NEW YORK — Boots Group plc, the U.K.’s leading beauty retailer and a maker of premium beauty products, has targeted the U.S. for major expansion.
The company, which controls a powerful position in the U.K. market, straddles the class-mass divide in pricing, giving it an undeniable draw with consumers. The firm is boosting its beauty product presence in U.S. retail partners CVS and Target, and by this fall, Boots beauty items will be offered in 130 stores, up from 32, which will give it entry into the key markets of Washington, D.C., San Francisco, Dallas, Minneapolis and suburban New York and Boston. This effort will also help the retailer gather data on how to successfully expand here nationwide in 2006 within these retailers.
The growth looks to generate $10 million in sales of Boots branded beauty products in the U.S. by the end of this year, according to one leading beauty manufacturer. Boots beauty products first appeared in the U.S. in spring 2004 when it inked deals with CVS and Target.
“Following this expansion, Boots should be very clear of plans for a scaled [U.S.] distribution by early 2006,” said Martin Waters, chief executive officer of Boots Retail International for USA and Asia. “Before we go full speed across the USA, [the plan] is to listen carefully to our consumers and make sure we get it exactly right.”
Waters added, “It would be naive to say one size fits all, so [this expansion] is to test a broader spectrum.”
Boots’ plan “is an indication of the continuing blurring of the lines between premium-priced retailers and more mass-priced retailers,’’ said Wendy Liebmann, president of WSL Strategic Retail. “Beauty shoppers in this country are willing to buy the unusual, premium products in mass retail outlets.”
The next challenge for Boots, she said, is “finding the right market for these kinds of products at these price points, as well as where and how far you can take it to be viable.”
With 600 beauty items from a mix of six product lines that offer skin care, color cosmetics, hair care, aromatherapy and bath and body, Boots goes head-to-head with national beauty brands made by powerhouses such as Procter & Gamble and L’Oréal. On a smaller scale, the Boots beauty line also competes with exclusive niche beauty brands, which help retailers set themselves apart from their retail competitor down the street.Boots Retail International, which distributes beauty products globally and operates Boots stores outside the U.K., generated $84.3 million in sales at current exchange rates from more than 400 in-store displays in nine countries and 77 stand-alone stores in Thailand, according to the company’s most recent annual report for the year ended March 2005. Sales grew 19.9 percent during the period. Boots Group LLC operates 1,450 stores across England, Scotland, Wales and Ireland. For its most recent fiscal year, the company generated $8.2 billion in sales.
Waters sees the new expansion as an opportunity to “target the base in the middle” in a market “full of activity. It is a broad competitive set” between “the breadth of brands and prices Boots offers” and other brands, he said.
As the British retailer continues to enter certain parts of America, it has tweaked aspects of its merchandising.
“We have worked hard to improve our on-shelf displays,” Waters said. For each display, consumers will be greeted by a brightly lit space that Waters described as a “beacon of light, full of life and graphics.”
“We developed a physical environment for the brand both different from other displays but consistent with the [retail] companies,” he said. Trained beauty advisers will be at some Target and CVS stores — “like what you would see at a [Boots] in the U.K.,” to educate consumers about Boots products.
The setup for each display includes a 16- to 24-foot wall stocked with Boots products. Some stores also have an oval table containing products, testers, samples and brochures.
One of the newer improvements to shelves is the cosmetics area for the No 7 brand of cosmetics. “It is far easier for the guest to shop within the cleaned-up wall space that is organized within ranges, such as skin care and color,” Waters said.
The most recent addition to Boots’ beauty mix is Detox, a detoxifying five-day or 28-day plan of dietary supplements complemented with salt scrubs, face masks and massage oils retailing from $2.99 to $19.99.
Then there are skin care lines Mediterranean and Eastern, both of which offer body balms, butters, scrubs and washes that are infused with ingredients from Europe and Asia. Products range in price from $4.99 for moisturizing soaps to $14.99 for body butters.Boots’ Sleep line, ranging from $7.99 for balms to $19.99 for starter packs, highlights products that are said to calm and relax.
The Botanics line focuses on the power of plants in skin care, cosmetics, bath and body, hair care and aromatherapy. All of the Botanics products range in price from $3.99 for individual eye shadows to $24.99 for an aromatherapy introductory kit.
Boots’ No 7 brand addresses all aspects of a beauty regimen including skin care, nail care and makeup with prices from $4.99 to $21.99.
Different markets and stores will stock a variety of the Boots products, Waters said, adding, “it all depends on the competitive sets, demographics and how well that store performs” to determine which store gets what.
Asked why Boots had chosen Target and CVS as its American partners, Waters said, “Target is a tremendous retailer and CVS is the leading drug store operation in the U.S and the most innovative in the beauty and skin care arena. We thought there was great potential to pursue a partnership.”
Boots has no plans to launch a retail store in the U.S., Waters said.
“The U.S. drugstore market is very well catered for, [and] Boots’ key message is that we are committed to the partnership we have,” he said.
Waters said he is considering exploring a move into the Canadian and Mexican markets, pending what the outcome of the U.S. project.
Internationally, Boots has its footprint in Europe with the Migros chain in Switzerland, Etos in Holland, Unichem pharmacies in New Zealand and Watson’s drugstores in Hong Kong and Taiwan.
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