Comparing Superdrug and Boots 1

Running head: Comparison of Superdrug and Boots

Comparison of Superdrug and Boots

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ALLIANCE BOOTS GROUP

BACKGROUND

Alliance Boots ranks as one of the largest high street retailers in the UK. The company

was founded in 1849 by John Boot and named “Boots”. After an acquisition of Alliance

Unichem PLC by the Boots Group PLC in 2006 it was renamed as “Alliance Boots”. Alliance

Boots Limited is the leading pharmacy-led health and beauty retailer. The British based

pharmaceutical wholesaler has a total of 40% market share in UK. The company is the leading

pharmacy chain in Britain with a 17% market share. The Boots Group operates three principal

businesses: Boots Retail International, Boots the Chemist and Boots Opticians. These businesses

are supported by The Boots Group’s. It is the third largest pharmacy chain in Europe and

employs over 110,000 staff. It’s operating in more than 20 countries around the world including

associated and joint ventures. The Headquarter of Alliance Boots Limited is in London, England.

The company has acquired this position over a time period of 150 years. They focus on

personal care, healthcare and cosmetic products and medicines; some stores also feature photo

processing, a range of electronic equipments, beverages and sandwiches. Boots has opened out

of town stores to compete with supermarkets located out of town. The company operates more

than 3,200 health and beauty retail outlets of which over 2,900 have a pharmacy. The Boots is a

clear market leader in pharmacy in the UK, Norway, Ireland, Italy, Russia, Netherlands and

Thailand. They provide an innovative range of wholesale distribution for the pharmaceutical and

healthcare industry. They supply healthcare products and medicines to over 135,000

pharmacies, hospitals and doctors in 15 countries. The company aims to provide customers with

a one-stop shop for all their well-being needs as they offer the services of opticians, beauticians
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and dentists etc. the company is also planning to open a chain of up market beauty shops which

is called Pure Beauty and have launched Boots branded gyms. The company held on to its

market share despite of the intense competition from supermarkets, with their new low-prices

strategies the Boots retailer has held on to its share in the market. The company aims towards

offering people premium ranges that they can’t get anywhere else.

STRATEGIES

 The strategy of the Boots’ has been to create a shareholder value and to

become a modern, efficient and competitive health and beauty retail business.

 Boots has sought to refocus on its core health business.

 To offer better value for its customers by reducing prices on its products.

 The company believes in differentiating its products from those of its

competitors by growing its own-brand and exclusive product ranges.

 To make their functions more efficient by investing in its supplies and

information technology.

 To invest in its pharmacists training to offer expert customer care.

 To open new stores and improve their conveniences and accessibility.

 The strategy for group is to grow two core business activities in existing

geographical markets. The company believes that they have the capabilities to achieve this

target with the customer insights, brand image, financial strength and productive people.

 The company has the resources and the financial strength to execute

strategy of moving profitably into fast growing new international markets.

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 They are committed to delivering cost effective products and reducing

corporate costs.

MARKETING STRATEGIES

In their marketing campaign, both the rivals Superdrug and Boots directly hit each other.

Last year Boots complained that the price comparisons by the Superdrug were unjustified and

protested against the misleading comparison claims. Boots claimed that not only were some of

the prices used were incorrect but also the definition of the everyday health and beauty items

were misleading. The company claimed that Superdrug had included snack food lines, film and

battery products in their list of everyday health and beauty products, which can not be included

in the everyday product line. Super drug also claimed that a discount of up to 70% was offered

on certain fragrance lines but it was proved wrong by Boots that none of the fragrance could be

obtained with this much of discount. According to the Superdrug, price comparison was

performed by an independent agency. They admitted their mistake and said that for future ads

there will be improved checking procedure. (Bird, K., 2008). Boots aims to become a world-

class pharmacy-led health and beauty retailer. So the marketing and the trading teams are

brought together under a joint commercial function. They created a number of marketing

positions which will develop its product and brand. Restructuring includes the strategy to build

up the customer loyalty and the commitment of its teams which will help differentiate Boots

from rivals such as Superdrug. (Donnelly, A., 2008). The major competitor of the Boots, which

is Superdrug, is more vulnerable to the supermarkets’ aggressive price-led strategy. There is a

much price difference in both the retailers and Superdrug is preferred by the people who cannot

afford high priced brands so they opt for Superdrug. Although these people are well aware of the

quality products offered by the Boots but Superdrug is more feasible for them. The company has
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the history and brand name possessed by no other retailer in the UK and the Superdrug cannot

compete Boots in its brand name. The company has expanded into everything and now it is

going back to its health and beauty retailing.

