Boots Group

This article is about a former British company which has now merged to form Alliance Boots, as a result, information on this page may be out of date.

The Boots Company PLC known as Boots and financially branded Boots The Chemists, is the dominant pharmacy chain in the United Kingdom, with outlets in most high streets throughout the country. In recent years they have diversified their business from a traditional pharmacy to one offering one-hour photo-processing, opticians, and even home appliances in certain stores. In the 21st century Boots has faced increased competition from the main UK supermarkets, and it has struggled to grow. Its main subsidiary is Boots The Chemists Limited.

Boots Group PLC changed its name to Alliance Boots plc on 31 July 2006, following the completion of its merger with Alliance UniChem Plc. The original Boots Group subsidiaries are once again under the umbrella holding company name of The Boots Company PLC, a wholly owned subsidiary of Alliance Boots. Separately, Alliance UniChem Plc, the holding company for the former Alliance UniChem original companies, also became a wholly owned subsidiary of Alliance Boots.

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About Boots

Boots was founded in Nottingham, England by John Boot in 1849 and transformed into a national chain by his son Jesse. Its current logo is based on a design made by one of Jesse's signwriters in the 1870s. The chain was established during that time, and for the first time they became official dispensing chemist, stocking prescription medicines. By the onset of the First World War there were over five hundred Boots shops. In 1920, Jesse Boot sold the company to an American called Louis Liggett who owned a company called Dug Incorporated. However, deteriorating economic circumstances in North America saw Boots sold back into British hands in 1933 with the son of the founder, John Boot who inherited the title Lord Trent from his father, at the head of the company ('Interwar retail internationalization: Boots under American ownership', International Review of Retail, Distribution and Consumer Research, 7(2), 1997). In 1968 it acquired the 622- strong Timothy Whites and Taylors Ltd chain. Boots now has almost one thousand five hundred stores including some stores overseas. The Alliance Boots group in total has nearly 3,000 stores.

The company, consists of several subsidiary companies, such as Boots The Chemists Limited, which is the main retail chain. The parent company is now called Alliance Boots plc. The other main trading companies are Boots Opticians, and Boots Retail International. Originally with their own logos, all parts of the original Boots Company group now share the oval Boots logo. Alliance Boots plc has a separate logo, however. In 1982 the company opened a new manufacturing plant in Cramlington, Northumberland.so then

Since the appointment of a new Chief Executive from ASDA, the company has been given a refocus, inevitably leading to more outsourcing (such as Boots's own warehouses at its Head Office base in Nottingham - now owned by Unipart) and job losses at Nottingham. In a break from tradition, Boots is reported to be preparing to lease out a main office building (vacant due to the level of staff losses) on its own private 300-acre estate in Beeston, Nottinghamshire.

Merger with Alliance UniChem

On 1 October 2005, rumours began to spread that Boots and Alliance UniChem were planning to merge, although there had been no official announcement.

This was formally announced on 3 October by the Chairman of the Boots Group, Sir Nigel Rudd. He said of the deal, "I believe that this merger does an awful lot for customers, for shareholders, and for indeed the employees".

The merger would create a chain of pharmacies with 17% of the UK market with Alliance Unichem bringing some 1,250 plus Retail outlets based in the UK, Norway, the Netherlands, and Italy. Alliance UniChem's UK retail pharmacies are mainly "community pharmacies" located in small retail precincts in residential areas, whereas Boots shops are mostly on the main high streets of towns, cities and suburbs and in major shopping centres. The merger will also give Boots the major international presence which it has struggled to develop on its own.

The declining state of the retail industry in the UK has led to the merger and will help the company to face the competition given to it by supermarkets such as Tesco and ASDA that have entered the pharmaceutical market.

On Monday, 3 October 2005, the merger was confirmed, and the new group took on the name Alliance Boots PLC. After the merger it became Britain's dominant pharmaceutical retailer and wholesaler.

On 7 February 2006, the Office of Fair Trading decided not to refer the proposed acquisition by Boots Group PLC of Alliance UniChem Plc to the Competition Commission. This was due to the fact Boots agreed to sell 96 shops in local areas where there was a substantial lessening of competition. Boots will now operate 2,500 Chemist Stores across the United Kingdom.

The merger became effective on Monday 31 July 2006.

On the 25 April 2007, Alliance Boots was approached with a buy-out offer by New York City-based Private Equity firm Kohlberg Kravis Roberts, for an estimated £11billion. Alliance Boots has become the first company on the FTSE 100 share index to be bought-out by a private equity firm. On 25 July, it was reported that banks that are part of the debt syndication have had trouble obtaining buyers for the debt.

Expansion and diversification

Boots from 1989 to 2002 owned Halfords and once owned FADS, a home furnishings store and Do-It-All, a joint venture with W H Smith. Childrens World — similar to Mothercare — was another Boots company. They also considered moving into selling sex toys but in 2005 announced that they had decided not to. [1]

In the 1990s Boots branched into dentistry, with a number of stores offering this service. Boots has also made a venture into "Wellbeing" services offering customers treatments ranging from facials, homeopathy, and nutritional advice to laser eye surgery and Botox (although the Botox service was short-lived). These ventures proved to be unprofitable. Boots Hearingcare was sold, and now trades as "David Ormerod Hearing Centres at Boots". In late 2004 Boots also sold off the Dentistry, Footcare, and Lasix eye surgery services to Optical Express.

Boots also attempted to move into the music business adding departments into many of their stores that sold recorded music, however they were unable to tempt the public away from the already established competition in this field, such as Woolworths and Our Price.

