Alliance Boots, owner of the Boots pharmacy chain, is taking another hard look at the U.S. market.
This story first appeared in the November 12, 2010 issue of WWD. Subscribe Today.
The company first began to import a number of its beauty lines here more than six years ago, through exclusive partnerships with both Target and CVS Pharmacy.
It parted ways with CVS in early 2010, and is currently drafting plans to amplify its brand equity among U.S. consumers.
As a solid first step, an offering of Boots’ beauty brands — No7, Botanics and Mediterranean, to name a few — is sold on Drugstore.com and across the Target chain, where 300 doors are outfitted with Boots beauty advisers. In fact, No7 Protect & Perfect Intense Beauty Serum is currently one of the top-selling skin care products in Target, according to Boots.
But despite years of speculation, Boots does not plan to open stores in the U.S., executives said. Rather, the company is content to cohabitate with strong North American retailers.
“Here it is impossible [to open doors]. The market is too concentrated,” said Stefano Pessina, executive chairman of Alliance Boots, during a recent trip to New York, which was part of a multicity U.S. retail tour. “We cannot fight Walgreens or CVS. We would be squeezed.”
He later declared, “The obvious way of expanding [the business] is expanding the product” distribution. As a result, the company is actively seeking new distribution partners. “It’s the best market in the world, even in a time of crisis,” he said.
In addition to the three brands mentioned above, Boots also sells the following beauty ranges here: Botanics Organic, Boots Original Beauty Formula, Hawaiian Islands, Amazon Forest, Time Dimensions and Expert. And more are likely to come. “There is so much knowledge of the British market in the U.S., and we will continue to introduce new brands,” said Steve Lloyd, chief executive officer of Boots North America, which is based in Norwalk, Conn. “We could go beyond beauty to vitamins and include a fantastic range.”
Boots has employed a similar strategy around the world, forming alliances to extend its reach, which now spans more than 3,250 doors.
For instance, in May, the company formed a partnership with Procter & Gamble Co. to distribute its Boots Laboratories treatment brand through Italy’s pharmacy channel. “If this works, we could do it elsewhere,” said Pessina. In the U.K., where the brand is ubiquitous, the company aligned with Waitrose supermarkets, where Boots runs a number of pharmacies. Boots also operates pharmacies in Carrefour in Thailand.
Boots has no designs on operating pharmacies inside U.S. retailers — not yet, anyway. Pessina said, “We have not yet gotten to this point, but we are open to it.”
He acknowledged he is baffled by the amount of time it takes to fill a prescription in a U.S. pharmacy. “What we find is that it is quite strange that you have to wait 20 to 30 minutes to have a prescription filled,” he said, adding Boots has whittled the process down to 2.7 minutes. “And we are still not satisfied.”
The company, which generates about 75 percent of its sales from the health care side of its business, has a network of 7,000 pharmacists, said Ornella Barra, a pharmacist and ceo of the Pharmaceutical Wholesale Division, a role in which she oversees the health and beauty care sector.
Boots is intensifying its sights on U.S. expansion after investing heavily in its store base abroad. Pessina said the company invested 1 billion pounds, or roughly $1.6 billion at current exchange, to revitalize the stores primarily in the U.K. and finished that process in the past year. It included the rebranding and refurbishing of around 1,000 stores from Alliance Pharmacy to “your local Boots pharmacy.” Boots currently has approximately 2,500 doors in the U.K., and generally opens about 30 stores a year, according to the company.
Pessina said, “Now we are thinking about the future.”