Dis-Chem thinks smaller for growth
● Pharmacy retailer Dis-Chem will add six stores to the four it has in Namibia and roll out smaller-format stores in South Africa as it continues to implement its growth strategy in the region.
In an interview after its AGM on Friday, Dis-Chem chief financial officer Rui Morais said the Southern African Development Community (SADC) was an area of focus for the retail company.
“We’ll have six stores in Namibia by the end of the year and our first in Botswana,” he said. “It [the expansion] is SADC-focused initially because tied into our business model is how pharmacies are regulated, which differs from country to country in the region.”
Friday’s AGM was the second Dis-Chem has held since listing on the JSE in 2016 at a share price of R21.48. The stock rose to R39 this January but is now at R28.31.
Morais said in addition to Namibia and Botswana, they would open 20 more shops in South Africa by the end of the year.
With a core health and beauty business, Dis-Chem’s large-format stores offer products ranging from wellbeing and personal care to some apparel. However, Morais said they were now looking at smaller outlets in response to the changing retail landscape, which has seen the development of more convenience-type centres, with stores between 350m² and 650m².
“We are still over-indexed in terms of larger formats, so in terms of smaller formats I think by the end of the year we’ll have around 20, so that’s stores [that are] under 1 000m². We would be [focused on] core health and beauty in the smaller space but we wouldn’t have electrical, household and shoes. It’s still going to feel like a Dis-Chem, [but] very much core health and beauty,” said Morais.
He added that the new, smaller stores would operate under the traditional DisChem brand and The Local Choice brand (TLC), a pharmacy franchise in which DisChem has a stake.
In addition to smaller stores, the retail pharmacy also has its eye on the township market in Gauteng and is looking to add to the one it has in the Western Cape.
“We believe the shopper [in the township] is a similar shopper in the metro areas,” Morais said.
“They might live there [in the townships] but they work in Sandton, for example, so the [consumer of that] profile is [who we are] really catering for.
“If you look at where we are under-indexed or under-represented in South Africa, those are the opportunities in townships that exist.”
Morais added that the stores in the urban areas would have less of a focus on private labels as that segment of the market is very brand-conscious.