Boots starts a revolution

Despite receiving a mixed City reaction, Boots the Chemists has decided to stick to its plan to launch an all-in-one health, beauty and fitness offer.

The launch of the Boots Body360º brand is just the latest expansion into the health, beauty and fitness market for Boots the Chemists, which has widened its portfolio of interests considerably in the past few years.

The £14.5m investment in Body360º is part of the company’s “differentiation strategy” bringing health, beauty and fitness services together in two standalone centres from next January.

Design groups Fern Green and Era are developing interiors for Body360º, which will look to appeal to both individuals and families wanting to enjoy a healthy lifestyle. A selection of treatments will be accompanied by a fitness suite, exercise studio, swimming pool, sauna and spa. The identity for the venture (pictured) has been developed in-house.

Traditionally a high street chemist, Boots has evolved into a multi-brand group. It has launched itself into a variety of sectors, including dental and optical care, chiropody, men’s grooming and photographic services. There are currently 152 standalone and 146 existing in-store Boots opticians; six dental practices, with another 44 planned by next spring; and six chiropody surgeries. Such is the growing impact of operations outside the traditional high street store that Boots is now aiming to generate half its profits through non-chemist items within the next few years.

A new in-store health and beauty format is also being trialed in the Milton Keynes and London’s Kensington High Street outlets this autumn. The format will offer a range of conventional and alternative therapies including osteopathy, physiotherapy, reflexology and weight management.

“This will be the first complete health and beauty experience in the high street, combining products, services and treatments in one place,” says Boots The Chemists managing director Ken Piggott. “We will be able to offer our customers everything from manicures and facials to consultations with homeopaths, osteopaths and herbalists.”

Steve Davies, a senior retail analyst at research group Corporate Intelligence, says Boots’ move into this sector is “quite sensible. The health centre market is booming, but if Boots approaches it from a well-being perspective, as opposed to a fitness perspective, it can add to the service”.

With an ever-expanding international portfolio, Boots is constantly adding to its presence, with stores in Thailand, Holland and Japan currently, and further shops due to open in Taiwan shortly. Boots Healthcare, with main categories consisting of analgesics, skincare and upper respiratory tract products, extends this global reach further, with its £327m market encompassing Europe, Asia, and now South America, following the launch of Strepsils in Argentina last month.

“The global health and beauty market is estimated to be worth £135 billion,” explains Boots the Chemists chief executive Steve Russell. “The strength of the Boots brand in health and beauty enables us to expand existing markets at the same time as we extend the reach of the brand into new international markets.

“We are laying the foundations of a future where we extend our range of health and beauty products and develop into adjacent service markets. We will take the offer overseas and develop ways of reaching customers through new channels. Interest in personal health and well-being continues to increase around the world.”

Though Boots shares dropped 8 per cent immediately after the announcement last Thursday of its annual results to 31 March, Corporate Intelligence’s Davies believes the company can be successful across all areas.

Unlike Virgin, which, under the leadership of Richard Branson, has entered into a variety of sectors, Boots has retained its core focus on health and beauty. However, having established the now-global group in the music industry, today Virgin provides services in air and train travel, car hire and purchase, drinks, weddings and mobile phones, as well as its original music base. Ironically, Virgin’s own foray into the cosmetics market, with Virgin Vie, proved unsuccessful.

“I don’t think Boots is spreading itself too thinly because it has a common theme through all its brand extensions,” says Davies. “The company is renowned for high street health and beauty, but there is a lot of potential to stretch it further because there is lots of trust in the Boots brand.”

Noting the continued growth of supermarkets, he claims they now provide the “main competition” to Boots’ high street outlets. “Boots is noted for the quality of its staff and own-label products, but it has got to extend itself as there is likely to be more and more price competition from that area with the arrival of Wal-Mart.”

John Herbert, managing director of retail design consultancy John Herbert Partnership agrees that Boots’ “core business is under considerable attack from supermarkets.” But, he says it can survive this competition if it “underlines its expertise authoritatively. To be credible is difficult and you need a high standard of staffing,” claims Herbert. “It’s a very good approach, but it needs to actively define its future. In the long run, the success of the high street stores relies on the success of the other ventures. If Boots can underline services which have health ingredients in them and become a community store, it’s a great way for the company to go.”

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