Neglected core strengths
Strong Pharmacy performance
Building strength in Beauty
Losing customers
Competing better in commodity markets
Unsustainable prices
Gross margin broadly stable
Difficult to shop
More convenient and accessible stores
Outdated systems
Inefficient operations
Modern infrastructure
Boots the Chemists was substantially under-invested; the Group had neglected its core strengths. We have started to address this and we have revitalised the organisation which now has a simple message to unite behind:
BOOTS IS THE HEALTH AND BEAUTY EXPERT. Those are our two areas of strength and nobody does them better than us.
In health, which is the heart of the Boots business, we have worked to "put the chemists back in Boots" and have seen our best pharmacy performance in five years; in beauty we have strengthened our ranges, improved many beauty halls and relaunched No7.
Our pricing was too high. Over the past year we have cut more than 2,000 prices by 14 per cent - that means that since the Lower Prices You'll Love campaign started we have lowered prices on 3,300 lines by more than 18 per cent. But, as you have heard from Jim, we have also managed the margin successfully, with a particular focus on our new better-buying programme.
Our stores were difficult to shop. So we changed our trading hours to meet modern shopping habits and improved signage in many of our existing outlets. We continued to add space in more convenient locations.
Our systems were outdated and some of our core operations inefficient. So we installed new tills in all our stores and made huge strides in overhauling our supply chain to make it more customer focused. Behind the scenes we re-built our systems infrastructure; we shut a major manufacturing plant; we started a better-buying programme and we had a major redundancy programme running which removed one in three people from head office.
Any one of these things on their own had the potential to severely disrupt trading. But we have managed through the change and I am very proud of what the organisation has achieved. We have grown ahead of the market and have delivered 10 per cent profit on sales.
LINK: Now let's look at our sales performance in more detail
