Clicks business review

Robust private label sales, together with the growing ClubCard membership, enabled Clicks to grow market share across all core categories.

Clicks again showed the defensiveness of its core product offering as retail sales increased by 11.7% for the year, with beauty and personal care delivering the strongest growth.

Robust private label sales, together with the loyal support of the growing ClubCard membership base of 11.8 million, enabled Clicks to grow market share across all its core health and beauty categories.

The performance for the year reflects management’s consistent focus on Clicks’ strategic pillars of value, differentiation, personalisation and convenience.

Clicks performance against objectives

Sales performance

Pharmacy sales increased by 8.9% despite the lower number of pharmacies opened relative to prior years due to the regulatory restriction on the granting of new licences (refer to the CEO Report). The focus on organic growth, supported by ClubCard customers who contributed 87.3% of pharmacy sales and the increase in customer participation in the repeat prescription service to 53%, resulted in Clicks growing its retail pharmacy market share by 50 basis points to 24.2%.

Front shop health sales grew by 10.7%, driven by promotional sales growth of 15.8%. Market share increased strongly to 34.2% (2023: 33.1%) with the sub-categories of footcare, medicinal and first aid reporting the largest gains.

Clicks’ integrated baby strategy has consolidated its leadership position in this competitive market. Baby foods delivered a standout performance, with private label baby toiletries and diapers also achieving high double-digit sales growth. The baby offering integrates private label products, specialist baby stores, clinics, Baby Club benefits and online ranges, and contributed to Clicks increasing its share of this strategic category to 22.5% (2023: 21.0%).

Beauty and personal care grew by 15.9% off a strong base. The investment in the elevated beauty halls, private label and exclusive offers, personalised ClubCard offers and sold-out events such as the Beauty Playground are entrenching Clicks as a destination for beauty. Skincare sales increased by 21.6% and drove market share to 43.8% (2023: 42.7%). Personal care grew sales by 19.2%, with the market share increasing to 22.1% (2023: 20.7%) due to strong gains across all sub-categories, particularly body fresheners, deodorants, soaps and suncare.

General merchandise grew by 10.1% with the domestic cleaning sub-category growing strongly and being partially off-set by weaker sales of electrical and paperware. Growth in small household appliances was muted and market share declined slightly to 19.0% (2023: 19.5%).

Offering value

The Clicks customer promise of “feel good, pay less” resonates with all consumers in the current constrained economic environment.

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 14.6% to 44.9% (2023: 43.6%) of turnover, with strong promotional sales growth across all front shop categories.

Value extends beyond price in Clicks. The generous loyalty rewards of the iconic Clicks ClubCard resulted in R780 million being returned to customers in cashback rewards in the past year, 13.2% higher than the prior year. In the past five years R3.1 billion has been paid back to customers in ClubCard rewards.

The brand is also committed to offering patients value through lower-priced generic medicines in Clicks pharmacies to save customers money and extend medical funding benefits. Generic medicines accounted for 59% of sales and 69% of pharmacy volume.

Extending convenience

Clicks expanded its footprint to 936 stores with the opening of a net 51 new stores. In the past three years, Clicks has opened 154 new stores. The brand continues to focus on convenience format stores which comprise 76% of the store portfolio, with the balance being destination stores. The Clicks footprint includes 53 stores in neighbouring Namibia (24 stores), Botswana (22 stores), Eswatini (5 stores) and Lesotho (2 stores).

Clicks continues to accelerate its presence in lower-income areas and now has 234 stores located in areas serving lower-income customers, accounting for 22.4% of retail turnover.

The national pharmacy presence was extended to 720 following the opening of a net nine pharmacies. The number of pharmacy openings was below the targeted range due to the restrictions relating to the Unicorn licensing matter.

The commitment to delivering affordable and accessible healthcare through a convenient pharmacy network is illustrated by the fact that 51% of the country’s population now live within 5.0 kilometres of a Clicks pharmacy.

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 (including purchases researched online and bought offline) accounted for 3.0% of front shop sales.

Engaging customers through personalisation

ClubCard is core to the Clicks customer strategy as it provides the mechanism to attract, engage and retain customers by personalising communications and marketing offers through the effective use of data and digital technology.

Membership of the ClubCard programme reached 11.8 million by the financial year-end, increasing by 1.4 million members. ClubCard sales accounted for 81.7% of total sales in Clicks, highlighting the loyalty levels of ClubCard shoppers.

ClubCard has been transitioned to a loyalty programme that integrates rewards, customer engagement and personalisation to reinforce the emotional affiliation of customers to the brand.

It was pleasing for Clicks to be recognised at the SA Loyalty Awards 2024 for the “best strategic use of data analytics and customer relationship management applications” as well as the “best use of artificial intelligence to improve loyalty experience”.

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

The ClubCard extends into other key customer markets, with the Baby Club membership at 662 000 and the Seniors Club at over 1.3 million members.

Differentiated product offer

Through its differentiation strategy Clicks aims to respond to changes in consumer demographics, preferences and shopping behaviours in the dynamic trading environment.

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

Strong demand for private label products contributed to sales growing by 13.5% and contributing 25.4% of total sales. Private label comprises 30.3% of front shop sales and 11.5% of pharmacy sales.

Innovation in private label drives differentiation while sustainability and localisation are key components in developing products. The Clicks Made4Baby dry protect diaper range and Sorbet BB cream were voted as the SA Product of the Year 2024 in their respective categories, with the Sorbet BB cream being recognised as the overall product of the year.

The private label baby offering engenders trust due to its quality and price positioning. The six Clicks Baby standalone stores and five store-in-stores within Clicks delivered an increase of 35% in sales in the year.

The elevated beauty halls in selected Clicks stores have driven increased sales of the major beauty brands as well as brands exclusively available in Clicks. This new look and feel has been implemented in 44 stores and based on the positive customer response, will be extended to more stores in the new financial year.

Growth plans for 2025

Clicks plans to open 40 to 50 stores and 40 to 50 pharmacies in the new financial year and remains committed to expanding its store footprint to 1 200 in the medium term. An investment of R578 million is planned for new stores and pharmacies, while a further 70 to 80 stores will be refurbished or expanded to ensure the stores remain appealing and enticing to customers.

Capital expenditure of R361 million will be invested in retail information technology, including the rollout of the new pharmacy management system as well as the implementation of a new warehouse management system at the Cape Town retail distribution centre.

Following last year’s acquisition of M-Kem, the 24-hour specialised pharmacy in the Western Cape, management has been developing a model to introduce similar large format pharmacies around the country. Approximately 10 of these pharmacies are planned to be opened in the medium term. Clicks is also evaluating the feasibility of smaller format stores to further enhance the convenience of the Clicks brand.

The contribution of private label, exclusive and franchise brands to front shop sales is targeted to increase to 31.0% (2024: 30.3%) in 2025 as Clicks continues to innovate and introduce new products. The private label medicines range will be extended to 305 – 315 products (2024: 287).

As Clicks accelerates its personalisation and digital engagement strategy, the ClubCard active membership is targeted to increase to 12.5 million while the Baby Club is expected to reach 710 000 members and the Senior Club 1.5 million members.

Clicks performance against objectives