Boots invests pounds 300m in four-year growth drive

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The Independent Online
Boots is to invest pounds 300m in its Boots the Chemists chain over the next four years in a move that will see a marketing push for health and beauty products and new stores added in seven different sizes.

The company also announced a second trial of its Advantage, "smart card" loyalty scheme, though would not commit to a national roll-out.

The investment programme is part of Boots' strategy to underline the strength of the Boots brand and differentiate it from high street rivals.

It follows a period which has seen the supermarket groups expand aggressively into toiletries and health and beauty products while adding pharmacies to stores.

The strategy is designed to prevent the kind of market share erosion suffered by WH Smith after the supermarkets grabbed market share in books, magazines, music and videos.

"We recognise the threat of the supermarkets. It is time to move the game on," said Steve Russell, managing director of Boots the Chemists.

In the company's first presentation on its core business for three years, Boots said it is planning refurbishments for many town centre stores, including 18 in central London this year.

Pharmacy sections will be re-designed adding areas for medical advice "booths". Multi-media kiosks will be introduced to provide more information on product areas such as skincare and oral hygiene. More information will be available in stores.

A dozen new edge of town sites will open in the next two years. A further 240 sites have been identified for small stores, of which 40 will open this year. The number of outlets at Heathrow Airport will be doubled from four to eight.

Other stores will be tailored to their local market, such as "travel" stores at airports and railway stations, which will focus on sunscreens and other travel and holiday-related items. All 1228 stores will be tailored to a specific format in the next two to three years.

It is also intended to reinforce the "added value" of the Boots pharmacy offer at a time when Asda is mounting a continued attack on the price of non-prescription medicines.

Boots made no announcement on its international expansion plans though a move into Holland had been rumoured. Boots will open its first branch in Dublin in the autumn.

Though the company is considering opening stores in continental Europe its ambitions may be limited by legal restrictions.

Boots plans to build a portfolio of "power brands" to add to its No 7 cosmetics range and Soltan suntan lotion. The Natural Collection range of toiletries will be built upon.

The Advantage loyalty card trial which was launched in 13 stores last October in the Norwich area will now be complemented with a second trial with a lower rate of discount.

Boots said the participating stores enjoyed a sales uplift of 3 per cent, enough to make the card pay.

Few analysts have changed their profits forecasts and the shares edged 3p ahead at 587p.