The high street discounters’ move into branded products will threaten the viability of hypermarkets, warned Boots boss Ken Murphy.
Murphy, chief operating officer of Boots UK, said brands’ move to develop smaller product sizes so they can be stocked in discount retailers was a “real problem” for large grocers.
He told the World Retail Congress: “Poundland, 99p Stores, Home Bargains are taking over many high streets. Branded manufacturers are actively collaborating with them. It’s driven pack size [of products] down. Hypermarkets are in trouble as a consequence. People know if you shop at a hypermarket you will throw away 8% to 10% of what you buy. Hypermarkets have a real problem on their hands.”
However, Murphy said he was not worried about Aldi, who is reported to be in talks with brands owners including L’Oreal, P&G and Colgate, stocking branded beauty items, although he acknowledged it posed more of a threat in personal care.
He said: “It’s more of a threat from [Aldi stocking] Colgate than L’Oreal. Tesco and Sainsbury’s have had [L’Oreal]for some time and we haven’t lost share. People look to environment and breadth of assortment [in beauty]. I’d be less worried about that then the personal care side.”
Murphy said he the “opportunities are endless” for Boots in private label and there was “less snobbery” from consumers when choosing own-label over branded products.
He said the globalisation of many of the big brand owners means it takes longer for them to get products to market, which has given Boots an advantage. He said: “We pride ourselves in getting to market two to three times faster than brands.”
Boots is looking to increase the amount of GP services it has in-store. Murphy said: “Our strategy is to be a well-being destination. Our strategy is to have as many GPs as possible in–store in the next five years.”