Boots yesterday played down claims that it is exploring the closure of over 200 stores in a bid to boost its performance.
An earlier report by Sky News had stated that sources close to the health & beauty retailers’ parent company Walgreens Boots Alliance (WBA) had told it that the company had placed the outlets under review for possible closure during the next two years.
Whilst decisions had yet to be made about the stores under scrutiny, the source acknowledged that a significant number were likely to be shut. The insider said that some of the affected sites would close at the expiry of their leases, whilst others would be part of a consolidation in towns which currently have two separate Boots outlets.
Responding to the report, a spokesperson for Boots stated it does “not have a major programme” of closures envisaged.
However, they added: “As you’d expect, we always review underperforming stores and seek out opportunities for consolidation… We are being realistic about the future and that we will need to be agile to adapt to the changing landscape.”
Boots currently operates around 2,500 stores in the UK, with it currently working to modernise its product offering and stores to win back shoppers after a difficult few years.
Recently filed accounts for Boots UK showed that the chain had suffered a significant fall in profits last year as weakening sales and pressure on margins to remain competitive took its toll.
WBA stated earlier this year that it has already been taking “decisive steps” to improve performance in the UK as part of a wider group restructuring programme that aims to trim costs by more than $1.5bn by 2022. In February, it was revealed that up to 350 jobs were at risk at Boots head office in Nottingham to create a “more agile” team.
Commenting on the possibility of store closures and the group’s overhaul plans, Patrick O’Brien, Retail Research director at GlobalData, suggested it could be too late to address Boots’ decline in market share.
“It has taken Boots a long time to address the midmarket squeeze that has wrought so much damage to major multichannel retailers in other sectors such as food, fashion and department stores. Shoppers have been trading down to discounters, and trading up to higher end retailers for more expensive treats and gifts,” he said.
“Like Tesco and M&S it has actually been in this predicament for years, but unlike them, it has done little to address the issue until very recently, and now we have to wonder if Boots has left it too late to halt its market share decline.
“Long term lack of investment in stores has become more noticeable to shoppers, and its dated approach also extends to pricing, where multi-buy promotions and a generous loyalty scheme have made its shelf edge prices uncompetitive with discounters such as Aldi, Lidl and Savers, who have all been eating into its market share in health & beauty.”
NAM Implications:
- In the same way as unprofitable products are either re-negotiated or delisted…
- …so too unprofitable stores are either re-negotiated (rents) or closed.
- Opportunities for NAMs to help improve profitability of ‘problem’ outlets, on a fair share basis…
- …if possible…
