Clicks business review

The performance reflects management’s unwavering focus on the key growth drivers of value, differentiation, personalisation and convenience.

Clicks increased retail sales by 12.2% in an environment of growing pressure on consumer disposable income as the brand recorded market share gains in all product categories. Growth was supported by robust private label sales and a sustained recovery in the beauty category.

The performance for the year reflects management’s unwavering focus on the key growth drivers of value, differentiation, personalisation and convenience.

Clicks performance against objectives

Sales performance

Pharmacy sales, excluding vaccinations in the current and prior years, increased by 9.7% despite a relatively weak cold and flu season. Clicks increased its share of the retail pharmacy market to 24.0% (2022: 23.7%).

Front shop health grew by 5.3% against the high base of Covid-19 related product sales in the prior year, while the medicinal sub-categories were impacted by the subdued cold and flu season. Double digit sales growth was achieved in sports and slimming, and in the incontinence product category, with front shop health gaining market share to 32.8% (2022: 32.3%).

Baby accessories and diapers similarly achieved double digit sales growth. Supported by the comprehensive baby offering, which integrates private label products, specialist baby stores, Baby Club benefits and online ranges, Clicks increased its share of this strategic category to 21.0% (2022: 20.5%).

Beauty and personal care grew by 18% with all product sub-categories recording double digit sales growth. Clicks achieved strong market share gains in skincare to 43.6% (2022: 42.1%), haircare 33.0% (2022: 32.3%) and personal care 21.1% (2022: 20.2%).

General merchandise grew by 15% despite the negative impact of load shedding on electrical sales. The best performing sub-categories were beverages, impulse confectionery, snacks and paperware, while sales of small household appliances saw the sub-category grow market share to 19.5% (2022: 18.4%).

Offering value

Value is increasingly important to customers in the current challenging economic environment and Clicks aims to deliver on its customer promise of ‘feel good, pay less’. The brand offers competitive everyday pricing and appealing promotions, with Clicks being price competitive with all national retailers. Health and beauty markets are promotionally driven and in the past year promotional sales increased by 14.9% to 43.6% (2022: 42.3%) of turnover, with strong promotional sales growths in the beauty and personal care, general merchandise, front shop health and baby categories.

Value extends beyond price in Clicks. The generous loyalty benefits of the iconic Clicks ClubCard resulted in R689 million being returned to customers in cashback rewards in the past year and R2.8 billion over the past five years.

The brand is also committed to offering patients value through lower-priced generic alternative medicines in Clicks pharmacies to save customers money and extend medical funding benefits. Generic medicines accounted for 59% (2022: 58%) of sales and 70% (2022: 70%) of pharmacy volume.

Extending convenience

Clicks expanded its footprint to 885 stores with the opening of a net 45 new stores. In the past three years, Clicks has opened 142 new stores. The brand continues to focus on convenience format stores which comprise 75% of the store portfolio, with the balance being destination stores. The Clicks footprint includes 49 stores in neighbouring Namibia (24 stores), Botswana (18 stores), Eswatini (5 stores) and Lesotho (2 stores).

Clicks has accelerated its presence in lower income areas and now has 228 stores located in areas serving lower income customers, accounting for 22.5% of retail turnover.

The national pharmacy presence was extended to 711 following the opening of a net 38 pharmacies. The commitment to delivering affordable and accessible healthcare through a convenient pharmacy network is illustrated by the fact that 50% of the country’s population now live within 5.1 kilometres of a Clicks pharmacy, compared to 5.3 kilometres a year earlier.

The acquisition of M-Kem, the 24-hour specialised pharmacy in the Western Cape, extends customer convenience, offering a diabetic clinic, wounds and burns management practice and a travel clinic.

The Clicks online store supports customer convenience and has enabled Clicks to enter product categories that are sold online only, including premium beauty, health mobility and baby hardware. Online purchases account for 1.2% of front shop sales.

Engaging customers through personalisation

ClubCard is core to the Clicks customer engagement strategy as it enables the brand to personalise communications and offers to customers through the effective use of data and digital technology.

Membership of the ClubCard programme passed the 10 million mark during the year, increasing by 700 000 to 10.4 million members. ClubCard sales accounted for 80.2% of sales in Clicks.

The Clicks mobile app, which incorporates a virtual ClubCard, allows customers to receive personalised offers, monitor reward points and cash back in real time, submit scripts and order repeat medication.

The ClubCard extends into other key customer markets, with the Baby Club membership at 365 000 and the Seniors Club over 1.5 million members.

Clicks was again voted as the ‘coolest health and beauty brand’ in the Sunday Times GenNext awards, reflecting the choices of the next generation of shoppers. Clicks was also recognised in the Kantar BrandZ Top 30 Most Valuable SA Brands for delivering ‘the best experience, function and meaning’. In the SA Loyalty Awards 2023, Clicks received the award for the ‘best strategic use of data analytics and customer relationship management applications’.

Differentiated product offer

Private label and exclusive brands offer differentiated ranges across all merchandise categories at competitive prices while increasing customer choice and enhancing margin. The Body Shop, GNC and Sorbet further differentiate the Clicks offer.

Strong demand for private label products contributed to sales growing by 15.4% and accounting for 25.2% of sales. Private label comprises 30.3% of front shop sales and 11.3% of pharmacy sales.

The Clicks Made4Baby private label range performed well across several product categories, including baby foods and diapers. Currently one in every three diapers sold is a Clicks branded diaper, highlighting the price and quality of the product. This was confirmed by the Clicks Made4Baby dry protect diaper range winning the SA Product of the Year 2023.

The elevated look and feel of the beauty halls in selected Clicks stores has driven increased sales of the major beauty brands as well as brands exclusively available in Clicks.

Based on the positive customer response, Clicks will be extending the Clicks Baby store-in-store concept and accelerating the opening of the standalone Clicks Baby stores.

Growth plans

Clicks remains committed to expanding its store footprint to 1 200 in the longer term, targeting to open 40 to 50 stores and 40 to 50 pharmacies annually.

In the 2024 financial year, R487 million is planned for investment in new stores and pharmacies, while a further 50 to 60 stores will be refurbished or expanded to ensure the stores remain appealing and enticing to customers.

Capital expenditure of R316 million will be invested in retail information technology, including the roll out of the new pharmacy management system as well as the 6 000m² expansion of the Centurion distribution centre, to support the increased scale of the business.

The contribution of private label, exclusive and franchise brands to front shop sales is targeted to increase to 31% (2023: 30.3%) in 2024 as Clicks continues to innovate and introduce new products. The private label medicines range will be extended to 270 – 280 products (2023: 249).

Despite the strong growth in recent years, the ClubCard active membership is targeted to increase to 11 million (2023: 10.4 million) as Clicks accelerates its personalisation and digital engagement strategy, while the Baby Club is expected to reach 400 000 members (2023: 365 000) and the Senior Club 1.55 million members (2023: 1.5 million).

Clicks performance against objectives