Strategic Focus Areas - 2019/2020 Supplier Toolkit May 2019 - Trade Intelligence
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Corporate Retail
Strategic Focus Areas
2019/2020
Supplier Toolkit May 2019
CONTENTS
GROUP STRATEGY
RESEARCH REPORT
PRODUCTION Pg 3
LEAD ANALYST
Maryla Masojada PRODUCT OFFERING
RETAIL ANALYST Pg 4
Andrea du Plessis
RESEARCH TEAM CUSTOMER EXPERIENCE
Adrienne Osberg and Carey
Leighton Pg 6
CLIENT SERVICES
info@tradeintelligence.co.za
RETAIL FOOTPRINT
EDITORS
Nick Paul and Katia Benedetti Pg 8
PHOTOGRAPHY CREDIT
Trade Intelligence Trade Photo
Library (unless otherwise stated) CUSTOMER LOYALTY
ENQUIRIES Pg 10
info@tradeintelligence.co.za
+27 (0)31 303 2803
SUPPLY CHAIN
@TradeTatler
Pg 12
tradeintelligenc
e tradeintel
www.tradeintelligence.co.za
WORKFORCE
Pg 13
Copyright © 2019 Trade Intelligence. All rights
reserved. Copyright subsists in this work. No part of
this work may be reproduced in any form or by any
means unless directly quoted as source.
Any unreferenced reproduction of this work will "The Group continued its strong growth momentum and
delivered another resilient financial and operational
constitute a copyright infringement and render
the doer liable under both civil and criminal law.
performance for the year, despite facing increasing
headwinds across multiple fronts in the second half of the
year."
David Kneale, former Clicks CEO,
Clicks strategic advisor
R
Group turnover +9.1% to R29.2bn
R
Group gross profit +9.8% to R6.2bn with gross
profit margin increasing to 21.1%
Operating profit exceeded R2bn
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 2
04 | STRATEGIC FOCUS AREAS 2019/2020
GROUP STRATEGY
The Clicks Group’s stated strategy is to create This strategy is founded on five brand pillars and three
sustainable long-term shareholder value through a key strategic enablers outlined below in the Clicks
retail- led health, beauty and wellness offering. Clicks’ value- creating business model.
vision
is to be customers’ first-choice pharmacy, health
and beauty store.
Clicks Value Creating Business Model
5 brand pillars
Value Product Customer Care Convenience Rewards
Differentiation
3 key strategic enablers
Information Integrated and Motivated and Skilled
Technology Centralised Supply Chain People
Focus Areas Strategic Objectives
To deliver a competitive and differentiated front-shop product offering through:
01 | Product
• Value promotions
Offering
• Wide range of private label, exclusive and franchise brands
To create a great customer experience through:
02 | Customer • Easy-to-navigate, appealing stores
Experience • Friendly and knowledgeable customer care
• Increased health products and services in store
To grow the retail footprint by:
03 | Retail
• Opening new stores and pharmacies
Footprint
• Growing online sales to complement in-store sales
To drive customer loyalty and retention through:
04 | Customer
• ClubCard rewards and value offerings
Loyalty
• Improving digital engagement with customers
To ensure supply chain excellence through:
05 | Supply
• Efficient, centralised DCs
Chain
• Expanding the supply chain to support the increasing scale of the Clicks chain
To maintain a motivated and effectively skilled workforce through:
06 | Workforce • Focused staffing, training and development
• A notable focus on healthcare personnel
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 3
01 | PRODUCT OFFERING
Strategic Objective: To deliver a competitive and differentiated front-shop product offer through value promotions, as
well as through a wide range of private label, exclusive and franchise brands.
Context: Clicks refers to its value-creating, retail-led business model as the means by which its Group strategy is
realised. The Group’s growing market share in a context of constrained consumer spending can be largely attributed
to its consistent commitment to competitive pricing and value-for-money product offerings, along with its private and
exclusive label offerings. With one in every three front-shop products sold being only available in Clicks, private label
and exclusive brand penetration is one of the highest amongst retailers in South Africa.
Value promotions Private label, exclusive and franchise brands
In an economically tough period, value is essential to the Clicks private label, exclusive and franchise brands are
Clicks middle-market core customer, and will continue to used strategically to entrench product differentiation,
be a key strategic driver to attract the value-conscious drive higher margins, increase market share and
customer, supported and driven by promotions and reduce costs to the customer.
private and exclusive label development.
