Following today’s release of Boots UK’s figures for Q2, FY2022/23; Tash Van Boxel, retail analyst at GlobalData, a leading data and analytics company, offers her view: “Driven by a strong Christmas performance, with sales for the five weeks to 31 December 2022 up 17.4% on the previous year, Boots UK reported total sales growth of 11.0%, with consumers turning to the health & beauty market leader to stock up on essential beauty and skincare, as well as gifts for loved ones. Boots, unlike its online pureplay rivals, benefited from the Royal Mail strikes which caused chaos for the online channel in December, as shoppers relied on stores to avoid the disappointment of Christmas purchases potentially arriving late. While Boots reaped the benefits of consumers splashing out over Christmas, the health & beauty specialist’s stellar performance was not limited to the festive period, as Boots reported in increased footfall in Q2, up 16.0% on Q2 FY2021/22, as well as larger basket sizes, as premium beauty and skincare drove sales growth during the period. To maintain this momentum going into H2, Boots must continue to promote its value range, which has allowed shoppers to trade down rather than switching away to value retailers, such as Aldi and Savers, as well as its higher-price point beauty products, ensuring consumers can trade up for a treat. Given its positive performance, Boots UK is well positioned to attract a buyer if the rumours are true that it is soon to be put up for sale again.
“The health & beauty market leader has been expanding its Boots Everyday range and extended its Price Advantage scheme in Q2, and despite decreasing the number of points which Boots Advantage customers will receive after purchase, Boots has stated that they will receive 10% off all own brand products, which is likely to increase customer retention. However, Boots must remain wary of its rivals, particularly given that key competitor Sephora has now opened its first UK store (in 18 years) in Westfield London. But, given Boots’ recent revamp of its own Westfield store, it is evident that the retailer is well aware of the threat and is likely hoping to decrease the risk of losing customers to Sephora through the re-opening of its new and improved store format. With consumers able to both trade up to Sephora’s exclusive ranges, or trade down to its own-brand offering, Boots will be under pressure to retain its customers, and ensuring that its ranges remain in-stock and on trend, will be imperative.
“Boots has been improving both its online and offline performance, through continued investment in expansion, opening 19 beauty halls in Q2, and growing in its online presence. Although previously not a big contributor to overall sales, Boots’ digital sales rose 17.0% on the previous year, now accounting for 15% of retail sales. Of these digital sales, a quarter comes from the Boots app, which has achieved year-on-year growth of 65%, as the retailer continues to invest in its online channel to better compete with online beauty pureplays. While health & beauty online spend is forecast to decline in 2023, according to GlobalData, developing its online offering is still vital for Boots to ensure that it does not fall behind its pureplay competitors and it is well positioned to benefit as online spend rises from 2024.”