ADAVANTAGE CARD

Advantage Card offered by the Boots is basically a loyalty card. Boots Advantage card

has 15,000,000 regular users and users earn 4 points for every £1 spent. The customers shop at

Boots and earn points. Customers earn points and can buy anything when they reach a particular

number of points. So the loyal customers shop only at Boots to earn points and buy the product

they want.

CHRISTMAS OFFERS

Boots attract its customers in the Christmas season by offering them unique products and

special gifts along with the purchases. So the customers love to shop at Boots in the Christmas

season.

PRICE

The prices at Boots are relatively higher than the Superdrug. Boots is working towards its

strategy to cut down prices and aims at push “We can be cheap too” feeling because there are

profit warnings from the competitors such as Superdrug, Savers and the other Supermarkets.

PRODUCT

Boots is perceived to produce higher quality products than any other chain store. It also

has a long establish brand.

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PROMOTION

Advertising and media is really important to Boots. They use it to get their brand

credentials to the market.

POSITIONING

The Boots has opened new outlets outside the town to compete with the superstores

FINANCIAL PERFORMANCE

The Revenue for the year ended on 31st March 2006 was £5027.4 million and the revenue

for the year ended on 31st March 2008 was £11865 million. This shows that the revenues earned

by the Boots in the year 2008 were more than double the amount of those in the year 2006. The

Net Profit in the year 2006 was £303.4 million and in the year 2008 the company earned Net

Profit of £412 million. It shows a significant increase in the net profit of the company.

Year ended Revenue (£m) Net Profit (£m)

31 March 2008 11865 412

31 March 2006 5027.4 303.4

COMPETITORS
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Alliance Boots competitors are primarily in the Pharmaceutical Distribution and the

wholesale industry. The company also competes in the Drug Stores, Pharmacies and Eyewear

Manufacturer sectors.

COMPETITIVE ADVANTAGE

Alliance Boots have product differentiation competitive advantage over Superdrug. Their

products are known for high quality.

The competitors of Boots are:

CELESIO

Celesio is one of the largest drug wholesalers of Europe, holding market-leading

positions in most of the countries where it serve. The company was founded in 1835 and its

largest wholesale markets are in Germany, France and UK. The company also offers logistics

and transportation solutions to pharmaceutical manufacturers

LIOYDS PHARMACY

LIoyds Pahrmacy is England’s second largest drugstore chain behind Alliance Boots.

LIoyds Pharmacy is owned by Germany’s Celesio AG, Europe’s leading pharmaceutical

distributor. The LIoyds Pharmacy outlets offer blood, cholesterol and diabetes screening in more

than 90% of its outlets. The chain also has its own radio station that broadcast production and

health information throughout the stores of the company.

SUPERDRUG
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Superdrug was found in 1964. Superdrug is the second largest beauty and health retailer

in the UK. They have over 900 stores in England, Scotland, Wales and Ireland and 226 in-store

pharmacies. The company is said to be responsible for bringing innovation in the latest styles

and trends to every high street in UK and Southern Ireland. They offer the prices which are

offered by no other retailers.

HUMAN RESOURCES AND CULTURE

Boots is a member of Alliance Boots which is a leading pharmacy-led health and beauty

group. They have big ambitions for the future- to be the best pharmacy-led health and beauty

retailer in the world. To achieve their objectives and ambition they are looking for talented and

passionate people who really are interested in making a difference. Boots is the UK’s market

leader so there are huge opportunities available with the leading retailers in Europe. Julian Coles,

director of Purchasing and sourcing, Boots, said that a combination of excellent people skills and

a cost approach had enabled them to be successful. One of the key objectives of the Boots is to

make their staff develop a better understanding of Boots markets, its customers and competitors.