Franchise brands include The Body Shop, GNC,
With regard to effective promotions, Clicks was a Sorbet and Claire’s.
forerunner in South African grocery and personal care
retail in driving 3-for-2 value promotions as an ongoing Achievements and intentions
shopper offer – a mechanism which is now prevalent • At FY2018, private label sales accounted for
across FMCG retailers. 22% of total sales, with front shop sales at
28.2% and pharmacy at 5.6%. The 28.2% of
Achievements and intentions front shop sales
• Promotional sales increased by +14.7% achieved in FY2018 was slightly behind the target
during FY2018 and represent 35% of front- of 29%
shop sales • Private label and exclusive brand product line
• 3-for-2 promotions are key and effective in innovation is being used to grow sales – the addition
driving front-shop sales of 300+ Sorbet product lines in FY2018 and the
impact of the Enchante and Steel & Ice fragrances
• The baby category is of strategic importance in
are examples of this
attracting new customers and continues to be the
fastest-growing front-shop category in Clicks • In FY2019, further expansion for Sorbet, The Body
Shop, Claire’s and GNC into additional Clicks
• Clicks generally offers lower day-to-day pricing
stores is planned
than independent pharmacies, mostly due to the
lower cost advantages of scale • 34 new private label generic medicine products
Category Market Share* are planned, aligning with government’s strategy
of “making healthcare more affordable”
Category 2016 2017 2018
Front-shop Health 29.3% 29.7% 30.8%
Baby 12.1% 13.9% 15.1%
Skincare 27.3% 28.3% 36.1% "Our founding customer promise of
value continues to underpin the Clicks
Haircare 25.7% 27.2% 28.2%
performance through competitive pricing
* Clicks market share is not defined and is attributed by Clicks to accredited
service providers and agencies.
and value promotions."
SOURCE: Clicks Group
David Kneale, former Clicks CEO, Clicks strategic
advisor
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 4
04 | STRATEGIC FOCUS AREAS 2019/2020
The baby category is of strategic importance
in attracting new customers
Exclusive and franchise brands entrench Innovation with 300+ new Sorbet product lines to grow
product differentiation sales through exclusive brand innovation
3-for-2 value promotions are
key and effective in driving
sales
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 5
02 | CUSTOMER EXPERIENCE
Strategic Objective: To entrench leadership in the retail-pharmacy market in South Africa by creating a great
customer experience through easy-to-navigate, appealing stores, friendly and knowledgeable customer care
and increased health products and services in-store.
Context: The customer experience in-store is guided by service from friendly and knowledgeable staff in the front
shop and through a wide range of products and services offered in the pharmacy and clinics. Pharmacy continues to
drive feet through the door, underpinned by key market trends such as an increased use of generic medicines and
the shift to self-medication.
Easy-to-navigate, appealing stores Friendly and knowledgeable customer care
The Group aims to improve in-store customer Clicks continues to invest in improving the quality of
experience by focusing on improving the in-store customer care to ensure shoppers are served by
shopping environment through ease of navigation and friendly and knowledgeable staff.
shopper appeal.
Achievements and intentions
Achievements and intentions • The appointment of 700 wellness assistants
• The intention of the store refurbishment programme is planned for FY2019
is to ensure stores remain modern and appealing to
• Further investment in training and development
customers
of healthcare personnel, through the in-house
• In FY2018, 55 stores were refurbished Clicks Pharmacy and Healthcare Academy is
planned
• 60 store refurbishments are planned for FY2019
• The Virtual Queue Solution allows customers to shop
‘while queuing’ at the pharmacy
• Clicks intends to drive the online platform, including
the virtual ClubCard and the ‘Click and Collect’
service, to complement in-store experience.
See 3) Retail Footprint for further detail
Improving in-store ease of navigation Clicks continuously invests in friendly
supports customer experience and knowledgeable staff and customer
care
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 6
04 | STRATEGIC FOCUS AREAS 2019/2020
Increased health products and services in
store
Increasing the product and service offerings through the
pharmacy dispensary and clinics further underpins Clicks’
focus on improving customer experience.
Achievements and intentions
The Group aim to increase pharmacy-market* share from 23.3%
to 30% by:
• Opening a pharmacy in every Clicks store in South Africa;
currently only 71 stores without a pharmacy remain
• Meeting the increased consumer demand for generic
medicines through innovation
• Expanding clinic services
• Partnering with the Department of Health by establishing
400 pharmacies as collection points for state chronic
medicine parcels
• Increasing repeat prescriptions
* Clicks market share is not defined and is attributed by Clicks to accredited
service providers and agencies.
SOURCE: Clicks Group
Product and service offerings through pharmacy and
clinics underpin Clicks’ focus on customer
experience
"Clicks has continued to invest in
improving the quality of customer care
to ensure shoppers are served by friendly
and knowledgeable staff."
David Kneale, former Clicks CEO, Clicks strategic
advisor
The virtual queue allows customers to shop
while ‘queuing’ at the pharmacy
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 7
03 | RETAIL FOOTPRINT
Strategic Objective: To grow the retail footprint by opening new stores and pharmacies, as well as through
growing online sales to complement in-store sales.
