Compared to Dis-Chem, Clicks is in a better position to take advantage of the booming retail pharmacy market in South Africa. This is due to its proven track record, greater utilisation of private-label products, and effective staff arrangement.

Kgomotso Mokabane, an equity analyst at Sanlam Private Wealth, recently shared feedback outlining some of Clicks' structural advantages over its.

Over the last ten years, the retail pharmacy industry in South Africa has been experiencing consistent growth as Clicks and Dis-Chem acquire more companies. As a result, they now dominate half of the country's pharmacies.

In addition to Alpha Pharm and Medirite, other corporate chains hold a 5% share of the market, leaving the remaining majority in the hands of independent businesses.

Following its significant growth over the past decade, Sanlam Private Wealth has recently welcomed Clicks into its portfolio. Clicks boasts a proven track record of consistently delivering stable and predictable earnings.

An example of corporate expansion is in US and UK, as corporate pharmacy chains hold 71% and 61% of the market share respectively. According to Mokabane, there is still potential for growth among South African corporations. He pointed out that they could potentially acquire an additional 12% of the market from independent businesses in the future near future.

Over the past five years, Clicks has expanded its store base by 33%, resulting in a current total of 936 stores. They have set a goal to increase this number to 1,200 within the next five years.  According to Mokabane, South Africa's continually increasing urbanisation continues to enhance its edge. major retail pharmacies may reach a limit in their store expansion. It is predicted that Clicks will dominate the remaining 12% of the market.

Clicks has focused on convenience centres and smaller stores rather than destination locations like large shopping malls. Currently, the majority of its stores (76%) are strategically placed in bustling locations, making them easily accessible to more than half of the South African population within a 5 km radius of a Clicks branch.

This change in focus prioritises improving the efficiency of current stores, making wise use of capital, and expanding into sectors other than pharmaceuticals.

Clicks is heavily investing in enhancing its prescription management system. This system enables patients to retrieve their medication at any Clicks store across the country by simply using their loyalty card.

This is seen as positive, as it enhances retention among individuals who regularly require repeat prescriptions for chronic ailments. As per the World Bank's definition, a country is considered 'ageing' if its population over 65 years old exceeds 7%. South Africa is approaching this threshold.  The use of chronic medication is expected to increase, putting Clicks in a favourable position to take advantage of this knowledge.

The company's total store revenue is not heavily dependent on pharmacy sales though. These only make up approximately 30%, with the remaining portion stemming from front-shop retail.  The pharmacy counter plays a crucial role in generating foot traffic, and the store's layout is tailored to cater towards this purpose.

Always situated at the back of the store, the dispensary strategically guides customers past eye-catching advertisements and well-stocked front-shop items on their journey to the checkout counter.

In addition, Clicks has introduced an affordable medical coverage option in order to appeal to the 45% of working individuals in South Africa who currently lack medical aid.

The reasonably priced Flexicare medical insurance plan is a collaboration between Discovery, who acts as the administrator, and Auto & General, the underwriter.  This partnership with introduce a new customer base to Clicks. Since it is a capital-light collaboration, management will be able to focus on the company's core business without any distractions.

This indicates that Clicks is in a favourable position to sustain growth, even without the option of purchasing independent pharmacies for expansion.

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