Dis-Chem will launch a revised reward programme which it hopes will further boost its market share after it recorded a decline in key categories following aggressive promotions by competitors.
Moreover, the fast pace at which rivals are rolling out stores has impacted Dis-Chem’s market share.
Clicks has about 950 stores across the country while Dis-Chem has 285 after opening 20 during the financial year to the end of March. It lost market share in personal care and beauty, health care and medical as well as baby care.
Competitive retailers are outpacing us in terms of new space to our current base. We need a step change. There is also a shift to promotional space and it’s an indicative of very value conscious consumers. We operate in a world where more and more things are being sold on promotion.
— Rui Morais, Dis-Chem CEO
“Competitive retailers are outpacing us in terms of new space to our current base. We need a step change. There is also a shift to promotional space and it’s indicative of very value conscious consumers. We operate in a world where more and more things are being sold on promotion,” said CEO Rui Morais.
“We have a relatively clunky promotional mechanism. We needed to understand our market share on and off promotion and that initiated the need for a better reward programme. In the second half of this financial year, we will launch a simplified promotional mechanism, a revamped reward program, because that drives promotional foot traffic.”
Morais said since the 2025 financial year end in March, there had been a slight recovery.
Sean Culverwell, investment analyst at Anchor Capital, said: “Share losses have been a consistent theme this year, and management will want to arrest it if they expect the market to value them closer to their peer.”
Dis-Chem extended market share in dispensary from 24.2% to 24.3%. “I’ve always been a proponent of ensuring that we win the script. We are maintaining our leadership position as South Africa’s largest pharmacy retailer by dispensary market share. That’s our defensive mode. Anyone who carries a script is our best returning patient,” said Morais.
Dis-Chem will open 39 stores by the end of its 2026 financial year. Morais said although there is no strategy around small store formats, in some areas stores are becoming smaller.
However, “every store format needs to deliver on our integrated health-care ecosystem of pharmacy, clinic, and health focused financial services”, he said. According to Morais, there is an increased adoption of virtual doctor consults with 14,500 facilitated by nurses in Dis-Chem clinics.
In February the company launched Dis-Chem Life, selling individual life insurance and funeral products. It also introduced in-store financial advisors at 17 stores, with plans to expand to all stores by the end of the 2026 financial year. It said policy acquisition from its own retail channels have doubled year-on-year.
Dis-Chem recorded group revenue growth of 8% to R39.2bn over the previous year. Group total income grew by 9.2% to R12.1bn. Its retail revenue grew 5.9% to R33.6bn.
In addition to owning retail stores, Dis-Chem has a wholesale and distribution business, which sells products to independent pharmacies. It also created its own franchise business, TLC, which over the years has attracted new entrepreneurs into the industry while independent chemists rebranded into TLC.
TLC franchise stores increased from 205 to 240. Revenue growth from themfranchisees grew from R2.1bn to R2.5bn.Independent customers grew to 1,264 from 1,161, with revenue increasing from R2.5bn to R3.1bn..
Culverwell said Dis-Chem’s performance was a mixed bag. “Although growth was decent, the results were flattered by a once-off property gain associated with the acquisition of the Midrand warehouse. Excluding this gain, results were a bit shy of market expectations. Outside of this, the trajectory appears to be improving, with like-for-like sales growth improving in the three months after year-end — albeit still lagging what Clicks are reporting.”
He said the outlook for the sector looks good from a dispensary point of view. The generous single-exit-price increase coupled with a the apparent early onset of winter should support growth.
For Dischem, store growth has accelerated post year-end, with the group having already opened nine stores from its total target of 39. Furthermore, its employee cost savings initiatives should be supportive of margins. “We expect an acceleration in earnings growth for the year ahead,” said Culverwell.
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