Boots planning Net assault to take top spot in online health

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The Independent Online

Boots is planning a major assault on the internet in a bid to expand its e-commerce operations and position itself as Britain's premier online health brand.

Boots is planning a major assault on the internet in a bid to expand its e-commerce operations and position itself as Britain's premier online health brand.

The company has been criticised for being slow to adapt to the internet and allowing smaller rivals to encroach on its core territory. But the retail giant is working on a series of initiatives designed to give its high-street chain, Boots the Chemist, an unmatchable online position in price, product range and healthcare information.

Central to the plans is a Boots internet portal acting as a gateway to both information and e-commerce activities. It will also include an unrivalled database of healthcare information, allowing customers to conduct self-diagnosis of certain illnesses and click on to suggested remedies.

A Boots spokesman said: "Boots is not always first with new technology initiatives. But when we do something, we tend to do it well."

In January the company appointed Richard Holmes, a former marketing director of Boots the Chemist, to head a new division called Boots Internet Ventures. His brief is to go anywhere in the world studying best business practices and seeking potential business partners. He is due to report back to the Boots board in June.

The City has been waiting for Boots to announce its internet strategy after expressing disappointment with its e-commerce experiments so far. The company has a website, Boots.co.uk, but only started selling goods through it just before Christmas. Its only other e-business operation at the moment is its stake in handbag.com, an internet joint venture with Associated Newspapers, which is aimed exclusively at women.

But the company yesterday announced plans to launch a website dedicated to men. The Boots Men site will include zones such as "Hair of the Dog", containing hangover cures, and "Condom on!", offering advice on "how to choose the right condom for the right occasion". A spokesman said: "These ventures are just the tip of the iceberg."

Boots is investing £11m in its website over the next three years, but the City had hoped to see something based more strongly on the Boots brand.

The brand name is a massive tactical advantage, as it carries a high degree of trust. The company claims that 90 per cent of women shop with Boots every month.

Boots controls 13 per cent of the prescriptions market and, according to Verdict Research, dominates the UK market for toiletries, cosmetics and over-the-counter medicines, with a share of 25.8 per cent.

The power of the Boots brand is likely to attract a high volume of internet traffic to the website. This would enable Boots to secure significant revenues from online advertising and e-commerce links.

Boots has already been leveraging the strength of its brand by opening dental practices, chiropody centres and beauty parlours in some of its larger stores. Its new chief executive, Steve Russell, also sees scope to move into weight management, holiday health, physiotherapy and alternative medicines.

A successful internet strategy would provide a huge boost to Boots' shares, which have halved in value over the past year due to the increasing competitive threat from the major supermarkets following Wal-Mart's takeover of Asda.

Instead of matching Asda and Tesco on price, Boots has so far chosen to compete using price promotions rather than across-the-board price cuts. It has also been working with suppliers such as Procter & Gamble and L'Oréal on exclusive ranges.

Britain's biggest retailers have been slow to respond to the challenge of the Net even though most accept that their businesses are being damaged by the online threat. Marks & Spencer, Great Universal Stores and Kingfisher have hardly any Web sales. Even Dixons, which created Freeserve, is selling only limited quantities of its electronic goods online.

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