Boots offer its employees opportunities for growth and development. Graduates and

undergraduate staff work with the Boots. The company is committed to encourage every

employee to participate in an environment where they feel valued and respected. They have a

diverse workforce working with them. The people are giving rewards for better performances.

They arrange meetings in which the problems of employees are communicated. The company

looks after its employees and customers and care for the environment and the communities in

which they operate. They make sure that the employees are treated well and involve them in the

business processes. The employees are offered a stake in the company so they can think of the
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company as if they own it and take the charge of the corporate social responsibilities. The

company gives the employees the chances of self-development; they are given recognition for

good work so they can feel a sense of achievement in their job. The cost cuttings and short term

profits of the company can boost profits and make the shareholders of the company happy but

negatively affects the relationship between employees and the company.

SUPERDRUG

BACKGROUND

Superdrug was found in 1964 by the Goldstein family who started the business from just

one store and then it was sold to Kingfisher in 1987. In 1988 after the acquisition, a major

expansion program accelerated the business. In 2001, the Superdrug was purchased by Dutch

health and beauty chain and its retail interests were sold to ASW in 2002. Superdrug is the

second largest beauty and health retailer in the UK. They have over 900 stores in England,

Scotland, Wales and Ireland and 226 in-store pharmacies.

Superdrug is the first high street beauty and health retailer who support London Fashion

Week. They claim to be the UK’s most fashion conscious beauty and health retailer. The

company is said to be responsible for bringing innovation in the latest styles and trends to every

high street in UK and Southern Ireland. They offer the prices which are offered by no other

retailers. Superdrug is committed to bring new brands to their customers earlier than their

competitors, so they secure an exclusive ahead of the other retailer in the UK. In 2007, they

started a beauty investment program of £46m.

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Superdrug is a challenging brand and started many campaigns on behalf of their

customers. They challenged UK government to reduce Value Added Tax on the essential health

items. The company is also involved in many funds- raising campaigns and support charities and

jobless people. They are continuously working to raise their charity partners.

The employees are trained to give the best quality product and services to their customers

who they believe is deserved by them. They have a retail academy which gives training to their

team member, knowledge, skills and confidence to interact with their customers and offer them

the best beauty and health advice. They are also ensuring that their young employees get the

proper academic qualifications through a n apprenticeship scheme. Superdrug achieved turnover

of £1.03 billion representing growth of 2.9% and the operating profits increased by 34.9%. They

are towards the plan to have single biggest beauty offer on the British high street.

MARKETING STRATEGIES

Superdrug has become a fashion-led beauty retailer that responds rapidly to the latest

market trends. The marketing strategy of Superdrug is that it targets mainly the younger women

who do not have disposable incomes for health and beauty products. Superdrug recorded 50 %

increase in its customers over the summer period of the year 2006. Superdrug needs to generate

high volumes which it aims through attractive looking stores, high profile marketing and

improved customer services. They market their products through Web, Online marketing,

Mobile, Press, Direct mail and In-store promotions. Superdrug always has great offers for their

customers in store. A £46 million beauty program was launched by the company in the year 2007

and £23 million expansion at the end of the year 2008. Superdrug have also launched Pink Fascia

stores which offers more choice in beauty and fragrance. The stores of the Superdrug will be turned

pink in every major city by the end of 2008 under this growth program.
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Their powerful marketing campaign received 140,000 online registrations from female

customers. The results of the campaign were clear to see. Historically Superdrug appealed to

teenagers because it was trendy and cheap but these customers abandoned the products when

they grew up. Today the market focus is about age, not attitude, the target market includes

women who are interested in fashion but there are no age restrictions. The chain is also

successfully building a campaigning reputation and fund-raising activities.

It was conducted in partnership with Procter & Gamble, Cosmopolitan, lastminute.com

and Weight Watchers. (Oatts, J., 2006). Superdrug store was looking for a client/server

application development tool to boost the productivity. Barry Simmer, a pharmacy controller

believes that the Superdrug is more advanced than many UK companies regarding Technology.