Context: As competition increases through the expansion of corporate pharmacy by retail chains, Clicks will focus
on expansion in retail shopping centres within South Africa, increasing convenience to shoppers, and bringing
stores closer to households. Its strategy is to utilise its ‘trusted brand’ to continue to drive turnover growth through
store expansion.
Opening new stores and pharmacies Growing online sales to complement
A key focus for the Group is growing retail trading
in-store sales
space through the opening of new stores, as well as With consumers becoming increasingly digitally
through refurbishment of its existing store network. connected, the Clicks intention is to use the online
store to complement its retail footprint, enhancing
Achievements and intentions
customer convenience through a variety of
• At close of FY2018, the Clicks Group had a total mechanisms.
of 837 stores, of which 663 were Clicks stores Achievements and intentions
• During FY2018 targets were exceeded for new • The ‘Click and Collect’ in-store service, and home
Clicks stores, pharmacies and clinics delivery services are reportedly driving
incremental spending in stores
• In FY2019 the Group plans to invest more than
50% of total CAPEX in the opening of new stores • The intention is to offer the full product range that
and pharmacies, as well as in refurbishment of is available in a large Clicks store plus more, with
existing stores the addition of exclusive-to-Clicks online product
lines,
• The long-term target is a retail base of 900 Clicks
e.g. Prestige beauty
stores in South Africa, with a pharmacy in every
store • Clicks Direct Medicines will continue to provide
a national direct-to-patient courier service
• The Group’s intention is to improve the
personalisation capacity for online sales and digital
engagement
The long-term target is a retail base of 900 Clicks
stores in South Africa, with a pharmacy in every store
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 8
04 | STRATEGIC FOCUS AREAS 2019/2020
The Clicks mobile app enhances customer Clicks Direct Medicines provides a
convenience for digitally connected consumers national direct-to-patient courier service
"It's all about making sure
customers get exactly what they
need, when they need it and in the
way that works best for them."
Vikesh Ramsunder, Clicks Group CEO
The Group’s intention is to improve
personalisation through digital engagement
The ‘Click and Collect’ service complements in-store sales
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 9
04 | CUSTOMER LOYALTY
Strategic Objective: To drive customer loyalty and retention through Clicks ClubCard rewards and value
offerings, and improving digital engagement with customers.
Context: Clicks ClubCard has been a pillar of the Clicks brand for over 20 years and is an integral component in
driving loyalty through promotional activity, facilitating targeted and personalised promotions. 75% of ClubCard
customers are female and 62% are aged 25 to 49 years. Clicks ClubCard has continued to grow membership to
7.8 million people.
ClubCard rewards and value offerings Improving digital engagement with customers
Clicks intends to continue using the Clicks ClubCard As one of the largest retail loyalty programmes in
programme to successfully drive customer loyalty, South Africa, ClubCard enables Clicks to better
through the programme’s rewards and value understand and communicate with its customer
offerings. The aim is to increase basket size and through data analytics. The recent introduction of the
value, and frequency of shopping. Clicks mobile app enhances digital engagement
through the virtual ClubCard – it also offers users
Achievements and intentions
script management, pharmacy services and store
• 77.2% of all Clicks sales are generated from locator features.
ClubCard members Achievements and intentions
• In FY2018, R440m in cash-back vouchers were • BabyClub has a dedicated Facebook page with over
returned to Clicks customers (up from R332m 310,000 likes. The use of Facebook as a platform is
in FY2017), and over R1.8m has been just one example of interactive communication
returned to customers over the past six years across social media used by Clicks to better connect
with customers
• ClubCard has been independently rated as South
Africa’s most popular and easiest-to-use retail • In FY2019, a key focus is to improve the
loyalty programme personalisation capacity of Clicks’ digital
engagement
• Clicks remains focused on extending ClubCard
affinity partners to provide additional benefits to
existing ClubCard members and to attract new
members
ClubCard Membership 2017 2018 2019 target FY2018
Clicks ClubCard 7 million 7.8 million 8 million 46
Virtual Clicks ClubCard – 240,000 500,000 33
Clicks Seniors Club 839,000 925,000 1 million 4
Clicks BabyClub 417,000 445,000 500,000 9
"The basket spend of ClubCard
members continues to be twice that
of a non-ClubCard shopper."
David Kneale, former Clicks CEO,
Clicks strategic advisor
Customer loyalty through Clicks ClubCard
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 1004 | STRATEGIC FOCUS AREAS 2019/2020
Clicks BabyClub members qualify for additional 77.2% of all Clicks sales are generated
savings and exclusive promotions from ClubCard members
The Clicks ClubCard mobile app enhances digital engagement
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 1105 | SUPPLY CHAIN
Strategic Objective: To ensure supply chain excellence through efficient, centralised DCs and expanding the
supply chain to support the increasing scale of the Clicks chain.
