South Africa’s two largest pharmacy chains, Clicks and Dis-Chem, are pushing aggressive expansion plans, reflecting market optimism about their future growth. Both companies are enhancing their presence through new store rollouts and a strong focus on loyalty programmes, appealing to the increasing number of value-focused consumers in South Africa.
Clicks has proven resilient with a cash-generative business model. Its strategic investment of R1 billion annually over the next three years will focus on new stores, distribution, and technology upgrades. Loyalty remains a cornerstone of its approach, with Clicks ClubCard membership reaching 11.8 million.
Private label offerings
In 2024 alone, Clicks added 1.4 million new ClubCard members. Private-label offerings have also been a growth driver, representing a third of all front-shop sales, which boosts gross margins.
Clicks’ CEO, Bertina Engelbrecht, believes the company’s “defensive core” around health, beauty, and household products underpins its strong market position and a commitment to new pharmacy licenses following the sale of Unicorn, its medicine manufacturing division.
For FY2025, Clicks aims to open 40-50 new stores and pharmacies, inching closer to its medium-term target of 1,200 locations. The introduction of UniHealth specialist pharmacies, based on the large-format M-Kem model, is also underway, with plans for ten stores. Testing a primary care model for Schedule 3 and 4 drugs could offer further innovation, allowing trained pharmacists to prescribe medications, reducing the need for doctor visits.
Dis-Chem expands offerings and space
While Clicks maintains its consistent trajectory, Dis-Chem focuses on expansion and financial service offerings, including life insurance. Dis-Chem has seen rapid space growth, with plans for an additional 137,000m² over the next three years. CEO Rui Morais highlights that, amid increased competition, matching space growth with other retailers is crucial.
Dis-Chem reported a robust interim performance, with a 9.6% revenue increase to R19.6 billion and 16.3% growth in headline earnings per share. Its loyalty programme, now with over 9.3 million members, underscores the value-conscious nature of South African consumers.
Nedbank analysts Paul Steegers and Shaun Chauke emphasise Clicks’ superior earnings consistency and margins, noting its leading market share and strong balance sheet. Although Dis-Chem’s smaller base allows for more rapid space growth, Clicks’ steady market gains have made it a standout, with recent upgrades to its operating margin guidance.
Dis-Chem holds a 35.9% market share in Gauteng, while Clicks leads in the Western Cape at 30.9%. As both companies scale, Dis-Chem’s foray into financial services with life insurance and other products could provide new revenue streams, complementing its pharmacy business.
Clicks and Dis-Chem are setting the standard for South Africa’s pharmacy retail landscape, each leveraging unique strategies to sustain growth. With loyalty programmes, private-label expansions, and a push into underserved areas, these chains remain well-positioned to capitalise on South Africa’s growing health and wellness market.