Loyalty card tie-up aims to generate new growth through strategic partnerships

Health and beauty giant Alliance Boots is talking to other retailers about opening its Advantage Card to a select group of partners.

The proposed venture is part of executive chairman Stefano Pessina’s strategy to grow the business through acquisitions and partnerships.

Alliance Boots chief executive of health and beauty Alex Gourlay told Retail Week the idea was at an advanced stage and would be likely to enable customers of partners to collect points on online purchases initially, ahead of a potential roll-out to other retailers’ stores.

Gourlay would not disclose which retailers Boots was in talks with, but said: “This fits into our partnership model and we will only tie up with retailers that are aligned to the Boots value-added model and with those that do not compete with us.”

Loyalty is a battleground in the fight for customer spend, particularly among grocers. Sainsbury’s chief executive Justin King said last week that loyalty schemes were dividing retailers into successful “haves” and challenged “have-nots”.

Alliance Boots’ initiative could make Advantage Card more akin to the Nectar scheme used by Sainsbury’s and Homebase. Both the Boots Advantage card and Nectar have more than 16 million active members each. Alliance Boots is withdrawing Dollond & Aitchison from the Nectar scheme at the end of this month following the optician’s merger with Boots’ eyecare chain.

Alliance Boots, which this week reported that trading profit had topped £1bn, has been pursuing a partnership strategy under Italian billionaire Pessina’s leadership. Boots UK has forged ties with Waitrose and Mothercare. It is also in talks with other retailers to use its click-and-collect service, whereby shoppers could pick up other retailers’ goods from Boots stores.

Gourlay said Boots will open a new warehouse in Burton to service its dotcom operation, plus Christmas and partnerships. He is considering allowing other retailers to use Boots’ supply chain. He said its trials with Waitrose had generated “positive customer reactions” and further trials will take place this autumn.

In the year to March 31, Alliance Boots’ trading profit climbed 12.7% to £1.07bn and revenues rose 9.6% to £22.5bn. Pre-tax profit came in at £475m, compared with £13m last year. At the health and beauty division, trading profit rose 8.5%. Boots UK like-for-like sales were up 3%.