Boots and Sainsbury’s drop joint trial
Retailers to go it alone on health & beauty
February 3 2003
Boots and Sainsbury’s are ending their store-within-a-store trial of health & beauty areas within supermarkets.
The trials, which have operated since October 2001, were seen by many observers as evidence of the logic of a much closer working relationship between the two UK retailers, both of whom could benefit from expanding to compete with the economies of scale commanded by bigger players such as Wal-Mart and Tesco.
Consumers responded favourably to the Boots areas in Sainsbury’s out-of-town stores, but the two retailers have been unable to agree commercial terms for a roll out of the format.
That echoes wider talks between the two companies held last year, which could have led to formal merger discussions, but which foundered at an early stage. The two will now pursue their health and beauty offers separately, with the trial stores reverting back to the Sainsbury’s format.
Steve Russell, Boots chief executive, said: “Health & beauty sales were in line with expectations, confirming the attraction to customers and operationally the trial worked well. However, we could not agree on commercial terms for roll-out.”
Boots said its had also been evaluating its own edge of town plans, and will double its edge of town representation from the current 77 stores over the next three years. The existing stores recorded 18 per cent year-on-year sales growth in the third quarter last year.
Russell said: “With the lessons from our own stores and the new fomat developed for the trial with Sainsbury’s, we are able to access more edge of town sites with better economics. We will implement this opportunity effectively and quickly.”
