Boots brands may sell in rivals' stores

Boots is understood to be considering a radical new strategy which would see its most popular brands made available in other retail outlets.

Boots is understood to be considering a radical new strategy which would see its most popular brands made available in other retail outlets.

The high-street retailer is responsible for some of the UK's most popular health and beauty products, including its No 7 and No 17 cosmetics ranges, Soltan sun cream and Nurofen painkillers. Until now, these have largely been stocked only in Boots' 1,400 UK stores.

However, chief executive Steve Russell is mulling over a plan that would put these and other popular brands on sale in rival shops, according to a source close to the company.

The proposal is seen as a reaction to the arrival of Wal-Mart, the giant American retailer which last year acquired Asda and has ruthlessly targeted Boots customers since then.

Wal-Mart's impact has contributed to a near-40 per cent slump in the Boots share price in the last year.

However, analysts believe that the quality of Boots' in-house brands could help the company withstand this threat. One analyst estimated that combined sales of Boots' own brands last year topped £200m.

At its recent results presentation, Boots provided a clue to its plans when it revealed that it had put together the research and development and marketing operations of its own-brand products.

"They are trying to develop an area of core competency in the development and marketing of branded products," said one analyst. At the same time, he downplayed the prospect of Boots turning its back on high-street retailing.

"Boots has suffered at the hands of supermarkets not least due to the central position of its stores," he said. "But we're a long way from the company moving exclusively into the distribution of brands. Boots doesn't yet have the necessary expertise."

The threat from Wal-Mart was underlined last Monday when it unveiled its first branded store in Patchway, Bristol, promising to undercut its rivals by as much as 60 per cent.

However, despite Wal-Mart's reputation for ruthlessly driving competitors out of business, observers believe that its ability to dominate British retailing will be fatally undermined by UK planning rules which will limit its ability to build huge out-of-town stores.