problem of too much store space,’ says Verdict’s

senior retail analyst, Richard Perks. ’It’s been margin-driven rather

than sales-driven, so it needs to squeeze much more from existing

space.’



The answer could lie in its move to invent itself as a one-stop medical

shop. ’Going into these in-store health businesses is a logical move

which could reap impressive results,’ says Perks, who reckons the

opticians are doing extremely well and talk of bringing dentists and

other health professionals in-store would make sense.



None of that diversity poses a problem to Charlie Hiscocks, the director

in charge of Boots’ account at ad agency J Walter Thompson. ’Our ongoing

strategy is ’look good, feel good’. The fundamental challenge for us is

forging a fundamental health and beauty link to everything Boots does in

future, whether it’s in-store cafes and premium fresh sandwiches, or

in-store chiropodists and male cosmetics.’



There has also been a huge push to expand overseas this year, close to

home with the purchase of Connors Chemists’ 25 stores in Northern

Ireland, making Boots the biggest pharmacy chain in the province; and

further afield in Japan where it will open four Boots Health and Beauty

stores in Tokyo.



It is also opening another 40 shops in Thailand.



It is the behaviour of a confident business, believes Verdict’s Richard

Perks. ’Boots is at last capitalising on the huge amount of trust people

have in the brand,’ he says.



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