Boots has been a familiar name on the British high street since its first herbal medicines store was opened in Nottingham in 1849. Since then, it has gone on to become a household name in health and beauty. Few people realise that it was the Boots R&D team that discovered Ibuprofen in 1961.

Today, Boots operate over 2,300 stores providing health & beauty retail, pharmacies and opticians. It also owns several health & beauty brands sold in its stores including No. 7, Soltan and Soap & Glory.

US-based owners, Walgreen Boots Alliance (WBA), have recently announced the intended sale of the Boots retail business, having sold-off their Alliance Healthcare wholesale pharmaceuticals arm in 2021 – all part of the WBA strategy to double-down on healthcare with a focus on the North American market.

Multiple potential private equity bidders have been linked to the deal including Bain Capital & CVC Capital (joint bid), Sycamore Partners, Advent, Carlisle, KKR, TDR Capital and CD&R. Furthermore, supermarket giants Sainsbury’s and Tesco have also been cited as potentially interested suitors, although this has not been confirmed by either party.

With access to over 5M datapoints on Boots from a wide range of trusted sources, Deltabase has run a rapid assessment of Boots versus a selection of competing health and beauty retailers (Superdrug, Holland & Barrett and online retailer Lookfantastic).

This rapid scan identifies a few reasons why Boots may command an impressive purchase price for an investor brave enough to undertake the transformation required to unlock the British brand’s full potential.

Key strengths

Whilst the COVID-19 pandemic has had severe adverse impacts in some sectors, Boots has benefited from a ‘perfect storm’ of tailwinds including a surge of COVID-19 testing products and services; record numbers of flu vaccinations; increased pressures on NHS services which induces more demand in the pharmacy sector; and general long-term increases in consumer spending on health and wellness products.

1. Boots has a very strong brand and is well-regarded by consumers
According to insight from YouGov, Boots is rated the 2nd highest health and beauty brand in the UK (after Dettol) with 99% of consumers aware of the Boots brand and a healthy net promoter score (NPS) of 74 out of 100. By contrast, competing health & beauty retail brands Superdrug, Holland & Barrett and Lookfantastic have NPS scores of 66, 56 and 11, respectively).

Graph showing UK Health and Beauty Brand Sentiment

UK Health & Beauty Brand Sentiment (Source: YouGov 2021)

2. Boots has a commanding position in the UK Health & beauty market
Boots enjoys a dominating position in the UK health & beauty retail sector, with its £6B annual revenue accounting for c. 40% of market share. Recent quarterly (Q1 FY22) results from WBA suggest that Boots UK retail comparable sales are up 16.3%, buoyed by flu vaccinations and COVID-19 testing products and services. Boots also have 11.7M active Boots Advantage card users and associated customer loyalty data.

3. Consumer spending on health, beauty and personal care is rising
According to analysis by Statista, revenue in the Beauty & Personal Care market amounts to £12B in 2022 and the market is expected to grow annually by 3.08% (CAGR 2022-2026). This correlates to IBIS data on historic market growth in the UK cosmetics retail sector of 3.8% (2017–2022).

Weaknesses & Threats

1. Lockdowns accelerate shift to online purchasing
The COVID-19 pandemic and resultant lockdowns have accelerated the shift towards online sales, resulting in reduced footfall in key high-street retail locations. Data from YouGov indicates that approximately 30% of health and beauty purchases are made online at the end of 2021 (versus 18% pre-pandemic). Statista predicts that 40.5% of total beauty & personal care revenues will be generated through online sales in 2022. The threat of Amazon selling prescription medicines online in the UK at scale continues to hang over all pharmacy businesses.

UK Consumer Heath and Beauty Purchases by Channel

UK Consumer Heath and Beauty Purchases by Channel (Source: YouGov, 2021)

2. Large estate of dated stores with variable profitability
85% of the UK population lives within 10 minutes of one of Boots’ 2,300 stores. However, the store format is tired and will need significant investment in order to draw shoppers into the stores. WBA announced in 2019 that they intended to close some 200 stores owing to “difficult market conditions in the UK” citing that many of the earmarked stores were loss-making or within walking distance of another Boots store. Analysis of company annual reports reveals that revenue per store stands at approximately £2.6M in 2020, down 6% from 2019 with highly variable store profitability. However, Boots has fared better than competitors Superdrug who have observed a 15% reduction over the same timeframe. There is likely opportunity to increase revenue per store and improve overall profitability by rationalising the estate, shedding poor-performing stores in non-strategic locations.

