Beauty and pharmaceuticals major Clicks says consolidation in the retail pharmacy sector is accelerating its market position, as smaller independent pharmacies struggle to compete on scale, pricing and loyalty programmes.
The group is using this structural shift to expand aggressively, particularly in urban and township markets where it sees long-term demand growth and limited modern pharmacy penetration.
In an interview with Business Day after the group’s latest results, Group CEO Bertina Engelbrecht pointed to industry consolidation as a driver of market share gains and continued store expansion.
She said Clicks is positioned as a “key beneficiary” of the trend, adding that the group continues to see strong execution in its store rollout programme, boosted by its ability to expand consistently.
The retailer operates more than 1,000 stores in South Africa and more than 795 in-store pharmacies, making it one of the largest retail pharmacy chains in the country.
Clicks reported that its retail pharmacy market share increased to 24.9% for the six months to end-February, up from 24.2% in the previous period, boosted by continued network expansion and customer growth.
The group plans to open 40-50 new stores and a similar number of pharmacies in the 2026 financial year alongside piloting 10 differentiated concept stores.
Engelbrecht said the group remains on track to meet its medium-term target of 1,200 stores.
Clicks is leveraging its pharmacy network to drive broader retail performance. Engelbrecht said the group is focused on converting pharmacy customers into front-shop shoppers, increasing basket size and margins.
“We are converting pharmacy customers into front shop customers,” she said, adding that conversion rates are exceeding internal targets, supporting stronger profitability in the retail segment.
Market share gains have also been influenced by constraints faced by competitors, particularly around pharmacy licensing, which has limited their ability to expand at the same pace. Engelbrecht said that outside a short period affected by licensing delays, Clicks has consistently grown its share of the market.
The retail pharmacy market at large is increasingly concentrated among a small number of large corporate players, including Clicks itself and its contender Dis-Chem, Shoprite’s MediRite and independent pharmacy networks such as Alpha Pharm.
Clicks and Dis-Chem together account for about half of the dispensary market, as independent pharmacies continue to lose share due to limited scale, weaker pricing power and lack of loyalty ecosystems, according to insights from Pensions World South Africa.
Over the years industry consolidation has been driven by the difficulty smaller pharmacies face in competing with large groups that can invest heavily in pricing strategies, data analytics, distribution efficiency and customer loyalty programmes.
Engelbrecht said that Clicks has leveraged its ClubCard loyalty programme as a core competitive advantage, with more than 83% of sales linked to loyalty members across a base of 12.9-million active customers.
Even with macroeconomic pressure, retail pharmacy remains one of the more resilient segments in South Africa’s consumer economy.
Non-discretionary medicine spending continues to support stable demand, while front-shop categories such as personal care, hygiene and wellness products add volume growth and margin support, according to investment management company Allan Gray analyst Jonty Fish. The broader healthcare retail sector is also evolving into wellness hubs, with retailers expanding into diagnostics, vaccinations and preventative healthcare services.
Fish said this consolidation trend is likely to continue due to structural disadvantages facing independent pharmacies. He pointed to strong long-term growth potential in the sector, saying that Clicks alone has delivered roughly 8% annual revenue growth over the past decade, supported by stable demand and store expansion.
“There is reason to believe that this consolidation theme will continue well into the future, as it is incredibly hard for independent pharmacies to compete with large groups. Lack of scale to reinvest in price, low front-shop percentages (where higher-margin products are sold), no loyalty programmes and no succession planning are just a few reasons why the consolidation theme should continue to play out,” he said.
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