Dis-Chem is facing mounting pressure due to a shortage of suitable retail space and intensifying competition across the healthcare and retail sectors, the pharmacy group said in its latest annual report.
The company, which operates 285 retail pharmacy stores across SA, Namibia and Botswana, identified limited access to profitable locations as a key risk to its store rollout strategy. Dis-Chem’s growth model hinges on opening new outlets or acquiring independent pharmacies. Any delays in this process could hinder its ability to enter new markets, grow revenue and defend its share in an increasingly competitive environment.
“An integral component of Dis-Chem’s expansion strategy involves the augmentation of its store network through either the establishment of new stores or the acquisition of independent pharmacies that can be transformed into Dis-Chem outlets," it said, adding that failure to open new stores promptly may impede growth.
“The successful execution of this strategy is contingent upon various factors, notably the group’s proficiency in identifying and securing lucrative acquisitions and suitable locations for new stores.”
In the 2025 financial year, Dis-Chem opened 20 new retail pharmacy stores and closed three, resulting in a net addition of 17 stores. It also closed nine Baby City outlets during the year, leaving a footprint of 285 pharmacy stores and 45 Baby City outlets. The group said it had built a pipeline of 130,000m² of future retail space to support store expansion over the next three years.
To overcome space constraints, Dis-Chem said it was tightening its site selection criteria, conducting more thorough due diligence and focusing on faster store conversions using standardised processes to reduce delays.
Competition
But physical space is not the only pressure point. Dis-Chem is also contending with growing competition from other pharmacy chains, independent players, supermarkets and online retailers.
“Dis-Chem’s network of retail pharmacy stores, e-commerce platforms, corporate wellness clinics and courier services operate in a highly competitive environment. This intense competition significantly impacts various aspects, including pricing, product range and quality, store location and format, customer service levels, and advertising strategies.
“If Dis-Chem cannot effectively address these diverse sources and forms of competition, it may adversely impact the group’s business, operations and financial condition.”
In response, the company is doubling down on several strategic focus areas including the expansion of private label range, boosting its e-commerce offering and strengthening its customer loyalty programmes.
Private label brands now contribute 20% of Dis-Chem’s retail sales, while its e-commerce revenue grew 37.2% over the past year, it said. The group is also investing in fulfilment hubs and expanding digital pharmacy capabilities to meet rising demand for convenience and online healthcare solutions.
At the same time, Dis-Chem must guard against brand vulnerability. The group said its financial performance depended on consistently delivering strong in-store service, offering a wide and relevant product range, maintaining product quality, ensuring competitive pricing and keeping shelves well-stocked.
“Failure to uphold a positive brand image could significantly impact Dis-Chem’s business, operational results and financial condition,” it said.
To mitigate those risks, Dis-Chem planned to invest in employee training, diversifying its product range, maintaining quality standards, implementing competitive pricing, improving supply chain operations and enhancing store presentation.
Despite the obstacles, the company said it remained confident in about growth ambitions. Dis-Chem said it was committed to expanding its footprint and refining its strategy to remain competitive in a shifting retail landscape.
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