The pharmacy powerhouse Clicks has identified escalating rivalry from food retailers, general merchandise outlets and digital platforms as a primary threat to its expansion ambitions, even as it forges ahead with bold store openings and service enhancements.
In its latest integrated report, the retailer emphasised that safeguarding its commanding position in healthcare and medicines will be vital for sustained success, amid a landscape where established players and newcomers alike are encroaching on its core domains. Grocery giants are venturing deeper into over-the-counter remedies and wellness products, while e-commerce operators capitalise on swift delivery networks that erode the appeal of physical convenience. According to Grand View Research, the South African pharmacy market is set to expand at a compound annual growth rate of 11.4 per cent through to 2030, amplifying the stakes as total revenues climb from current levels.
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Such pressures extend to Clicks’ pharmaceutical distribution arm, UPD, where fierce bidding from alternative logistics providers risks chipping away at volumes and squeezing earnings. Despite recent stabilisations following a comprehensive IT upgrade, UPD posted a modest two per cent uptick in handled turnover to R30.5 billion, underscoring the fragility of this segment. The group holds firm on its profitability goals, targeting 10 to 11 per cent margins across retail operations and 2.8 to 3.3 per cent for UPD, though rivals’ sharpened pricing, bolstered loyalty incentives and heightened promotions could test these thresholds.
Global supply chain turbulence adds another layer of vulnerability, with geopolitical frictions, supplier bottlenecks and operational hiccups potentially triggering shortages that hit hardest in the medicines aisle. Customers in this sector show little patience for empty shelves, swiftly pivoting to alternatives and tarnishing brand loyalty in the process. As reported by Mastercard, online retail penetration in South Africa is nearing 10 per cent of overall sales by the close of 2025, valued at over R130 billion, which intensifies the need for seamless availability across both brick-and-mortar and virtual channels to avert reputational harm.
These headwinds arrive as Clicks doubles down on a holistic strategy centred on health, beauty and wellness, prioritising wider store reach, accelerated pharmacy penetration and a fortified digital presence. Over the past year, it added a net 55 outlets and 60 pharmacies, swelling its network to more than 990 stores and 780 dispensaries, with convenience-focused sites now comprising 77 per cent of locations. Notably, one in four stores serves lower-income communities, driving 23.7 per cent of revenues, and the company eyes another 40 to 50 openings of each in the coming year en route to 1,200 sites medium-term.
To counter digital disruptors, Clicks is scaling its UniCare 24-hour pharmacy model and rolling out smart locker collections, while pouring resources into its mobile application and ClubCard programme—now boasting 12.6 million members who account for over 82 per cent of transactions. Private-label lines, prized for their superior margins, have surged past 25 per cent of sales and outpaced broader growth, with ambitions to reach 35 per cent of front-of-store revenue to sharpen pricing edges and foster uniqueness.
The group’s chief executive highlighted a robust operational showing in a pinched consumer climate, crediting its resilient framework, robust branding and economies of scale for maintaining an advantage despite stagnant trading sentiment. Yet, arch-rival Dis-Chem is mounting a formidable counteroffensive, unleashing its most ambitious rollout yet to inflate retail space by 45 per cent over three years, targeting strongholds like the Western Cape and KwaZulu-Natal. As noted by BusinessTech, Clicks holds the upper hand in this expansion skirmish, plotting around 50 new sites annually to outpace its foe.
This intensifying duel is etching marks on investor perceptions, with Clicks’ shares dipping 10.4 per cent year-to-date for a R78.4 billion valuation, while Dis-Chem has shed just three per cent to R30.1 billion. Dis-Chem’s pivots—encompassing affordable health cover, in-store diagnostics, telehealth and a Capitec-tied rewards overhaul—signal a broader evolution towards integrated care, potentially blurring lines in a market where fragile confidence and elevated unemployment, as flagged in recent sector analyses, keep spending guarded.