Superdrug, the united Kingdom’s second largest Health and Beauty retail chain managed

to attract more than seven million customers during the Christmas season to its stores. The

formula of the Superdrug was successful in maintaining an extensive range of its own well

recognized and high quality brands. The Superdrug store evolves into an international retail and

manufacturing business with its operations worldwide in 31 markets.

BEAUTY INSIDE AND OUT BUS

Superdrug, in the year 2005 hit the roads with its unique marketing campaign. The

London Fashion Week sponsored a launch of Beauty Inside and Out Bus. In this marketing

campaign, a double Decker bus was rescued from London Transport and refurbished. The Bus

was staff with the specially trained Superdrug Beauty Specialists and expert makeup artists. It

allowed the Superdrug to get closer to their customers in style and maximized the sponsors for

company at London Fashion Week.

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PRICE

In an increasingly price sensitive consumer market the price differentiation gives

Superdrug a considerable advantage. Superdrug offers low cost branded products and cheap

prices as compared to Boots. They offer prices which are offered by no other retailers.

PRODUCT

A wide range and variety of products are available at Superdrug stores. The store

introduces new and innovative products and is committed to maintain an extensive range of its

own well-organized and high quality brands. They claim to be the UK’s most fashion conscious

beauty and health retailer. The company is said to be responsible for bringing innovation in the

latest styles and trends to every high street in UK and Southern Ireland.

PROMOTION

Promotion is done through Media, Press, Web, Online, Mobile, Direct mail and In-store

promotions.

POSITIONING

Superdrug is positioning itself as Britain’s most fashionable beauty and health retailer.

The company is performing strongly in a market where it is under pressure from the other

superstores. The stores are located at the high streets all over UK.

FINANCIAL DATA

Superdrug generates revenues of £1 billion per year. Total growth up of the company was

5.3% and the operating profit increased up to 14%. Superdrug opened 48 new stores.
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HUMAN RESOURCES AT SUPERDRUG

The UK’s second largest health and beauty retailer’s payroll and information teams

manage 13,000 staff including many part-timers with variable working hours. The staff at

Superdrug is said to be unknowledgeable and unsure about things and people have complains

about their rude behavior. Superdrug also has an online recruitment process. It helps attract and

enhance candidates and enhance the company’s employer brand. Kate Parkes, HR Manager at

Superdrug explains that company is continually searching for new talent. The company has

commenced an intensive training program for its staff to improve customer focus and services.

Barry Simmer, pharmacy controller at Superdrug said that the Customer services offered by the

Superdrug are crucial in differentiating the company from its competitors. They survey their

employee’s requirements and try to engage at all levels of the organization. The workers are paid

mostly on the weekly basis. Superdrug’s HR system had been in place since 1990and despite

several modifications and upgrades; it was unable to cope with the growing number of stores.

Superdrug mapped out its requirements for the replacement of HR system and ultimately chose a

solution form business solutions, which was The Infinium System. Employees are rewarded for

their efforts by internal recognition at award ceremonies and conferences. They also receive staff

incentives. The payroll teams’ runs the system and the reports are produced for the management.

They have a long-term goal of a paperless environment for HR processes. The company hopes

for improved relationship between stores and payroll and increased accuracy and anticipates

savings on the cost which are not needed as printing and distributing etc.

The company is using AS/400 Client Server development tool which also helps in

empowering individuals to do their jobs more productively and efficiently along with preserving
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the integrity of their IT system. The tool is designed to optimize their existing resources, staffing

and knowledge-base. This also empowers the IT staff to improve their development skills and

apply them in their job. The best thing about the company is that the team Superdrug wants to be

the forefront of whatever is going on.

COMPETITORS

ALLIANCE BOOTS

Alliance Boots ranks as one of the largest high street retailers in the UK. The company

was founded in 1849 by John Boot and named “Boots”. Alliance Boots Limited is the leading

pharmacy-led health and beauty retailer. The British based pharmaceutical wholesaler has a total

of 40% market share in UK. The company is the leading pharmacy chain in Britain with a 17%

market share. It is the third largest pharmacy chain in Europe and employs over 110,000 staff.

