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New Clicks South Africa Trevor Honneysett

New Clicks South Africa Trevor Honneysett. New Clicks South Africa – Review of the year. Deregulation of pharmacy now a reality Lifestyle category in transition … … significant steps taken to address this “You Pay Less at Clicks” is back Benefits of UPD acquisition

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New Clicks South Africa Trevor Honneysett

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  1. New Clicks South Africa Trevor Honneysett

  2. New Clicks South Africa – Review of the year • Deregulation of pharmacy now a reality • Lifestyle category in transition … • … significant steps taken to address this • “You Pay Less at Clicks” is back • Benefits of UPD acquisition • Improving performance from Discom • PM&A performance improving as we move to integration • Stock turn improvements not sustained

  3. Booklet only Clicks - Snapshot * During the year, a number of part-time employees became full-time employees, in terms of the new Labour Relations Act

  4. Clicks HIGHLIGHTS • Pharmacy now a reality • PM&A integration started • PM&A showing ongoing improvement • Brand decision for pharmacy taken – Clicks • Focused leadership team • Integrated merchandising team • FMCG & Beauty continue to do well

  5. Clicks turnover growth

  6. CHALLENGES Reverse decline in homewares Price competitiveness Entire customer experience In-store look & feel In stock position Clicks • KEY ACTION PLANS • New core homeware range • Value proposition • Store presentation • “Expect to pay less” • Basket checks vs competitors • Promotions • Reduce operating costs • Greeters & aisle walkers • Focus on top 50 stores • Dedicated staff for home & beauty • Merchandising solution – clustering & ranging

  7. Pharmacy • Improved shrinkage • Professional training • Disease management • Promotions HIGHLIGHTS • Multifunctional, implementation team set up • Key legislation in place • Product & pricing benefits through UPD • Better buying discipline • Centralised pricing • Reduced staff costs

  8. Booklet only Pharmacy integration project PROGRESS: • Preparation work well underway • Marketing, IT, Operations, OD, Category, Store development, Finance, Legal, Change management • Pilot store (Glengariff PM&A) -> Clicks Pharmacy on 3 Nov as a JV • Planning to convert 4 other PM&A pharmacies in 2003 • First conversion of a newly opened Clicks store to JV Clicks Pharmacy format in 2003 • For 2004: • Other PM&A stores to convert • Up to 17 new Clicks stores with Pharmacy • Up to 40 Clicks refurbs with pharmacy

  9. KEY ACTION PLANS Integration into Clicks Category management/buying In store promotions Generic substitution Phase-out of LinkMax Focus on ICU stores Integration of IT platform Medical aids Build relationships with doctors Sustain relationship with government Pharmacy CHALLENGES • Sales & profit growth • Stock turn too slow • Integration of pharmacy systems • Relationship with funders • Relationship with doctors

  10. Booklet only

  11. Booklet only UPD - Snapshot

  12. UPD HIGHLIGHTS • Acquisition smoothly integrated • Growth in turnover from PM&A & independent pharmacies • Retained most independent pharmacy customers • Clicks pricing on top FMCG lines available to wider customer base • Standardised terms on FMCG suppliers • Solid profit performance enhanced by sound working capital & cost management

  13. CHALLENGES Two franchise models in the group Increase turnover from Link Continue to add value to third party customers KEY ACTION PLANS Simplify Multicare offering Develop Link offering as premium banner Develop programmes to enhance Link pharmacy loyalty to UPD Concentrate on bringing Clicks pricing to wider customer base UPD

  14. Booklet only Discom - Snapshot

  15. Discom HIGHLIGHTS • Ongoing differentiation from Clicks • Three hair salons opened • Strong growth in ‘dry hair’ market • Introduction of private label • Bolstered leadership team • Dedicated category leadership

  16. CHALLENGES Decline in homewares business Return to profitability Discom • KEY ACTION PLANS • Improvement in lifestyle – currently being evidenced • Entrench dominant position in African beauty & hair care • Improve margin through a stronger lifestyle & import programme • Procure new store locations • Implement POSware platform & merchandise planning

  17. Booklet only Music Division - Snapshot

  18. Music Division HIGHLIGHTS • Market share growth despite slowdown in national music sales • Strong growth in DVD sales • Popularity of local artists • Major growth opportunity in gaming & DVD

  19. Music Division CHALLENGES • Maturity of CD format • Global decline in CD sales • Piracy & downloads • Shrinkage • Eliminating redundant stock KEY ACTION PLANS • Repositioning from music to broader entertainment products • 70 stores by December • Branded lifestyle accessory range • POSware retail store system implemented by March 2004 • Major marketing drive for Christmas • Store plans: 7 new stores, 7 stores relocated / revamped

  20. Booklet only The Body Shop - Snapshot

  21. The Body Shop HIGHLIGHTS • Strong sales growth • Increased number of stores nationally to 18 • Stock turn improves to 5.8 • Piloted first Body Shop in a Clicks store - Tableview

  22. CHALLENGES Slower than expected take off of new stores in suburban areas Novelty factor of the brand wearing off KEY ACTION PLANS Catalogue mailings & promotions programme Focus on Christmas gifting - accounts for 25% of sales Opening five new stores Four new concept stores planned in Clicks stores The Body Shop

  23. Shared Services Supply Chain - what have we learned ? • Expectations of stock turns 5x, 6x, 7x when Centralised Distribution introduced • Not achieving this - questions Centralised Distribution • What we have learned : • Previously focused on Supply side of Supply Chain i.e. DC’s • Need to focus on Demand side of supply chain - category, planning, promotions, replenishment & data integrity

  24. DC efficiency improvements Group expenses vs transfer growth 6.70% 19.53% 2003 2002 Clicks/Discom cost to transfer 2.60% 2.93% Clicks/Discom cost per shipper R2.16 R2.67 Group cartage costs 1.23% 1.47% Volume centralised 66% 57% DC wastage 0.45% 0.64%

  25. Supply chain ‘pipe’

  26. Booklet only Supply chain – ‘demand’ side • Address physical store layout, merchandise promotion, ranging • Implemented merchandise planning from JDA for lifestyle category • Benefits already evident

  27. New Clicks South Africa – The year ahead • Roll-out & bedding down of pharmacies • Continued focus on Lifestyle category • Implementation of financial systems to improve speed & quality of information • Focus on stock distribution & management systems • Continued focus on expense control – alignment of size of shared services platform to the business

  28. Summary of year ahead • SA & Australia managed autonomously • Pharmacy proving itself in Australia – expanded opportunity for growth • Australia well positioned in a competitive market • Pharmacy implementation in SA • Emergence of Clicks as a pre-eminent healthcare brand • UPD integral to healthcare plans • Ongoing turnaround in Discom • Continued focus on improvement of stock turns

  29. Questions ?

  30. Thank You

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