What does Walgreens' takeover of Boots mean for marketing?
It will come as no surprise to industry watchers that the US’s largest retail drugstore, Walgreens, is to complete its interest in Alliance Boots with a complete takeover.
Ever since the Chicago giant announced it was taking a 45 per cent stake in Alliance Boots two years ago the prospect of a full merger has been on the cards. The £6bn deal will not be formalised until 2015, but it’s not too early to ponder what it means for one of the UK’s best known brands.
On one level, it’s business as usual. Boots will continue to be a presence on the UK high street, in the same way that Asda has not been renamed Walmart. It is likely that Boots’ distinct culture and brand identity will remain. And at a local level Boots as a separate entity will have a renewed focus to surge forward as the UK’s leading health and beauty retailer.
With the majority of R&D expertise, partnerships with UK academia and clinically proven product success, such as Protect & Perfect, based out of Nottingham, there will be greater opportunity for UK-led marketing, rather than Chicago taking over.
For Boots’ global brands, such as No7, Botanics and Boots Pharmaceutical, the deal represents a big step forward. Finally some of the biggest beauty brands in the UK are being given a remit to stand alone, rather than just be ‘own brands’ of Boots.
The merging of the two businesses also makes them the world’s largest pharmaceutical wholesale distribution network. As well as access to Walgreens Boots Alliance’s own 11,000 stores across 10 countries, global brands will be delivered to tens of thousands of further pharmacies around the world.
This is a real opportunity for the group to own health and beauty retailing and defend the onslaught of grocery and discount retailers in this area.
As is usual in these cases, the deal is touted as a merger of equals, and both parties offer distinct strengths. Boots brings expertise in loyalty and direct marketing, built up through its Advantage card over the past 15 years. Boots’ insight team has the expertise and experience to lead globally in this area.
Walgreens’ one-stop-shop retail offer can seem pretty schizophrenic. Here, Boots’ expertise in fundamentals such as retail operations and category management can give some much needed direction to the in-store offer. It’s no surprise that Boots’ former CEO Alex Gourlay has been charged with making this happen.
Walgreens has been named as an omnichannel 'role model’ in research by digital think tank L2, something Boots can take lessons from. Elsewhere, its innovation in pharmacy operations, such as remote approval via photo and video link can help shake up the UK market.
Other key people from Alliance Boots are now in very influential roles on the new board, giving a good indication that the UK side of the business will continue to go from strength to strength at the Nottingham HQ.
And with Boots’ arch dealmaker Stefano Pessina installed as vice chairman for strategy and M&A, more big deals seem likely in the next couple of years, particularly in Asia and the Far East.
Watch this space!
Debbie Preston is strategy director at LIFE Agency