DIS-CHEM: Innovation Helps Healthy Dis-Chem to Serve

As lockdown measures ease in South Africa – moving from Cyril Ramaphosa’s Level 4 to an ‘advanced Level 3’ on June 1 – more and more people get back to work in order to help the country move forward. As employers welcome people back, safety has never been of higher concern. There is now a shared responsibility – globally – for everyone to do their part to keep each other safe. In the workplace, this means safe spacing, hand sanitising, face covering, advanced cleaning, and more. If people feel sick, there is now an expectation to display responsibility and stay at home, even if it could impact you financially. In South Africa (at time of writing) almost 2% of people who contract the virus will die. Globally, available data suggests that most people who pick up the Coronavirus suffer mild symptoms before making a full recovery.

Nevertheless, precautions must be taken to avoid unnecessary fatalities and serious cases which strangle healthcare systems. Louw Nel, Political Analyst from independent political and economic research organisation, NKC African Economics, stated recently that South Africa’s harsh lockdown has allowed time for the health sector to get ready for what is certainly a lengthy battle against the virus.

“The lockdown has given the health sector time to prepare for the inevitable surge in infections, and the coming weeks and months will severely test the plans and contingency measures put in place during this period as South Africa gets back to work,” he said.

In the workplace and in the community, hand and respiratory hygiene remains essential in the containment of the virus and the World Health Organisation continues to urge individuals and businesses to do everything possible to ensure cleanliness.

South Africa’s leading pharmacy and health business, Dis-Chem, has positioned its brand as the go-to supplier for everything needed to shield against and kill Coronavirus. Founded in 1978 by Ivan and Lynette Saltzman, Dis-Chem has grown to become a Southern African powerhouse in its industry, commanding a retail network of more than 160 stores and a flourishing online business. Designed around its ‘Pharmacy First’ idea and an ‘Everyday Low Prices (EDLP)’ strategy, Dis-Chem was thriving before the pandemic and is now an essential link in South Africa’s frontline fight against it.

PRE & POST

Like most businesses, looking back is now a pre and post pandemic onset activity. Pre pandemic, Dis-Chem had continued to do what it had become famous for doing for so long, growing exponentially.

For the 12 months ending 29 February 2020, the company displayed good results which it put down to good Return on Invested Capital (ROIC) and cost control. Group revenue was up 12% to R24 billion and total income increased by 9.8% to R6.8 billion. The company rolled out new stores and continued to claim market share. CEO Ivan Saltzman was optimistic in what was already a constrained macroeconomic environment.

“The Group continues to report revenue growth ahead of market growth. Overall revenue was 12% higher at R24 billion, which was on the back of a 10% increase in revenue growth in the previous financial year. Retail revenue rose 11% to R21.8 billion with like-for-like retail sales growing 4.0%, which is commendable considering selling price inflation of 2.2%. Retail gross margins improved, with dispensary margins under pressure in a competitive market.”

But by the end of February the picture was about to change. By March 5, the first case of Coronavirus had been confirmed in South Africa following the initial discovery in December in China.

As the pace of change quickened, major adjustments were required in all businesses and Dis-Chem was no different. Demand for products soared as the public hunted for hand sanitiser, face masks, medicines and more. But on 26 March President Ramaphosa announced complete lockdown for an initial period of 21 days to contain the spread of the virus. Listed as an essential business, Dis-Chem was allowed to stay open but conditions were imposed. Saltzman’s tone changed.

“The Group approached the end of our financial year in February 2020 amid growing concerns about the rapid spread of the coronavirus and its potential impact. Since then, the world has been turned upside down by this pandemic and its devastating economic, health and social consequences,” he said.

Looking to the future, he was buoyant about post-lockdown opportunities for digital innovation and praised the business for its resilience.

“The past financial year can be characterised by the continued weak macroeconomic environment in South Africa that has severely constrained consumer spending, and which has been evident in the declining basket size and spend. I am very pleased, however, that our focus on ROIC, cost control, operational adaptability and strategic agility has provided some benefit in this extremely tough trading environment. These factors have all, ultimately, resulted in Dis-Chem reporting positive results with improved market share across all our core categories.

