How South Africa’s Clicks Group is bucking the retail slump

With sky-high inflation and rising rates, it is little surprise to see consumer spending slow significantly this year and retail sales drop.

In South Africa, retail sales fell 1.8% YoY in July 2023 after declining by a revised 1.8% in June, Statistics South Africa figures show – marking a retail sales decline for the seventh consecutive month.

But one South African retailer is bucking the retail sales slump putting in a resilient retail performance in the year to August 2023.

As the country’s leading health, beauty and wellness retailer and the largest retail pharmacy chain, Clicks Group reported a 12.2% rise in retail turnover with strong growth in private label sales and a sustained recovery in the beauty category – while group turnover grew by 8.2% to top R41.6 billion (US$2.16 billion).

Such resilience at a time when many other retailers are seeing a decline in sales follows a sustained period of growth for Clicks Group – which has been included in the FTSE-JSE Top 40 Index for the past six years.

Led by CEO Bertina Engelbrecht since early 2022, the first Black woman to lead a listed retail group in South Africa, Clicks has thrived under her watch.

According to Engelbrecht, Clicks grew market share in all core product categories despite growing pressure on consumer disposable income – increasing its share of the retail pharmacy market from 23.6% to 24.0% with front shop health market share increasing from 32.3% to 32.8%.

The Cape Town-headquartered health and beauty retailer attributes its robust sales and market share expansion to strong growth in private label, a sustained recovery in the beauty category, ambitious rollout of stores, and success of its loyalty programme – all areas that have been a continued focus for the retailer since its founding as a value retailer in 1968.

Private label and loyalty programme key to success

For Clicks Group, which celebrates its 65th anniversary this year, private label has been a signature since 1978, when it first launched own-label brand You Pay Less. Today, the JSE-listed Group counts nine private-label and exclusive brands among its offer including Safeway, Kambrook and Smartbite – which contribute more than 25% of sales.

A recipe for sustainable success, Click saw its private label sales grow by 15.4% in the first eight months of 2023, with one in every four products sold a Clicks-branded product.

Strength too lies in the Group’s Clicks ClubCard Loyalty programme, which made its debut in 1995, marking the first of its kind in Africa, and today represents a huge portion of sales.

Since the start of 2023, Clicks has significantly increased its membership by more than 700,000 to 10.4 million active members – with the loyalty programme now accounting for eight in 10 of all product sales.

Rollout of stores continues

Founded in 1968 by visionary retailer Jack Goldin with just one store and a handful of employees, Clicks has since grown to more than 880 stores in Southern Africa, including Namibia, Botswana, Eswatini and Lesotho, and more than 18,400 employees.

In 2023 alone, the retailer has opened 45 new stores and a further 38 pharmacies, expanding its footprint to 885 stores and 711 pharmacies – and all in strategic locations, meaning 50% of the country’s population now live within 5.1km of a Clicks pharmacy. Customers can also shop online at Clicks via a mobile app and choose from more than 25,000 products.

Clicks plans to open 40 to 50 new stores and pharmacies in the 2024 financial year, with a longer-term target of operating 1,200 stores.

Capital investment of R880 million is planned for the 2024 financial year. 

This includes a R487 million investment in new stores and pharmacies and the refurbishment of 50-60 stores, while R393 million will be invested in supply chain, technology and infrastructure, including battery storage at UPD’s main distribution centre.

Acquisition and franchise agreements have also always been central to the Clicks’ strategy, including The Body Shop franchise (2001) and GNC franchise (2014).

Today, Body Shop products are sold exclusively in more than 250 Clicks stores and 61 standalone stores throughout South Africa, while GNC products are offered in over 670 Clicks’ stores.

In 2023 alone, the Group successfully concluded three strategic acquisitions totalling R320 million, further cementing its leadership in health and beauty retailing.

Among these, the Sorbet beauty salon franchise chain of 194 outlets, M-Kem, along established 24-hour pharmacy in the Western Cape, and 180 Degrees, a pharmacy software development company.

“Our business model remains resilient and defensive and the group has proven its ability to adapt to changing market dynamics,” Engelbrecht said.