Boots has opened out of town stores to compete with supermarkets located out of town. The

company operates more than 3,200 health and beauty retail outlets of which over 2,900 have a

pharmacy.

CO-OPERATIVE GROUP COMPANY

The Co-operative group company was established in 1863. The business is run by the

UK’s largest co-operative society including farming, food and drug store, banking and travel

agencies. The company operates more than 5,000 outlets on high streets throughout the UK. Co-

operative Group is the Britain’s largest funeral service provider.

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LIOYDS PHARMACY

LIoyds Pahrmacy is UK’s second largest drugstore chain behind Alliance Boots. LIoyds

Pharmacy is owned by German’y Celesio AG, Europe’s leading pharmaceutical distributor. The

LIoyds Pharmacy outlets offer blood, cholesterol and diabetes screening in more than 90% of its

outlets. The chain also has its own radio station that broadcast production and health information

throughout the stores of the company.

CONCLUSION

Superdrug is the second largest UK health and beauty retailers, behind Alliance Boots.

Both the retailers were affected by the supermarkets that have decreased the market share of two

retailing giants in the UK. They both have followed strategies to differentiate themselves from

the other supermarkets. Boots is focusing on its health credentials and Superdrug builds itself

into the Top Shop of the health and beauty sector. Superdrug and Boots are close rivals although

there is a great difference in the size of the both companies. Both the companies keeps an eye on

the others offers and strategies. Recently Superdrug was rapped over price comparison ads with

its rival Boots. Boots complained about the accuracy of the pricing information used and

products claimed to be cheaper by Superdrug at their stores. Boots asserted that they compared

their products prices everyday with those at Superdrug’s. That shows the direct competition of

the two giant retailer stores in UK. The competition between the two is much tougher as one

announces expansion, the other follows the footsteps. The customer base is less loyal at the

Superdrug. They prefer Superdrug because of the cheap prices offered by them.

Superdrug is preferred for the Branded products it offers as it’s cheap and Boots for

quality of own brands. Boots have become much more price competitive over the recent years.
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The difference between Superdrug’s and Boots site prices is not as extensive as it was, but both

the retailers are offering an extensive range of low price products online to increase their sales

volume. The low income groups prefer Superdrug for their purchases. Superdrug stores have

been refurbished and made much more attractive to shop in and the company is providing

intensive training programs to its staff for improved customer focus.

Boots’ advantage card is one of their major loyalty schemes which entice their customers

to continue using the retailer. As compared to Superdrug, Boots offer a wide range of products

which is clearly an advantage over its competitor. The promotional offers an extensive ranges

offered by the Boots further attract customers towards them. Their Christmas offers are the one

most preferred by the customers as they offer gifts along with the purchases. The online website

of Boots offer a cosmetic range not available at their rivals site so its drives the customers to visit

the website. The delivery cost charged by the Boots can offset many price benefits which are

available at any other retailer shop. Boots is highly cautious of its position on its key items

particularly when a new rival comes with some offer online.

Super drug is the fastest growing health and beauty retailer in the UK and offer

multifaceted product range. Its revenues are over a billion in a year. The core objective of

Superdrug was to increase transactional channels available to its customers; they needed a

solution to plug into their legacy store system and their third party fulfillment provider. So they

launched on Venda platform and the website was launched before Christmas and the sales target

were achieved beyond the timeline that was actually set. They are looking forward to continue

growth and improvement to their online proposition. It’s a challenge for Superdrug to carve out a

market share for itself in such an intense competition and find out offerings that no other

competitor can offer. Superdrug have improved a lot in recent years. The company has widened
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its store space. Trading conditions are tough but the Superdrug has always been able t compete

through its combination of great value and expertise. It has shifted its focus to high quality

branded cosmetics, health and beauty items. Superdrug is now focusing more on the value added

services such as health checks and beauty clinics etc. It has much more stronger product position

than before after launching its own brands like Kolor cosmetics which targets the young, more

fashion conscious customers.

Although Superdrug is cheaper than Boots and you can find a variety of products at the

store but the staff at Boots is said to be more organized and trained than the Superdrug. People

complain about the rude staff at Superdrug store. The long queues are another problem

encountered by many customers who shot at Superdrug.

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