AFTER THE BELL: The battle for your pharmacy basket is waged by the loyalty cards

I think you already know that I’m not one of those people who keeps a stack of store cards in my wallet.

Nor do I have a spreadsheet on my phone that tells me how many points I have from which group and what I can buy with them.

Although, having a store card for the bigger chains where you shop often absolutely makes sense, over time it really does work.

But one of the things I really love to watch is a good fight between two companies that can look evenly matched. It’s a bit like watching the Boks and the All Blacks fighting for my wallet.

I don’t know which shops you’ve been into recently, but I’ll bet a lot of money you’ve been into either a Dis-Chem or a Clicks at some point in the past two months.

And while Clicks is certainly the older brand in my memory, the competition now looks pretty fierce.

Big retailers that moonlight as pharmacies

In some ways, they’re the same. They’re both big retailers that moonlight as pharmacies.

They obviously see it in a different way, but when I’ve bought a toaster, a statin and a chocolate bar from the same shop in one outing, I don’t know how else to describe them.

And when you walk into a branch of either one of them you’ll see how they’re stuffed with goodies you might want.

Two summers ago, when El Niño was still in the far distance, I found myself in dire need of three small fans. Of course, I found them in a Clicks while on the hunt for something else.

Early one Saturday our toaster decided to trip up my morning by crashing the DB board [Editor’s note: the “B” means board].

A better person would have tried to fix it.

Me? I went off to the local Clicks where I spent a grand total of R200 on a replacement.

It lasted longer than I thought it would. A year later someone in the family decided they’d had enough and it was in the interests of family harmony to have the facility to heat four slices in one go.

I still chuckle at a post on X, back when Twitter was fun, from someone who said: “I have just gone into Dis-Chem and bought only the item I needed. I’m available for interviews and photographs.”

It was the perfect description of the business model of both Clicks and Dis-Chem. You go in for one thing, you come out with a full trolley.

All of this means that they are competing now in the fun part of retail, the actual science of it. How do you get more people into your store than the other store? How do you make them loyal? What will retail look like in a decade?

All of those questions  are the lifeblood of what is going on behind the scenes.

Dis-Chem recently spent a fortune on what they call X, bigley labs. Basically, it’s a standalone unit that focuses only on improving the science of retail for Dis-Chem.

And it’s cost them a fair whack of money, to the point where it actually had an impact on their results to the end of February this year.

They’re not the only people to do this. Shoprite did something quite similar just before the pandemic. And we’ve all seen the fruits of that.

You might think that with Dis-Chem on the march like this, Clicks would be on the backfoot.

Not so much.

Rewards systems

They are the people who pioneered the whole idea of rewards systems and cards and points and all of the other paraphernalia in South Africa. There is absolutely no chance that they are going to just roll over.

And while they might not have something as oddly named as “X, bigly labs” that doesn’t mean they don’t have a group of very clever people working incredibly hard on the same issue.

I’m certain that investors can see that.

Over the last few weeks it seemed to me that Clicks’ shares were trading down consistently. Until Tuesday when suddenly their shares jumped by 9%. It was explained to me on The Money Show that night, it seems a brokerage upgraded their rating and saw the share as undervalued.

If you look at how the world is changing you can see why these two chains are going at it so hard.

I know we’re all about to become slaves of AI (no matter which colour pill you take), but we’re still going to want heaps and heaps of plastic stuff.

And the one sure thing you can build that model on is the place where you have to go and get your pharmaceuticals every day, week or month.

From what I can see there is no obvious frontrunner in this fight.

So, feel free to get the popcorn and enjoy the show. DM