Interview: Boots chief Simon Roberts sees bright future in UK bricks-and-mortar retail

Simon Roberts believes in the rebirth of British high streets more than most. As the president of Boots, with the majority of its 2,500 stores on high streets, it’s clear he has a vested interest.

But why is the affable Roberts so optimistic that high streets have a bright future?

“Some of the trends going on at the moment suggest high streets will become more important,” he says. “Local shopping and more frequent shopping is a big trend. I walk round out-of-town supermarkets and they are less busy, aren’t they? Whereas in their convenience stores they are very busy.”

But it’s not just about commerce.

Roberts, who is also co-chair of the Government’s Future High Streets Forum, points to the fact that town centres are “part of a local community”. He adds: “They are destinations – places to spend time eating and socialising.”

Retail Week has joined Roberts at Boots’ Nottingham headquarters to get a more in-depth view of the business. We are treated to tours of Boots’ laboratories, where more than 100 scientists work on testing and dreaming up new products, its distribution centre, and a building where start-up medical businesses can rent a space.

“We didn’t enter Black Friday with loads of one-off deals that were margin dilutive. It was a gift extravaganza for us”

Simon Roberts

Back in the boardroom, Roberts, who turns 45 this week, seems on chipper form having just delivered what the company is calling an “encouraging” Christmas. No specific numbers are being released as the retailer does not disclose figures until April, in line with US parent company Walgreens Boots Alliance.

However, Roberts does admit the company was affected by the mild weather that hit many retailers and the impact of flooding in parts of the North.

When it came to Black Friday, Boots participated but not as much as some retailers. Roberts explains: “We didn’t enter Black Friday with loads of one-off deals that were margin dilutive. It was a gift extravaganza for us and online was beyond what we expected.”

Striking a balance

Roberts, who speaks firmly but cautiously, says he was pleased with the “substantial” contribution from its online business over the entire peak trading period.

Like all bricks-and-clicks retailers, Boots is grappling with the challenge of balancing a buoyant ecommerce business against the backdrop of the costs involved of running a store estate. And for the health and beauty retailer, that cost looms large with its 2,500-strong store network.

Roberts argues, however, that such a large number of stores is still a strength. “We are in a unique position,” he says. “90% of the UK population are within 10 minutes of a Boots. I see our store estate as a massive asset strategically. In the context of omnichannel that may be more powerful than we thought three or four years ago.”

Indeed three-quarters of online orders at Boots are now picked up in store, which pleases Roberts. He notes the, at times annoying, reality of home delivery. “I’m sure you’ll have experienced the queue at the Post Office after the card comes through the door, it’s really inconvenient.”

Other retailers – notably John Lewis and Tesco – have started to feel the cost impact of click-and-collect and have begun charging customers for small orders.

“Charging for delivery is not something that’s top of my mind at the moment”

Simon Roberts, Boots

But this is not a path Boots will be following any time soon. “Charging for collection in-store (delivery) is not something that’s top of my mind at the moment,” says Roberts.

Boots has also been capitalising on its vast store estate, having signed a deal with Asos allowing the fashion etailer’s customers to pick up orders from their local Boots.

Roberts reveals that after an initial trial in 12 stores last year, this has been ramped up to 70 shops. “We are Asos’ number one preferred collection point,” he boasts. “It speaks to the convenience angle. We’re really pleased with it.”

But when pushed on whether the scheme will extend to more stores and the prospect of further tie-ups with other retailers, he is more circumspect. “We’re looking at how our omnichannel platforms will continue to grow,” he offers.

Tough decisions

The shift in focus to create a better omnichannel experience has meant Boots having to make some tough decisions.

Last summer it announced plans to cut 700 back-office roles as it upped its investment in technology.

Roberts says the restructure was the “first phase” of a three-year plan, which will include a “number of phases”. He adds: “The first phase has gone well as far as you can say that.

“When you go through change as a business it’s easy to become distracted, but the figures I’m looking at from this Christmas have given me confidence this will not be the case.”

However, Roberts will not be drawn on whether store staff will eventually be affected by the ongoing restructuring. “We talked about non-store roles last June. We never made any comment about store roles at the time. Phase one of the change was about getting the non-store areas right, we’re coming through with that.”

Boots also attracted some unwanted headlines last year when it became embroiled in the controversy over airport VAT. The scandal received plenty of publicity as media and campaigners lined up to criticise the fact that some retailers were failing to pass on VAT saving to travellers outside the EU.

Boots responded by deciding it would no longer ask customers to show their boarding passes when making purchases. It also revealed plans for a review of its airport pricing policy.

Meanwhile last month, Chancellor George Osborne launched the government’s own review after branding it “unacceptable” that some retailers were failing to pass on savings.

Roberts appears unfazed by the row. “We are not a duty-free retailer,” he says.

“A significant volume of the products we sell at the airport either don’t attract VAT or attract lower levels of VAT. We believe in giving good value to customers in total, not just those travelling outside the EU.”

Nevertheless, he promises the results of Boots’ review will be published in the “first half” of this year.

It’s not the first time the retailer has been embroiled in a row over taxes. Stefano Pessina, Walgreens Boots Alliance’s chief executive, has attracted media attention over his tax affairs. But as part of a vast global company, these kinds of issues are unlikely to trouble the retailer significantly, instead being more of an unwelcome distraction.

Since Boots merged with Walgreens, have staff noticed a change?

Roberts offers this: “Boots will always be Boots. Staff would see a business that’s going through a period of change and that’s not all easy.”

He concludes by saying that he sees 2016 as a “transition year to building an even better Boots”. Roberts adds: “We are carefully and thoughtfully making choices about things we’ll push on. But the market is not straightforward and we have to make sure that customers get an even better experience in Boots.”