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Boots seeks the cool factor with new strategy as full year results disappoint

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Boots UK needs to rethink its tired stores to compete
Boots UK needs to rethink its tired stores to compete
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Boots UK is latest high street retailer to post a decline – now is the time for it to look to become cool, experts say

Another day and another disappointing set of results from a High Street retail stalwart. This week, Boots UK released its full year figures for 2017/18, showing revenue dropping by £158m to £6.79bn, while operating margin declined by 1.5% to 5.8%.

 

The results reflect how Boots UK – part of the massive Walgreens Boots Alliance – is, like many other well-known retailers, struggling to stay relevant amid continued discounting from other stores and the move by shoppers to finds the best price online.

 

While Boots is a stalwart of the high street, the brand is in need of modernisation to drive appeal among younger shoppers and build its future customer base – particularly crucial amid the rise of online pure-plays, and rival Superdrug’s strong youth engagement.

 

Boots’ Advantage Card loyalty scheme is widely known as the best points system on the high street with four points awarded for every £1 spent. While there were 14.4 million active users at the end of August 2018, Boots has shed 200,000 active users in just 12 months.

 

Indeed GlobalData’s 2019 How Britain Shops survey shows 41.9% of UK health & beauty shoppers purchased from Boots in the past year, down 7.1% from 2015. This highlights Boots’ shopper desertion with many consumers prioritising the discounters for cheaper branded toiletries amid squeezed budgets. To better cater to price conscious shoppers, Boots must ensure its prices are competitive and that promotions offer real value.

 

‘‘UK health & beauty market leader it may be, but Boots’ performance remains turbulent despite the overall resilience of the sector, and its plight echoes M&S’s long-term decline in the clothing market, with a significant strategic overhaul required to reverse the damage,” says Kate Ormrod, Lead Retail Analyst at GlobalData.

 

“Boots UK CEO Seb James is coming out fighting, with grand plans to bring the cool factor back to the business – starting with Rihanna and her inclusive Fenty Beauty brand, which is now available in selected stores,” Ormrod continues. “Boots is introducing a total of 20 new beauty brands within six months – helping to close the gap with the online pureplays where brand choice is far superior. Via range expansion, Boots has opportunity to attract more premium shoppers and beauty aficionados, especially given department stores’ ongoing struggles.”

 

According to Ormrod, the specialist will also revamp 24 of its beauty halls this year, with product and brand discovery central to the new format to enhance the instore environment and entice spending.

 

“This is undoubtedly worthwhile given that stores have felt unloved for some time, however this will impact just 1% of its store estate, muting its ability to fully revitalise its brand image – making a swift rollout of successful elements essential.,” she says “The health & beauty specialist had ample opportunity and impetus to kick start a new strategic direction years ago so while its new strategy is sound, Boots could have been reaping its rewards for some time.’’

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