LONDON — Boots is considering closing up to 200 shops in the U.K. in the next two years, according to British tabloids, following on the footsteps of British high street retailers such as Marks & Spencer, Debenhams, House of Fraser and Topshop.
Sales fell 2.3 percent down to 6.8 billion pounds and the company cited the highly competitive nature of the health and beauty category as the reason for a decline in sales, in its latest financial report. Boots also said pharmacy sales were impacted by governmental agencies seeking to minimize costs of pharmaceutical drugs.
But Walgreens Boots Alliance, its parent company, saw beauty sales in 2018 shoot up by 17 percent to an estimation of $1.7 billion.
“We currently do not have a major program envisaged, but as you’d expect we always review underperforming stores and seek out opportunities for consolidation,” said a Boots U.K. spokesperson in a statement provided to WWD.
“As is natural with a business of our size, we have stores opening, closing and relocating on a regular basis. In fact, we’re investing in our stores, last year we completed a huge merchandising project to update our self-selection cosmetics areas in 2,200 of our stores. We are being realistic about the future and that we will need to be agile to adapt to the changing landscape,” the spokesperson said, also pointing to the company’s plans of opening a new Covent Garden flagship and “reinventing its beauty business” in an additional 24 locations.
Earlier this month, the company also launched Rihanna’s Fenty Beauty across its U.K. doors. Last year in September, Boots launched its flagship store on Tmall Global, Alibaba’s B2C platform.
Patrick O’Brien, U.K. retail research director at GlobalData, said the issues the company is facing could be a result of the investment to revamp the stores, being left too late.
“It has taken Boots a long time to address the mid-market squeeze that has wrought so much damage to major multichannel retailers. Like Tesco and M&S it has actually been in this predicament for years, but unlike them, it has done little to address the issue until very recently, and now we have to wonder if Boots has left it too late to halt its market share decline,” O’Brien said.
According to O’Brien, shoppers are choosing to shop at discounters such as Aldi, Lidl and Savers, who have been edging into the health and beauty market.
“Long-term lack of investment in stores have become more noticeable to shoppers and its dated approach also extends to pricing, where multi-buy promotions and a generous loyalty schemes have made its shelf edge prices uncompetitive,” he added.