Sales performance

Clicks delivered a strong performance in the constrained consumer spending environment, increasing market share in all key merchandise categories as the chain continued to pursue its strategy of being the customer’s first choice health and beauty retailer.

Sales increased by 10.9% to R13.7 billion, driven primarily by volume growth through effective promotions and price competitiveness. Promotions accounted for 29% of sales.

Comparable store sales increased by 7.9% with real volume growth of 3.6% as selling price inflation averaged 4.3% for the year. The financial performance of Clicks is covered in the chief financial officer’s report.

Sales performance	% increase	% contribution to total sales
Pharmacy	12.8	27.5
Front shop health	15.3	23.0
Beauty and personal care	10.1	32.1
General merchandise	4.5	17.4
Total turnover	10.9	100.0

Pharmacy and front shop healthcare accounted for 50.5% of sales (2014: 49.3%). Pharmacy sales increased by 12.8% as lower cost generic medicines continued to grow faster and more patients chose to self-medicate. Sales of generic medicines increased by 19.0% and accounted for 45.4% (2014: 43.0%) of pharmacy sales, while over-the-counter medicines, which do not require a prescription, grew by 15.6%. Clicks increased its share of the retail pharmacy market to 18.7%.

Front shop health showed strong sales growth of 15.3%. The key sub-categories of medicines, vitamins, supplements, first aid and diagnostics performed well and benefited from expanded ranges, additional space and better customer service in-store. Baby merchandise, which is a strategically important category in attracting new customers, continues to be the fastest growing category in Clicks, with sales increasing by 20.3%.

Beauty and personal care remain highly competitive markets where consumers are most responsive to promotions and product innovation. The fragrance sub-category benefited from extended ranges and increased sales by 22.1%, with colour cosmetics and skincare both showing double digit growth. Haircare sales were slower at 5.5% with relatively less product innovation in this category.

General merchandise, with the most discretionary product offering, grew sales by 4.5%. As Clicks increases its health, beauty and wellness focus, it is exiting certain non-core product categories which declined by 20.0%. In the core product categories, domestics increased by 13.7% and confectionery by 9.6%. Clicks increased its leading market share of small household appliances to 20.2%.

Market share (%)	2015	2014
Health
Retail pharmacy*	18.7	18.3
Front shop health**	29.4	28.4
Baby**	11.2	9.9
Beauty and personal care
Skincare**	26.8	26.3
Haircare**	25.4	24.9
General merchandise
Small household appliances***	20.2	18.7
*IMS (methodology changed in 2015; comparative not restated). **AC Nielsen (comparatives restated). ***GfK (comparative restated).

Competitive and differentiated offer

Private label products and exclusive brands ensure that customers are offered differentiated ranges at competitive prices, while also increasing loyalty and enhancing margins. Sales of private label products increased to 19.8% (2014:  19.0%) of total sales in Clicks, and 25.7% (2014: 24.7%) of front shop sales.

The Clicks offer is further differentiated by stocking the best-selling ranges of the group’s exclusive health and beauty franchise brands. The Body Shop has a presence in 86 Clicks stores, GNC in 257 stores and Claire’s has extended its presence post-year-end to 77 Clicks stores.

Customer loyalty and rewards

Clicks ClubCard increased active membership by over 300 000 to reach 5 million at year-end. The loyalty programme accounted for 75% of sales in Clicks and the average basket value of ClubCard members remains double that of non-ClubCard members.

The ClubCard was relaunched during the year to enable cashback rewards to be loaded directly onto customers’ cards to increase convenience and modernise the programme. Over R294 million was returned to customers in cashback benefits.

Clicks was rated as the country’s leading health and beauty retailer for the seventh consecutive year in The Times Sowetan Retail Awards 2015. The chain was also placed first in the specialist and pharmaceutical outlet category. In the retail grand prix category Clicks was ranked fourth among all retail chains in the country.

Expanding and refreshing the retail footprint

Clicks continues to expand its store footprint to increase customer convenience. A net 22 new stores were opened to increase the brand’s footprint to 486 at year-end. This includes 24 stores in the neighbouring countries of Namibia, Swaziland, Botswana and Lesotho. A further 43 stores across the chain were extended or refurbished.

The pharmacy footprint grew to 361 after adding a net new 22 pharmacies during the year. Primary care clinics in pharmacies are an integral part of the healthcare offering to customers and a driver of pharmacy foot traffic. The number of clinics was increased by 18 to 157.

Outlook for 2016

Clicks will continue to focus on delivering good value and appealing promotions while offering differentiated product ranges. Private label and exclusive brands are targeted to contribute 25% of sales in the long term.

ClubCard membership is planned to increase to 5.5 million in the new financial year and customer engagement will be increased through the launch of a transactional website.

Clicks is targeting to grow its store base to 600 in South Africa in the medium term and aims to open 20 to 25 new stores in 2016. The pharmacy expansion programme will be accelerated, with 25 to 35 new pharmacies planned in both new and existing stores. The goal is to ultimately incorporate a pharmacy into every Clicks store.

Vikesh Ramsunder
Chief operating officer