After it was revealed last week that Boots suffered another big fall in sales during the latest round of pandemic-related restrictions, an industry analyst has suggested that the retailer needs to focus on differentiation to combat competitors gaining momentum in the sector.
Mahya Agorlou from GlobalData said: “Covid-19 has also encouraged consumers to transfer their health & beauty spend to grocers, something warmly welcomed by the supermarkets. Sainsbury’s, for instance, has adapted floor space to incorporate 134 beauty halls and 48 wellness hubs offering over 1,000 health focused products. Hence, there’s now an increasing level of urgency for Boots to keep up with grocers in terms of look and feel. Boots’ tired-looking stores have long been criticised and, with additional pressure from other channels, Boots will find it increasingly difficult to justify such a large store portfolio as retail emerges from the pandemic.
“Furthermore, as other operators look to take share of the more consistent pharmacy market (most notably Amazon UK’s recent trademarking of ‘Amazon Pharmacy’), Boots must ensure its health & beauty retail proposition remains competitive, on price, range, and fulfilment options.”
Agorlou suggests that despite these challenges, Boots has an opportunity to poach premium end beauty consumers from ailing department store chains which have been closing stores in recent years.
She said: “Boots, due to the portfolio of brands it stocks from everyday to premium cosmetics, is better placed to lure ardent beauty shoppers versus its direct high street competitor Superdrug and other grocers; however, it must act swiftly and address the ambience and experiential element of its stores if it is to strengthen its appeal.
“Boots can also protect market share through quicker reaction to changing consumer demands – particularly in sustainability. GlobalData’s January 2021 consumer survey revealed that 81% of consumers consider the sustainability and ethics of a retailer when shopping for health & beauty products, yet seemingly the issue remains low on the list of priorities for many beauty players. With the physical estate of department stores (such as John Lewis) dwindling down, now is an opportune moment for Boots to become a leader in this space through focus on initiatives such as recycling schemes and supply chain transparency.”
NAM Implications:
- Opportunity for suppliers to propose ‘revive-Boots’ initiatives
- …that will focus on attracting department store customers
- …and winning back pharmacy custom that had migrated to single-trip grocery
- Both types of initiative requiring delicate positioning, obviously…!
