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Could Boots' Deliveroo partnership lead to 'dark pharmacies'?

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·Senior City Correspondent, Yahoo Finance UK
·2-min read
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A Covid test that can provide a result in 12 minutes will be made available at high street pharmacy Boots in selected stores over the next few weeks, London, Britain, 26 October 2020. The nasal swab test, which will cost £120, will be available in more than 50 stores across the UK to anyone who is not showing symptoms. The test, and the device needed to process it, have been approved by authorities in Europe and the US. In trials on more than 500 patients it accurately detected the virus in more than 97% of cases. (Photo by Maciek Musialek/NurPhoto via Getty Images)
For now, the tie-up is being described as a trial. But history suggests this dipped toe in the water could lead to big changes down the line. Photo: Maciek Musialek/NurPhoto via Getty

Another day, another online delivery tie-up. This time, it’s Deliveroo partnering with Boots to offer make-up, pain pills and other bathroom cabinet essentials on demand.

The partnership makes sense for both businesses. Boosts customers are increasingly moving online and both Deliveroo (ROO.L) and Boots face competition from a new wave of 10-minute grocery delivery companies.

One of the new breed, Zapp, pitches itself specifically to people who might need a paracetamol and a can of coke — a core Boots market. A tie-up with Deliveroo offers a quick way to mount a defence against this assault. 

For Deliveroo, the Boots partnership gives people more reason to stay on its app rather than straying elsewhere.

Read more: Where Deliveroo is trialling Boots deliveries

For now, the tie-up is being described as a trial. But history suggests this dipped toe in the water could lead to big changes down the line.

Deliveroo’s takeaway takeover has given rise to so-called "dark kitchens" in Britain — restaurants that exist only on industrial estates or down unmarked side-streets. These "dark kitchens" churn out meals solely for takeaway clients, with no seated customers anywhere to be seen. 

10-minute delivery apps like Getir and Gorillas are now applying this model to the supermarket and convenience store sector. These companies have "dark" stores dotted at key points around cities, stocked with fresh veg, milk, and other weekly shop items. Shoppers aren't allowed in, only delivery drivers picking up items.

A similar transformation could be in store for the pharmacy sector. The rise of virtual GP apps like Babylon Health and Dr IQ mean it's only a short skip and a jump to get to "dark pharmacies." Besides, much of Boots' business comes from beauty products and bathroom items that would be relatively easy to digitise.

Read more: Lidl to trial climate 'traffic lights' on products

This evolution would be good news for investors in the sector. "Dark pharmacies" would let the likes of Boots squeeze more stock into a smaller space. But staff may be less pleased. By replacing customer service with an app, "dark pharmacies" would most likely require fewer employees than regular ones. That could drive more people into the gig economies, delivering paracetamol on their bikes rather than handing it over the counter.

Whether people like it or not, past experience suggests market forces may drive this development regardless.

Watch: How to prevent getting into debt

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