Group Strategy And Business Model
Clicks Group’s strategy is to create sustainable long-term shareholder value through a retail-led health, beauty and wellness offering
Clicks’ strategy is to be the customer’s first choice health and beauty retailer
Clicks business model
Value
Consistently good value-for-money products delivered through competitive prices and effective promotions
Product
Differentiated offering through wide ranges of private label and exclusive brands, including franchise brands
Customer care
Great customer service from friendly and knowledgeable staff in well-presented stores
Convenience
Extensive store and pharmacy network allowing easy access for customers
Rewards
Delivered through the ClubCard loyalty programme
Group business enablers
Supply chain
UPD provides an integrated healthcare supply chain channel for Clicks
UPD offers wholesale and distribution services to pharmaceutical manufacturers
Centralised supply from distribution centres to all retail stores
Information technology
Efficient and flexible integrated bespoke and proprietary systems
People
Motivated and skilled staff operating in a values-driven culture which rewards performance
Financial management
Efficient management of cash and capital to enhance returns
Capitals of value creation
Financial capital
- Total shareholder return of 35.8%
- R491 million paid to shareholders in dividends
- Cash generated from operations R1.7 billion
- Return on equity 53.7%
Manufactured capital
- 657 retail stores
- 361 Clicks pharmacies
- 9 distribution centres
- R370 million invested in capital expenditure
Intellectual capital
- Clicks is the leading health and beauty retailer in SA
- Market share gains in all businesses
- Own label and exclusive brands account for 19.8% of Clicks sales
Human capital
- 8 658 permanent employees
- R49 million invested in staff development
Social and relationship capital
- Level 3 BBBEE rating
- Included in JSE Socially Responsible Investment Index
Natural capital
- Participation in Carbon Disclosure Project
Performance against objectives in 2015 and plans for 2016
|
Strategic |
Developing a competitive and differentiated front shop product offer |
Creating a great customer experience in pharmacies |
Growing the retail footprint |
Driving customer loyalty through ClubCard |
Maintaining a motivated and skilled workforce |
|
Plans and targets for 2015 |
Increase front shop private label and exclusive brand sales to 25% Achieve price parity with national retailers |
Expand private label scheduled generic medicines range Grow repeat prescription service to 30% of repeat scripts Expand clinic services and open 19 new clinics |
Open 20 to 25 new Clicks stores 45 stores to be expanded/refurbished Open 20 to 25 new pharmacies |
Increase active membership to 5 million Grow Baby Club to 250 000 members Grow Seniors Club to 300 000 members |
200 pharmacy assistants to be enrolled 100 pharmacy bursary students 50 pharmacy internships |
|
Achieved in 2015 |
Front shop private label sales 25.7% (2014: 24.7%) Achieved price parity with national retailers |
76 private label medicines (2014: 66) 33% of scripts now on repeat prescription service Net 18 new clinics opened 157 clinics at year-end |
Net 22 stores opened (2014: 22) 486 stores at year-end (2014: 464) 43 stores expanded/refurbished Net 22 pharmacies opened (2014: 8) 361 pharmacies at year-end (2014: 339) |
5.0 million members (2014: 4.7 million) Baby Club 131 000 members Seniors Club 601 000 members |
332 pharmacy assistants enrolled (2014: 277) 82 pharmacy bursary students (2014: 98) 49 pharmacy internships (2014: 48) |
|
Plans and targets for 2016 |
Increase front shop private label and exclusive brand sales to 26% Expand presence of franchise brands in Clicks |
Expand private label scheduled generic medicines range Grow repeat prescription service to 40% of repeat scripts Expand clinic services and open 23 new clinics |
Open 20 to 25 new Clicks stores 50 stores to be expanded/refurbished Open 25 to 35 new pharmacies |
Increase membership to 5.5 million Grow Baby Club to 250 000 members Grow Seniors Club to 650 000 members |
200 pharmacy assistants to be enrolled 100 pharmacy bursary students 50 pharmacy internships |
|
Strategic objectives |
Growing private wholesale pharmaceutical market share to 30% |
Growing pharmaceutical distribution market share to 30% |
Ensuring effective pharmaceutical quality management |
Driving operational excellence and cost reduction |
Maintaining a motivated and skilled workforce |
|
Plans and targets for 2015 |
Increase market share to 26% in 2015 Maintain volume of business with private hospital groups Increase Clicks' buying levels from UPD to 97.5% |
Secure additional agency distribution contracts |
Ensure satisfactory outcome from regulatory inspections and maintain licences |
Maintain on-time deliveries of 98% Reduce labour and transport costs |
Reduce employee turnover to 14% |
|
Achieved in 2015 |
Market share maintained at 25.2% Sales to hospital groups increased 7.5% and accounted for 32% of turnover Clicks' buying levels from UPD at 96% |
22 contracts managed at year-end (2014: 19) |
Approval of new distribution warehouse by the Medicines Control Council (MCC) |
Maintained 98% of Cost growth contained to 8.4%, well below turnover growth of 21.6% |
Employee turnover 14% (2014: 16%) |
|
Plans and targets for 2016 |
Increase market share to 26% in 2016 Maintain volume of business with private hospital groups Increase Clicks' buying levels from UPD to 98% |
Tender for additional agency distribution contracts |
Maintain licences Continuous improvement in quality standards and implement electronic quality management system |
Maintain on-time deliveries of 98% Reduce labour and transport costs |
Maintain employee turnover at 14% |
Group financial and operating targets |
Medium-term |
Performance |
Medium-term |
|
Return on equity (%) |
50 – 60 |
53.7 |
50 – 60 |
|
Shareholders' interest to total assets (%) |
25 – 30 |
26.6 |
25 – 30 |
|
Return on total assets (%) |
14 – 18 |
14.0 |
14 – 18 |
|
Inventory days |
55 – 60 |
68 |
55 – 60 |
|
Operating margin (%) |
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|
• Group |
6.0 – 7.0 |
6.3 |
6.0 – 7.0 |
|
• Retail |
7.0 – 8.0 |
7.8 |
7.0 – 8.0 |
|
• Distribution |
2.0 – 2.5* |
2.5 |
2.0 – 2.5* |
|
* Excludes any trading gains from annual increase in single exit price of medicines.
The group’s performance relative to these medium-term targets is analysed in the chief financial officer’s report. |
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