Dis-Chem's mall-based stores struggle from Covid-19 as e-commerce booms

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Dis-Chem has reported a 344% surge in online sales between March and mid-August.
Dis-Chem has reported a 344% surge in online sales between March and mid-August.
  • The retail chain says sales from pharmacies in large malls across the country have remained sluggish, while online sales have ballooned. 
  • The group lost approximately R200 million in April when it could not sell 20% of its products, including high-margin beauty items.
  • Sales have recovered to double digit growth in stores located in convenience centres, or smaller shopping centres. 

Sales at Dis-Chem pharmacies in big malls across the country, such as Sandton City, have remained sluggish in the aftermath of the hard lockdown instituted towards the end of March.

Mall sales shrank when the country was between levels 5 and 3 of the nationwide lockdown, the pharmacy group said in a trading update on Tuesday.

Sales from pharmacies located in malls were in any case growing at only half the pace of sales from smaller shopping centres in the first four weeks of March before the lockdown began.

From the start of March to August 15, the retailer experienced a 344% surge in online sales. 

"Covid-19 has matured the e-commerce environment and consumer adaption by 3 to 5 years," it said.

One of the many changes ushered in by the pandemic, said Dis-Chem, was a reduction in impulse purchases because of lower foot traffic in its stores. The group also recorded lower sales of flu medication than usual.

"As a result of social distancing, increased sanitising measures, people working from home and children not going to school, the country experienced fewer cold and flu cases than in previous years. This adversely impacted the dispensary category, specifically over the counter ("OTC") sales," Dis-Chem said.

This was, however, offset by strong chronic drug adherence - or patients taking chronic medication as scheduled, due to heightened awareness around how patients with comorbidities are vulnerable to Covid-19. Consumers have also been spending more on vitamins and immune boosters, but less on sports supplement as gyms with gyms closed and sporting events cancelled.

Although Dis-Chem was classed as an essential services provider throughout the lockdown, in the first month where trading restrictions were most stringent, it could not to sell 20% of its products, including some of its most profitable beauty items. Under lockdown level 5, the retail group saw sales shrink by 20% but they have since bounced back, especially in convenience centres. 

Dis-chem lost approximately R200 million in April when all retailers were allowed to sell only bare basics.

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