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2020-08-26

Dis-Chem says shopping patterns have changed in South Africa

Listed pharmacy group Dis-Chem, says that restrictions during each level of lockdown in South Africa dramatically changed the shopping behaviour of its customers.


Nico Gous | Business Tech

The group noted in a trading update on Tuesday (25 August), that consumers were slow to return to shopping malls as lockdown measures eased, choosing convenience centres instead. It also reported a massive spike in online shopping over the reporting period – 24 weeks ended 15 August.

 

Between 1 March 2020 and 15 August 2020, Dis-Chem recorded revenue growth of 8.8% to R11.7 billion, with the group largely allowed to continue operations during lockdown.

Being an essential service provider and trading throughout the lockdown period, the various Covid-19 regulations implemented during the different levels of lockdown restricted the group from selling all its products and trading within its usual operating hours.

During level 5 of the lockdown period, the group was unable to sell 20% of its products, including higher-margin products from its beauty category, it said.

Lost revenue as a result of the restriction was approximately R200 million for April. Online shopping over the period more than tripled (344%), however.

“Covid-19 has matured the e-commerce environment and consumer adoption by three to five years,” it said. “Fashion and entertainment are the biggest drivers of footfall in malls. As such, the location of our stores in convenience centres vs malls played a vital role in the composition of turnover growth.”

Sales at convenience centres rose by 16.4%, but fell by 7.8% at shopping malls over the reporting period.

During level 3 – 1 June 2020 to 15 August – Dis-Chem noted 17% growth in convenience centres, but a 5% decline in sales in shopping malls.

“Non-essential product sales restrictions hurt our higher-margin Beauty category sales with two of our biggest promotions, Beauty Fair and Mother’s Day falling within the lockdown period. This category was also impacted by our large flagship stores located in malls, trading down.

“The group did not experience the commonly expected ‘Lipstick Effect’ (consumers buying small luxury items even during an economic downturn), demonstrating the change in the social behaviour of consumers,” it said.

Healthcare and Nutrition performed well as customers increased their spend on vitamins and immune boosters. Sports supplement sales within the category declined vs the corresponding period as a result of the closing of gyms and cancelling of sporting events.

The group, however, believes that Healthcare and Nutrition will continue to take an additional share of customers wallets as a result of improved health education and awareness in light of the pandemic.

“We continue to benefit from the resilient nature of the industry in which we operate and are encouraged by elements of the changing healthcare landscape that highlight the importance of our core dispensary and clinic offerings,” Dis-Chem chief executive officer, Ivan Saltzman said.

 


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