Clicks buys Pick n Pay’s retail pharmacy business
SA’s largest health and beauty retailer, Clicks, is buying Pick n Pay’s retail pharmacy business as it pursues its goal of opening a pharmacy within 5km of every South African.
Pick n Pay said the pharmacy business is not part of its future growth plans. The 25 pharmacies that are located in Pick n Pay stores will be rebranded under the Clicks name.
Clicks opened its 600th pharmacy in February and the acquisition will increase its national presence to 632. The largest retail pharmacy chain plans to have 900 stores in SA, with a pharmacy in each.
Sasfin analyst Alec Abraham says: “Clicks has a strong national network of both large-format stores and numerous smallerformat stores in convenient neighbourhood shopping centres. This ubiquity is certainly one of the group’s competitive advantages.”
CEO Vikesh Ramsunder said: “Currently 50% of the country’s population live within 6km of a Clicks pharmacy and we aim to improve this over time as we get closer to customers.”
The group has said its proximity to many consumers makes it able to support the government in the Covid-19 vaccine rollout.
Pick n Pay COO Adrian Naude said that the growth plans do not include its pharmacies, and the group wanted to ensure that staff jobs were saved, which the transaction will ensure. The pharmacists will be employed by Clicks.
“Pick n Pay has only held a relatively small number of pharmacies over the years,” said Naude. “We have recently set out our key strategic objectives in terms of future growth, and these do not include the development of a large pharmacy division,” he said.
Pick n Pay is focusing on growing its grocery store footprint with an emphasis on expanding its growing discount Boxer chain, which competes with Shoprite and Usave.
The merger is subject to approval by the competition and regulatory authorities.
Abraham said Clicks was very good at “these types of ‘easy’ deals to grow the store base and scale to support its formidable wholesale and distribution operation, UPD”.
In 2016, Clicks bought the 37 retail pharmacies at Netcare’s Medicross GP medical and dental clinics and 51 Netcare hospital retail pharmacies that are near the front of the hospitals and open to anyone.
Abraham said the news made him think of Clicks competitor “Dis-Chem, whose progress in rolling out smaller stores to challenge Clicks’ dominance in peri-urban areas has been a little disappointing”.
Clicks has a far greater number of pharmacies and stores than urban-based Dis-Chem, which is expanding into the growing baby market and antenatal health care with its purchase of retailer Baby City.
Clicks is closing its last Musica stores this month after the chain lost money for two years as consumers switched to digital music and entertainment, but its core business, Clicks stores and its UPD medicine wholesale and distributor, are thriving.