Overview

New Clicks Holdings is a specialist retail group listed in the Cyclical Services: General Retailers sector of the JSE Limited. The group is the country's leading provider of health, beauty and lifestyle merchandise through its network of more than 660 stores nationwide. The group's healthcare interests span the entire pharmaceutical supply chain, from wholesale distribution to retail pharmacy.

The trading brands of New Clicks are:

• Clicks
• Clicks Pharmacy
• Discom
• Musica
• CD Wherehouse
• The Body Shop
• Style Studio
• New United Pharmaceutical Distributors (UPD)

Background

New Clicks Holdings traces its roots back to 1968 when entrepreneurial retailer Jack Goldin opened the first Clicks store in Cape Town. By 1979 when Clicks Stores was listed on the stock exchange, the group had expanded its store base nationally and was operating 30 stores.

Goldin sold control of the company to Score Food Group in July 1988 and four years later the Clicks Group was acquired by the Premier Group. The assets of the Clicks Group were then sold to Malbak subsidiary New Clicks Holdings in November 1995.

New Clicks Holdings was listed on the JSE in March 1996, with a market capitalisation of R880 million. After the unbundling of Malbak in 1997 the company no longer had a controlling shareholder.

The group has been acquisitive over the past two decades as it expanded beyond the Clicks offering to include a broader component of lifestyle merchandise, bringing prominent brands like Discom (1984), Musica (1992) and CD Wherehouse (1997) into the fold.

July 1998 saw the group expand its operations into Australia with the acquisition of the 70-store Priceline chain and the consequent formation of New Clicks Australia. This was followed by the purchase of homeware franchise brand House (2000) and hair care brand Price Attack (2002). Following the changes in the healthcare and pharmacy landscape in South Africa the group sold the Australian operations in January 2004 to focus on its pharmacy implementation strategy locally.

In anticipation of regulatory reforms in the healthcare sector, New Clicks embarked on a strategy in the late 1990s to position the business to capitalise on the expected changes. The group acquired a majority stake in Link Investment Trust which operated over 300 pharmacies, funded the 80-store Purchase Milton & Associates (PM&A) pharmacy chain and purchased UPD in 2002.

The long-awaited changes came about in 2003 when legislation was passed enabling corporate ownership of retail pharmacies for the first time. This cleared the way for Clicks to integrate dispensaries into its stores. The first Clicks Pharmacy was opened in March 2004 and by the end of the 2005 financial year Clicks was operating a national network of 60 pharmacies.

Strategy

New Clicks' strategy is to dominate the retail spend in the lifecare market in southern Africa through multiple specialist healthcare, beauty and lifestyle brands and store formats. This will be delivered off an integrated, low-cost business platform.

Lifecare defines the niche products and services offered by the group, covering the fields of healthcare, home, personal and beauty care, entertainment and leisure, gifting and fashionable accessories. Lifecare is an aspirational concept and relates to an individual's life, home and well-being;

Specialist denotes the high degree of differentiation and the compelling way in which the group selects, ranges and presents its merchandise offering;

Retail is about adding value to the customer experience by selling the right products at the right price through the right channel.

In the year ahead, the main areas of focus to optimise and operationalise the strategy will be:

• addressing the turnaround in the performance of the Clicks brand, particularly in managing shrinkage, as the brand continues its move to a specialist health and beauty retailer;
• accelerating the integration of pharmacy into the Clicks brand and expanding the dispensary roll-out programme;
• maintaining the momentum in the performance of UPD, Discom and the Entertainment division;
• leveraging synergies and operating efficiencies from the new enterprise-wide information systems platform;
• aligning the complementary skills of the new leadership team to ensure the business is structured to deliver improved performance;
• improving the group's return on equity through
  • efficient capital management,
  • ongoing improvement in margin and mix,
  • enhanced performance, and
  • rigorous expense management; and
• transforming the business to reflect South African society.

The business strategy necessitates a multi-brand marketing strategy to accommodate the range of specialist brands and store formats in the health, beauty and lifestyle categories. Clicks and Discom provide a consolidated retail offering across all categories of merchandise, while brands such as Musica and The Body Shop specialise in one specific category.