Alliance Boots has real chemistry in this year's Most Admired
By Emma De Vita Monday, 03 December 2012
Alliance Boots has stormed up this year's Most Admired ranking to reach 20th place, beating the likes of Sainsbury's to get there. Here's how the nation's most beloved pharmacy has won the favour of its peers and rivals too.
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Alliance Boots is our second highest placed retailer overall (second only to John Lewis). The international pharmacy-led health and beauty group has climbed an admirable 16 places this year to reach number 20 – an impressive feat for any high street retailer during such gloomy times.
The biggest news of the past year for the group is its $6.7bn mega-merger with US business Walgreen, which creates an 11,000-store chain and the biggest pharmaceutical distribution network in the world.
With group revenues of £23bn and a presence in over 25 countries, Alliance Boots is capitalising – like BMAC’s other thriving companies – on its reach to all corners of the globe. What started out as one small pharmacy run by John Boot in Nottingham in 1850 has become an international player with healthy potential for increasing revenue and profits growth.
The group’s stated strategy is to focus on its two core business activities of pharmacy-led health and beauty retailing, and pharmaceutical wholesaling and distribution, while increasingly developing and internationalising its product brands. Such brands include the hugely successful No 7 beauty range and Soltan sun lotions.
Boots, one of Britain’s biggest retailers, was taken private in 2007 in a £11bn deal by now executive chairman Stefano Pessina, who zeroed in on the retailer with the backing of private equity house KKR. Pessina has previously said he is keen to expand Alliance Boots’ wholesale business, with China being the most exciting target market: the business only has a tiny share of the Chinese pharmacy industry through joint ventures.
It’s all part of a strategy to make Alliance Boots a substantially better business than it was when Pessina took it over – and many would say he has achieved this already, with profits up, stores smartened up, upgraded brands and an overhaul of its distribution system. Healthcare remains one of the most recession-proof parts of the highstreet, and Alliance Boots is poised to continue to take advantage of its success so far.
MT’s Britain’s Most Admired Companies Awards is one of the most respected awards programmes in UK business, having appeared annually since 1994. It is based on an extensive peer reviews survey of the largest companies in each of 26 industry sectors, conducted by Prof Mike Brown of Birmingham City Business School. Participants rate their rivals from 1 to ten across each of nine criteria (including quality of management, financial soundness, ability to attract and develop top talent and capacity to innovate). The awards are thus based on perception as well as on actual performance, hence the Most Admired tag. The winners are those firms which show themselves to be the most respected players in their various industries.