Dis-Chem is accelerating its wholesale-brand franchise network. Management says its independent pharmacy platform, The Local Choice (TLC), could eventually grow to 500 stores. This aggressive push highlights the ongoing consolidation in South Africa’s independent pharmacy sector.
In the year to February, the number of TLC franchise stores increased to 280 from 240. The number of independent pharmacies supplied by Dis-Chem rose 4.8% to 1,325. Group CEO Rui Morais believes TLC provides a major opportunity to consolidate a highly fragmented market. Corporate pharmacy groups currently hold about 65% to 70% of the overall market. Dis-Chem intends to use TLC to target the remaining independent share more aggressively.
Dis-Chem Franchise Expansion Drives Wholesale Revenue
Revenue from TLC franchisees increased by 16.4% to R2.9bn. This performance significantly boosted the group’s wholesale division. It also expanded Dis-Chem’s reach far beyond its corporate-owned store base.
External wholesale revenue rose 11.3% during the financial year. This growth was primarily driven by strong performance across the TLC franchise. Revenue from independent wholesale customers increased 7.2% to about R3.3bn. Meanwhile, core retail revenue climbed 9% to R36.6bn. Morais stated that converting independent pharmacies into franchises remains a top growth priority.
How Dis-Chem Franchise Expansion Creates A Corporate Pipeline
The franchise strategy does more than just drive wholesale volumes. It also secures future retail footprints. Dis-Chem retains the right of first refusal when any TLC franchise is sold. This rule creates a direct pipeline of potential corporate-store conversions.
The franchise model fits into a broader vision. Dis-Chem wants to position itself as an integrated healthcare ecosystem. This network spans retail pharmacies, clinics, medical insurance, and digital health services.
Loyalty Programme And Health Hubs Support Future Growth
Dis-Chem reported a total full-year revenue growth of 9.3% to R42.8bn. This solid performance occurred despite heavy financial pressure on local consumers.
A key driver was Better Rewards, the group’s revamped loyalty programme. Management credited the initiative with increasing customer foot traffic and shopping frequency. The programme acts as an always-on promotional tool. It combines standard retail promotions with extra member discounts to secure market share.
Future expansion will lean into the new Health Hub concept stores. These outlets combine classic pharmacy services with clinics and digital journeys. Dis-Chem plans to open 34 new pharmacy stores in the 2027 financial year. They will follow the Health Hub format launched at Melrose Arch this month. The group ended the period with 316 retail pharmacies and 42 baby stores.
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