Chart showing Estimated Revenue Per Store

Estimated Revenue Per Store (Source: Annual Reports)


Having benefited from tailwinds in trading over the last 24 months, Boots will need to be bold to thrive, rather than merely survive, once market conditions adjust post-COVID (e.g. reduced demand for COVID-19 testing, reduced demand on NHS services).

1. Explore new health & lifestyle adjacencies and revenue streams
There is an opportunity for Boots to leverage its trusted brand and widespread high-street presence to provide a range of additional high value health and lifestyle services where consumer trust is an important buying factor. One such example could be in the provision of aesthetic treatments. According to McKinsey, the market for aesthetic injectables (e.g. dermal fillers, neuromodulators, biostimulators) in Europe is expected to see growth of 12% (CAGR, 2021-26). High margin aesthetic and minor cosmetic procedures have moved from the extreme to the mainstream driven by celebrity and social media trends. There is a solid overlap between the demographic of existing Boots customers and this new target market plus good strategic alignment for a holistic health and beauty brand. Furthermore, the Boots wellness offering could be extended beyond vitamins and dieting products to include health supplements and homeopathic remedies to rival the Holland & Barrett proposition.

2. Accelerate shift to eCommerce and multi-channel sales
Boots is well-poised to take advantage of further shifts towards eCommerce with WBA having reported (Q1 FY22 Quarterly Results) that “Boots online sales nearly doubled versus pre-COVID levels”. Analysing website visitor traffic since early 2019, this increase is observable with Boots far outperforming selected competitors for sheer visitor volumes.

Chart showing Health and Beauty Website Traffic

Health and Beauty Website Traffic (Source: SEMrush)

Furthermore, following the successful trial of Deliveroo deliveries in 14 stores in 2021, national rollout of this partnership for rapid home delivery of products and medicines will enhance convenience, extending the Boots multi-channel, client-centric offering.

3. Create best-in-class omnichannel customer experience
It appears that there is further opportunity for Boots to improve customer experience across both web and mobile channels which would likely result in improved conversion rates and top-line sales growth.

Analysing website visitor behaviour reveals that Boots has the lowest average page views per visit which suggests that visitors to the Boots website are finding less relevant content than visitors to competing websites.

Chart showing Average Page Views per Visit

Average Page Views per Visit (Source: SEMrush)

Turning our attention to mobile apps, we observe a similar pattern; the Boots shopping and loyalty app has the largest number of user reviews (and, likely, largest number of active users) yet has the lowest user rating across the peer set.

Chart showing Mobile Apps Rating Scores

Mobile Apps Rating Scores (Source: GooglePlay and Apple App Stores)

4. Create an enduring retail transformation capability
There is an opportunity for Boots to unlock a new phase of growth and success through thoughtful and successful transformation. Retail companies that outperform their competitors often have their own transformation capability which continually enables them to innovate and lead the market; meeting both current and future needs of consumers.

Analysis of employee profiles on LinkedIn reveals that c. 1.8% of Boots employees have skills and experience in Transformation (versus 0.6% of Superdrug employees). However, it has access to a lower depth of eCommerce and Digital skills than Superdrug.

Chart showing % Workforce Key Skills

% of Workforce With Key Skills (Source: Deltabase analysis)

Focusing on the profiles of new joiners who have been recruited into each firm within the last 12 months shows that Superdrug has out-recruited Boots in both eCommerce and Digital skills which may translate to a widening capability gap in these areas.

% of new joiners (last 12m) with key skills (Source: Deltabase analysis)

% of new joiners (last 12m) with key skills (Source: Deltabase analysis)

Closing comments

The iconic Boots business makes an attractive acquisition target with obvious opportunities to realise operating efficiencies through rationalisation of the store estate. However, the real opportunity for Boots lies in unlocking the next stage of its evolution as the leading multi-channel provider of health and beauty products and services.

For the bolder investor, Boots can transform its proposition and reap the rewards in a growing health and beauty market. If investors can see this value potential and have the courage to embark on the necessary transformation, Boots will command a significant price tag.

If you are interested in our in-depth intelligence and benchmarking services to uncover specific and actionable value creation opportunities for Boots (or any other company) – please get in touch.