Context: The Clicks Group has identified supply chain excellence as a key focus area. This aligns with the strategy
to improve competitive advantage that is possible through an integrated supply chain.
Efficient, centralised DCs UPD
Achievements and intentions UPD, the Group’s pharmaceutical distribution business
in both pharmaceutical wholesale and bulk distribution,
• In FY2018, 96.9% of product was supplied
centrally through 9 DCs servicing all retail stores, fulfils the supply needs of all Clicks stores, major
with UPD providing an effective integrated private hospitals and over 1,200 independent
healthcare supply chain channel for Clicks pharmacies.
UPD has grown its market share from 25.6% to 26%.
• In FY2018, Clicks stores accounted for 54.5% of It plans to grow this to 26.5% with the opening of new
UPD wholesale turnover Clicks stores and additional private hospital contracts
in FY2019. The longer-term target is to own 30% of
• Clicks supplier infill levels in FY2018
the wholesale and bulk distribution market in South
decreased to 84.4% (FY2017: 85.2%) and
UPD infill levels increased to 96.4% (FY2017: Africa.
A key challenge in the pharmaceutical industry is the
96.1%) maintenance of a skilled workforce, and UPD has
Expanding the supply chain
successfully reduced its employee turnover to 12%
To support the increasing scale of the Clicks (2% ahead of target). To this end, it will continue to
chain, supply chain expansion remains a key focus on the marketing of the UPD training academy
focus for the Group. in FY2019.
Achievements and intentions
Of the Group’s capital expenditure of R700m planned
for FY2019, R329m (47%) is committed to supply
chain related IT systems and retail infrastructure,
which includes:
• The 20,900m² expansion of the Centurion Clicks
DC.
R123m of the total cost of R230m is expected to
be incurred in FY2019 for completion of the
second phase of the project
• R77m is allocated for IT and warehouse equipment
in UPD
Clicks distribution through UPD
Efficient, centralised DCs to support the Clicks chain
IMAGE: Clicks Group (Integrated Annual
Report)
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 1204 | STRATEGIC FOCUS AREAS 2019/2020
06 | WORKFORCE
Strategic Objective: To maintain a motivated and effectively skilled workforce through focused staffing, training
and development, with a notable focus on healthcare personnel.
Context: The ongoing challenge of attracting and retaining scarce retail and healthcare skills in South Africa is a
key driving factor in the Group’s focused approach to staffing, training and development.
Focused staffing, training and development A notable focus on healthcare personnel
Maintaining a motivated and effectively skilled As the largest employer of pharmacy staff in the
workforce is a primary driver for Clicks, and is private sector with over 2,800 pharmacy and clinic
recognised as critical to the Group’s sustained professionals, Clicks is actively building capacity to
performance and drive to improve customer service. address the ever-increasing shortage of pharmacists
in the country.
Achievements and intentions
Achievements and intentions
• In FY2018, the total staff complement increased by
+2.7% with 394 new jobs created, while staff • Pharmacy staffing remains a challenge for Clicks
turnover decreased and all players in the industry where the scarce
retail and healthcare skills available are in high
• 122 trainee managers registered for the in-
demand. To overcome this challenge, Clicks is
store operations learnership in FY2018
investing in attracting and retaining staff through
• Clicks committed to an investment in bursaries the Competitive
following: remuneration and incentive
−
of R27m over six years schemes: salaries and incentives are
• Continued investment in training and skills externally benchmarked to ensure the Group
development displays a commitment to remains fair and responsible
improving customer service in store − Career path planning
− Creating a stimulating working environment
− Transformation and empowerment
• Clicks’ in-house Pharmacy Healthcare Academy
plays a key role in training learner pharmacist
assistants and in supporting the continued
professional development of pharmacists, nursing
practitioners and qualified pharmacist assistants
"The Group's investment in the training
and development of staff, together
with initiatives to motivate, reward and
retain staff, contributed to the Group
being recognised as the Top Employer
in the retail sector by the Top Employers
Institute."
David Kneale, former Clicks CEO, Clicks strategic
Clicks is committed to improving customer advisor
service in store
IMAGE: www.constantiavillagecourtyard.co.za/store/clicks/
Copyright © 2019 Trade Intelligence Trade Intelligence | Clicks Group Ltd Strategic Focus Areas | May 2019 13Disclaimer
These materials and the information contained herein are collated by TI* referencing a
wide range of public domain data sources, face-to-face interviews, retailer presentations
and financial reports, and are intended to provide general information about the South
African consumer goods trading environment and selected retailers, and are not intended
+27 (0) 31 303 2803 as an exhaustive treatment of such subjects.
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Copyright © 2019 Trade Intelligence. All rights reserved. Copyright subsists in this work. No part of this
work may be reproduced in any form or by any means unless directly quoted as source. Any
unreferenced reproduction of this work will constitute a copyright infringement and render the doer
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