Boots has also diversified into the research and manufacturing of drugs. It developed ibuprofen, a painkiller and continues producing, trading and exporting its finished form (tablets, syrup etc.) in the UK and internationally, although manufacturing the bulk drug is now the activity of major pharmachemical operations in the USA, India and China.

Boots has expanded into the North America by supplying its popular ranges such as Botanics and No7 to retailers such as Target Stores, CVS and Shoppers Drug Mart.

Boots stores also started to sell products not traditionally associated with Boots such as Dyson cleaners - under the name 'Offer of the Week'. These 'odd' items were bought in bulk and savings on High Street prices are passed onto the customer. Although to many this seemed odd, Jesse's own customers were often presented with 'odd' items which Jesse purchased by buying in bulk and taking the first steps towards the strength of bulk buying. Jesse once filled the windows of his second Goosegate shop with sponges. Boots desisted with this strategy as it became evident it was unprofitable. In place of 'Offer of the Week' stores now frequently give out "money-off vouchers" to be used in store.

Advantage Card

The Advantage Card is the loyalty card of The Boots Company. It is billed as "the UK's most rewarding" loyalty card as it offers four points per pound spent. Each point can be exchanged for a product costing £0.01. Points can be exchanged for products, but only as whole payment, for example a card with 384 points on could buy a £3.79 product, but not a £3.99 product, even if the difference was offered in cash.

In the Republic of Ireland, the card offers 4c for every Euro spent; UK cards cannot be used in the Republic, nor vice versa.

It is Europe's largest loyalty card scheme with over 15 million cardholders, 91% of them women.

As well as the benefit for the customer, Boots can compile a vast database of information about card holders purchasing trends, aiding advertising campaigns and targeting. Each transaction conducted with the card is logged using 'smart card technology'. Advantage card holders often receive customised voucher booklets based on their history of purchases in-store.

The Boots 'health club' can be joined and gives discounts to members as well as an extra discount to over 60s.

International

Since 1936, there have been Boots stores outside the UK. Stores in countries as widely spread as New Zealand, Canada (see Pharma Plus) and France were all closed in the 1980s. A new roll-out started in 1997 with The Netherlands, Thailand, Taiwan and Japan but only Thailand survives, as an independent chain.

Stores in Ireland have survived under the Boots company, with flagship stores on Dublin's Grafton Street, Dundrum,Waterford, Limerick, Galway and various Cork locations. In other countries (including USA, Switzerland and Hong Kong), Boots products are sold from instore 'implants' in department stores and other drugstores, such as Watson's and Target. A new store has recently opended in Dubai, United Arab Emirates and several locations in Kuwait.

Financial performance

* Continuing operations only. Sales from discontinued operations were £443.8 million and profit for the year on discontinued operations was £1,469.3 million, including a profit on disposal of £1,370.7 million.

These financial results are of Boots Group PLC as a stand- alone company, before the Alliance UniChem Plc merger and the change of name to Alliance Boots plc.

The Boots Estate

The Boots Estate features a range of listed buildings, notably D6 and D10 which are both Grade I, and D31, D36, and D90 which are Grade II. Staff enjoy a staff restaurant, coffee and snack shops, newsagent, a branch of Boots The Chemist, and bank situated within beautifully landscaped grounds.

The landscaped grounds include the Millennium Garden which features a herb garden (with some plants that Jesse used in his original herbal remedies) in the shape of a goose foot - harking back to Jesse's original shop on Goosegate in Nottingham.

The Boots Museum is now closed (due to cost cutting) and historical items are in storage.

The Head Offices are adorned with some interesting artefacts from old stores and feature two 'shops' where new displays and advertising are trialled. Over the summer months staff work hard to create Christmas displays in the second of the two shops hidden from view with only certain staff permitted access. The plans for Christmas - a major trading time for any retailer - start to take shape in September and late Summer as stores gradually move shelving and displays boots official website ready for the massive increase in products and stock. Stores are therefore in a state of flux for almost half the year, although the Company makes great efforts to keep disruption to a minimum to its customers and is very much focused on customer navigation of its stores.

The Head Office site also features its own trial suite where new products are sampled and tested by consumers before the final decision is made to launch a product. However Boots also develops and produces a range of products for major names.

Since the merger of Boots and Alliance UniChem, the future role of the Boots Estate has become unclear. The Alliance Boots Head Office is situated in London (on the same premises as the old Alliance UniChem Head Office), meaning some buildings on the Boots Estate will now become redundant.

The Alliance Boots Wholesale division is being run from the Alliance UniChem site in Weybridge, Surrey, whilst the Community Chemists operation is being run from the Alliance UniChem site in Feltham, Middlesex. This means that the only substantial divisions of Alliance Boots which is being run from the Boots Estate in Nottingham is that of Health and Beauty (operators of the larger Boots stores, which sell a larger range of products in addition to the core medicine range), and Boots Manufacturing (responsible for producing in house toiletries and medicinal products).

Boots Healthcare International

In October 2005 Boots agreed to sell its over-the-counter medicines business, Boots Healthcare International, which markets brands such as Clearasil, Nurofen, Optrex, E45 and Strepsils, to the Anglo-Dutch household products company Reckitt Benckiser for £1.936 billion.

Boots used £1.43 billion of the sale proceeds to make a one-off special dividend payment, which roughly equalised its market capitalisation with that of Alliance UniChem prior to the merger between the two groups. The remainder will be retained for investment about tonico.

The disposal was completed on 31 January 2006.

See also

• Alliance Boots
• Alliance UniChem