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Clemmie Meadon
26/6/2024

How Boots is Adapting to the Challenges of 21st Century Retail

This article summarises the recent podcast episode with Seb James, current CEO of Boots and former CEO of Dixons Carphone (now Currys), delving into Boots’s history, current strategy and the changing retail landscape, both in the UK and internationally.
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Overview of Boots in 2024 

Boots has been a trusted brand for over 175 years, with over 50,000 employees, 2,000+ stores, 4,000+ pharmacists and 85% of the population living within 10 minutes of a store. Boots was established in 1849 in Nottingham, where it is still based to this day

Boots is part of Walgreens Boots Alliance, which was formed when Walgreens bought a 45% stake in the firm in 2012.  Interestingly, this wasn’t the first time the chain (partially) fell into US hands; in 1920 the firm was sold to the United Drug Company (now called Rexall), but was sold back to the Brits in 1933 in the wake of the US economic depression.

Whilst Boots today is most well-known by Brits for its high street presence, it has had a pioneering & world-changing impact on medical research & drug production, which it diversified into during the Post-WW2 era. Notably, whilst working at the Boots Research Department, Dr Stewart Adams discovered Ibuprofen. After 16 years of research & 20,000 experimental compounds later, Boots launched the drug in February 1969. Today, 20,000 tonnes of Ibuprofen are produced annually.

In addition to its health & beauty division, Boots is a leading pharmacist, dispensing millions of life-saving & enhancing prescriptions every year, in close co-operation with the NHS (the UK’s public health service). It employs approximately 4,300 pharmacists, many of whom are now taking a more active role in diagnosing & treating certain conditions under the Pharmacy First scheme, thus potentially alleviating pressure on stretched NHS services. 

With 75% of British women using a Boots Advantage Card, it also has the ability to obtain data on spending habits and medical issues that occur nationally, giving it a valuable revenue source beyond direct sales alone (in return, consumers do enjoy one of the country’s most generous retail rewards programmes, equivalent to 3% cashback for every £1 spent). 

Boots’s sprawling 279-acre headquarters in Nottingham, UK, where it has been based since 1849 (Image courtesy of Boots UK Ltd.)

Why is Boots called Boots?

Initially founded by John Boot in 1849, Boots became successful based on the model of providing high-quality products, while being affordable for the consumer. Its first herbalist-based store opened in Nottingham, with the aim of providing homemade remedies of ‘medical botany.’ As this household name persevered into the late 19th century, John Boot’s son, Jesse, saw the increasing prices of these remedies, bought in bulk, reduced profit margins and was able to provide medicines at a more affordable price to the consumer.

Who Owns Boots and Who is the CEO?

Whilst being owned by Walgreens Boots Alliance, Inc, a healthcare, pharmaceutical and retail leader, Boots is run by CEO Seb James, former CEO of Dixons Carphone. Having attended Magdalen College, Oxford, Seb pursued management consultancy at Bain & Co. before going on to obtain an MBA from INSEAD.

How Boots is Adapting to Online Competition & Other Trends

In this episode, Seb James speaks about the challenges faced by online competition between Boots and other large companies such as Amazon, and discusses their strategic priorities.

Seb further adapts on this by stating that in order to combat these challenges one must find strengths and forms of revenue that set their company apart from these online companies. 

Social media apps such as Tiktok and related social media influencers have led to a reduction of traditional buying habits. With 1.1bn active users, TikTok Shop already has a highly engaged and youthful audience, thanks of course to its pioneering social vertical video product. In 2022, $4.4bn of sales were made on TikTok Shop in the UK & SE Asia, a figure that analysts expect to grow substantially over the next decade

“The way people are discovering products is changing completely”

Seb states that a way of keeping up with consumer spending habits is to, 

“have the products which are hot on the shelf right now”

instead of attempting to influence these trends. 

Boots’s strong UK own brand product plays to these market trends, with UK consumers shifting to own-brand products amidst the cost of living crisis, cutting out the ‘brand premium’ that exists with third party products. Boots’s heritage, reputation, history, regulatory/legal & UK base also gives it a defensive moat against e-commerce competitors such as Temu or Ali Express

The strategy has worked as of mid-2024, with Boots reporting retail sales growth of 5.9% for the three months to 29 February 2024 (the vital Christmas sales period), on top of a 16% sales increase on the prior year quarter (Boots use a non-standard quarterly reporting system to account for seasonality, in line with some other retailers).

Are Boots Closing their High Street Stores?

In this episode, Seb also refers to the predicted death of conventional retail high streets (or the ‘main street’, for US readers) due to the rise of companies such as Amazon. Footfall into high street stores remains below pre-COVID levels leading to the disappearance of national chains from the high street and town centres. Moreover, this has led to a “community vacuum”, leading to crime and fear in towns.

Seb, however, predicts that high streets will see a regeneration as both landlords and local authorities adapt to offer more reasonable rents and rates. The issue is, however, that this regeneration takes time, with multiple competing stakeholders across both the private and public sector.

He cites the high street in Deal (Kent, UK) as a good example of retailers, landlords and local councils working together to regenerate the town centre, thus encouraging shoppers & boosting sales of both small businesses and national chains like Boots. 

“If you take a high street like Deal in Kent, which is a near where I live, that high street was a bit of a dump for 10, 15, 20 years, and is now regenerating as landlords ask for reasonable rents, as the local authority asks for reasonable rates, and small businesses are springing up; the butcher, the baker and the candlestick maker all coming backs…and the high street is really beginning to to come alive again.”

Deal in Kent (UK), where friendly collaboration may have led to mutual shopper & business success! (Image credit: Shutterstock/Oszibusz)

Can Pharmacies Alleviate Pressure on the NHS?

Government run & funded healthcare systems, such as the UK’s NHS, are under immense pressure. This is in part due to high demand as a free-at-point-of-use service, population growth as well as a range of other factors. 

CEO of Boots, Seb James, sees Boots as a partial solution to this problem, supporting the government’s Pharmacy First policy. Thousands of Boots pharmacists are now diagnosing and treating common conditions (such as sinusitis and impetigo), taking pressure off NHS primary care staff. 

“Both health administrations and the NHS have started to recognise that something has got to change.”

By Clemmie Meadon, who has completed an internship at MMP. Clemmie is currently a third-year student at Durham University studying Health and Human Sciences. She’s also completed a number of other internships around her studies, and has spent 1 year working on the retail frontline around her studies!

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Seb James
6/20/2024
6/20/2024
Retail in the 21st Century: Seb James, CEO of Boots, Discusses Health, Technology, Data and the Customer

In a world where competitive survival has become rarer, one UK retail institution has survived for 175-years, remains a trusted brand, with over 50,000 employees, 2,000 stores and 4,000 pharmacists.

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June 26, 2024
June 26, 2024

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