This site is intended for Healthcare Professionals only

Views bookmark icon off

Editor’s view: Close proximity

Another bonfire of the multiples as Boots announces more store closures

Just as I prepare to file this column, Boots announces it is axing 300 stores in yet another ‘store optimisation’ programme. My prescription charge opus will have to wait for another month, I sigh. Euphemisms abound, but the gist is that even after previous waves of closures, the multiple still believes it has too many stores, too close together.

Now, this mid-summer bulletin (no silly season for pharmacy journos) came as the high street behemoth published very healthy quarterly figures with profits rising year-on-year. Retail sales have grown for nine consecutive quarters, and pharmacy sales have bounced back after the end of the national Covid vaccination programme saw them slump for some time. Why now, one might wonder? 

Company executives are adamant about tackling the issue of stores in “close proximity” to one another. In a Darwinian flourish, they said: “Evolving the store estate in this way allows Boots to concentrate its team members where they are needed and focus investment more acutely in individual stores.”

We don’t yet know the locations of the affected pharmacies, but it’s no secret that many big retailers derive much of their profits from relatively few flagship locations. In these uncertain economic times, perhaps Boots’ US parent company – which tried to sell it off last year – is keen to redouble its focus on these high performers, not to mention its booming online trade.

Several of the big pharmacy multiples are taking these tough decisions. Rowlands Pharmacy shed more than 10 per cent of its stores in the 12 months to April 2022, and we all know there is serious uncertainty around the fate of LloydsPharmacy. All have suffered the effects of Government funding cuts, as several commentators noted when Boots made the announcement.

Perhaps perversely, I’d like to see a slender ray of hope in all this. No one has been immune from the devastating impact of the cuts, as Community Pharmacy England’s annual pressures survey shows. But industry trends indicate that small and mid-sized operators are strengthening their hands in market share terms, and corporate divestments surely create opportunities for new entrants to the market.

Speaking to P3pharmacy in February, property broker Christie & Co said these changes could reshape the market so that a strong multiple presence is balanced by more small operators providing a service tailored to their localities. There is certainly a place for both business models, and these shifting ownership patterns could have a healthy impact on overall service provision.

I don’t claim that these are easy times for anyone – countless independents have been brought to their knees, too – but not all change has to be bad.

Copy Link copy link button