Superdrug seems to be suffering an identity crisis in its attempts to catch up market leader Boots in the health and beauty stakes. By Ian McCawley
Visit several of Superdrug’s 700 UK outlets and you may well get a sense that the store experience is never the same twice. Ranked number two behind Boots in the specialist health and beauty market, the high street retailer appears to be struggling to establish its true identity.
Superdrug’s Oxford Street store in London, which is to trial 24-hour opening in the week before Christmas, sells everything from bread-bins to beauty products, and hairdryers to hot-water bottles. But there is no uniformity in its offering nationwide, with one-third of stores boasting a pharmacy, and another third hosting a perfume counter. It is this lack of a coherent in-store strategy that retail experts believe will damage sales.
According to Verdict Consulting, Superdrug has a share of about six per cent of the specialist health and beauty market, trailing way behind Boots, which commands more than 25 per cent. Superdrug’s financial performance remains under wraps, as parent company Hutchison Whampoa is privately owned and does not publish results for its retail arm AS Watson, whose brands also include Savers and The Perfume Shop. However, according to its website, Superdrug garners sales of &£1bn a year. The retailer is not helped by the fact that most of its outlets are in the “wrong place” according to one analyst. Superdrug stores are located predominantly on the high street, and are losing share to major supermarkets offering consumers the convenience of “everything under one roof”, he adds.
Superdrug has axed television advertising created by Euro RSCG London, for the time being at least (MW last week), to focus on in-store promotions, guerrilla marketing, public relations and supplier-funded advertising. Some see the scrapping of TV ads amid the pre-Christmas scramble for custom as “brave”.
James Walton, a senior economic analyst at food and drink grocery think tank IGD, says: “This was a bold business decision and you may argue that its in-store operation must be sufficiently strong; it has very strong leafleting and promotions, for instance. But will this be enough to carry it through?”
Others, however, say Superdrug had no choice. It announced a tripling in marketing spend from an annual &£3.5m to about &£10m after it appointed Euro RSCG London (MW July 21). But one insider says: “Superdrug was unhappy with the ‘awards ceremony’ ads created by Euro’s. They did nothing for sales, and didn’t tell consumers why they should buy Pantene from its stores rather than one of the major supermarkets.
“But unless it does some above-the-line work it’s going to be in trouble. It needs to establish what the brand is about.”
Superdrug marketing director Gerry Murphy is unable to comment as, according to a spokeswoman, strategy for the year ahead is still being agreed. The brand sponsored the hair and beauty stage at this week’s Clothes Show Live, and will also back London Fashion Week in February. The spokeswoman adds: “This gives some idea of the direction we’re taking.”
Other clues that Superdrug is keen to push beauty, rather than health, are evident. Last month, it exclusively unveiled David Beckham’s new fragrance, Instinct. It has also tied up with pop stars Sugababes and London health spa The Sanctuary for an online promotion, and it has appointed its first fashion director to improve its jewellery and accessories offer.
Recent media coverage of Superdrug’s decision to stock SSL International’s Durex Play range of sex aids may stimulate a hot flush among consumers, and Walton says stocking more exclusive and “exotic” products such as these could help it gain a competitive advantage over rivals. A spokesman for Datamonitor adds: “While sex toys may not spring to mind as a natural route of development, they afford Superdrug entry into an expanding market.”
But observers maintain Superdrug struggles to define what it stands for. One claims it is under pressure even from AS Watson’s other retail brands: Savers, which offers discounted products, and The Perfume Shop, which is a more high-end offering. He says: “Superdrug is somewhere in between, and middle brands get squeezed in any market. Some of its own-label health and beauty goods are well-designed, but the range has to be tied into a brand rationale that consumers understand.”
He concludes: “Someone needs to get hold of Superdrug, find its core competence and nail the positioning around it. It is in the midst of an identity crisis, and is seen as a not very good version of Boots.”
The consensus is that Superdrug should focus on beauty and fashion to add gloss to its sales performance.
â¢ Superdrug operates more than 700 stores in UK high street and shopping mall locations. It employs 12,500 people and serves about 4.5 million customers each week.
â¢ It was founded in 1964 by the Goldstein family, originally operating in Putney, west London. When Kingfisher bought it 1987, it had 289 outlets. These were increased to 650 by the purchases of Tip Top, Share Drug and Medicare chains, before being sold to Dutch health and beauty specialist Kruidvat Beheer in July 2001.
â¢ Hong Kong-based conglomerate Hutchison Whampoa’s retail and manufacturing arm AS Watson snapped up Superdrug in October 2002. It is embarking on a &£75m growth plan, developing 40 new sites and employing 400 extra staff. AS Watson claims Superdrug will number more than 1,000 outlets in the UK by 2009.