Boots fights back using net

By THIS IS MONEY
Updated:

 

Boots is to launch an internet shopping site called boots.com next month as part of a broad offensive to show the City it can maintain its marketing edge despite the threat from discounters.

Its share price has taken a hammering recently, amid concerns that sales and profit margins could be hit by tough conditions on the High Street.

Supermarket chain Asda, now owned by American retail giant Wal-Mart, has cut the price of beauty products and some over-the-counter drugs.

Boots chairman Lord Blyth wants to revive the share rating before he scales down his executive role to make way for chief executive Steve Russell next spring.

As part of the new marketing strategy, the High Street chemist chain is also planning to bring together a number of its healthcare services - dentistry, chiropody, optical care, beauty specialists and fitness equipment and products - in a chain of Boots-branded medical and fitness centres to move into the expanding lifestyle market.

Boots has been greatly encouraged by the success of its first specialist men's store in Edinburgh, where sales have been far stronger than expected.

It is planning to expand this concept into other markets, cashing in on the boom in skin and body care products for men.

So far Boots has refused to be drawn into a wholesale price war with the discounters, preferring to focus its marketing initiative on a range of special offers, across some 250 items, in its stores.

The launch of boots.com may offer it the opportunity, however, to compete more directly on price.

It expects to include on the list of goods available on boots.com products such as nappies, which are uneconomic in its High Street stores, where the emphasis is on encouraging the customer to move upmarket.

Boots believes it is better placed than other retailers to provide a competitive high-quality e-mail offering. It already has a fleet of vans delivering pharmacy items and developed film to suburban, rural and town centre locations.

It believes that the costs and retraining involved in making house-to-house deliveries will be minimal.

Goods will be supplied directly from the company's purpose-built warehouses, in contrast to Tesco, which has chosen to focus its internet sales operations on its super-markets.

Boots shares rose 23p to 606p on Friday, but are still well off the £10.60 peak of a year ago.

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