“Overall, the COVID-19 lockdown period has seen a revolution in terms of Dis-Chem’s e-commerce programmes. There was sales growth of 375% on these platforms during March; sales increased 262% month-on-month in April, while the first two weeks of May saw another exponential surge of 490%. Although this phenomenal growth has originated on the back of the situation presented by COVID-19, we were already leveraging our e-commerce strategy and innovation, which is led by our overall purpose of winning and retaining patients and customers. Our intent remains on increasing our store footprint, while driving secondary retail opportunities through innovation. We are, for example, enhancing customer convenience through our courier pharmacy Dis-Chem Direct and our 325 in-store, corporate and travel clinics. We also have Click and Collect in every store and we intend to continue investing in ongoing enhancements to our e-commerce platform.”

THE SHOW MUST GO ON

Like all businesses, Dis-Chem has had to adapt and continue – even as many were told to stay away from stores and hold up inside – and this has resulted in invention and resourcefulness. Dis-Chem has a number of schemes which have continued throughout the current crisis and this is testament to the size and desire of the company to be an integral player in everyday life.

In May, the Dis-Chem foundation donated 5000 blankets to people in need to help them stay warm during the winter. Dis-Chem social media channels promoted health and well-being tips to ensure natural immunity in people remained strong. The company partnered with other big businesses to ensure rewards schemes were available to help with purchasing. The likes of Momentum Multiply, Discovery Health, Legacy Lifestyle and more are all now onboard. Also in May, the Dis-Chem Random Acts of Kindness Movement promised three months of R150,000 donations to help Afrika Tikkun feed those in need. The Dis-Chem Foundation also partnered with FutureLife to serve 50,000 healthy meals to children in need. Children were able to receive important vaccinations at Dis-Chem Well Baby Clinics – vital for stopping the spread of flu and other conditions. The company continued its support for the Million Comforts scheme in which businesses match the purchases of sanitary products and donate to underprivileged girls, helping them to stay in school. Dis-Chem was also instrumental in the construction of a new water source in Dixie, Mpumalanga where the only water came from an unsanitary river. To celebrate Mandela Day, Dis-Chem donated 6800 masks to smaller organisations that could not afford PPE to help curb the spread of Coronavirus. All the way through lockdown, Dis-Chem was steadfast in its continuation of discount products and loyalty rewards to ensure people could get what they need – not an easy task while navigating a business environment which changes daily.

Perhaps Dis-Chem was better placed than most to see out this crisis considering the nature of its activity, but the fact remains that the Coronavirus pandemic came as a totally unexpected hurdle and needed fast, efficient and effective interventions to ensure safety or staff, customers and continuation of business. All things considered, the company has done very well in all aspects as it continues to serve South Africans in a changed marketplace.

“As Dis-Chem, we are well placed to be part of the solution,” Saltzman said. “We have the largest and most consistent clinic offering and we are expanding the service scope of our Clinic sisters as well as investing in Telemedicine technology across all our clinics to increase the reach and reduce the costs of specialist services for patients. I am excited about the fruition of our vision for Dis-Chem, to play a significant role in bringing affordable healthcare to the many South Africans that are in need.

“Our many strategic advantages will ensure that we transition through this period as a united team and emerge even stronger than before COVID-19.”

The next hurdle for the business to jump will be the reinstatement of the its Coronavirus drive through testing facilities in Gauteng which were taken offline and halted indefinitely because of a backlog at labs, impacting the speed of results.

“We are constantly following up with the various laboratories, but they are being forced to prioritise urgent hospital tests. The number of labs that can do the tests is limited and we are spreading our load across as many as possible. Another factor affecting the speed of testing and obtaining results is the reduced number of flights around the country, so transporting tests to the labs from outlying cities and other remote stations is delayed,” said Lizeth Kruger, Dis-Chem’s national clinic manager in a statement.

“We apologise for the delays and assure our customers and public that we are doing everything in our power to get results to them as quickly as we can. We will review the situation on a regular basis and will consider reopening the testing facilities once we are assured that the various labs can cope with demand. The pandemic and the rising numbers are leading to panic, and we urge consumers only to get tested if they develop symptoms,” Kruger added.

Importantly, face masks, hand sanitiser, antibacterial hand wash, virus killing cleaning products, healthy products that boost immunity, and much more continue to be made available to people through Dis-Chem through various channels to make things safer and easier for customers. Dis-Chem is changing, and like the business environment in South Africa, things are happening fast. Fortunately, this is an organisation with the means and ambition to stay up to date and in line, all the time caring for people’s health.