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
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
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.
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
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
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
’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
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.