Dis-Chem is ramping up plans to expand its wholesale brand franchise network, with management saying the independent pharmacy platform could eventually grow to as many as 500 stores as the group pushes deeper into South Africa’s fragmented health-care retail market.Dis-Chem has a wholesale and distribution business which sells products to independent pharmacies and has also created its own franchise business, The Local Choice (TLC), which over the years has attracted new pharmacy entrepreneurs into the industry while independent chemists have rebranded into it. In the year to February, TLC franchisees grew to 280 from 240, while independent pharmacies were up 4.8% to 1,325 from 1,264. Speaking after the release of the group’s annual results on Friday, CEO Rui Morais said Dis-Chem saw significant opportunity to consolidate the independent pharmacy market through the TLC franchise model. “We think TLC can be as much as 50% of that independent market,” he said. Corporate pharmacy groups, including Dis-Chem, account for between 65% and 70% of the pharmacy market. Dis-Chem believes the TLC model positions it to aggressively target that remaining market share. Revenue from TLC franchisees increased 16.4% to R2.9bn, helping drive wholesale growth and strengthening Dis-Chem’s presence outside traditional corporate-owned formats.Morais said the conversion of independent pharmacies into TLC franchises remains one of the biggest growth opportunities in the group’s wholesale division. External wholesale revenue increased 11.3% during the year, supported by 16.4% growth from the expanding TLC franchise base, while revenue from independent customers rose 7.2% to R3.3bn. Retail revenue climbed 9% to R36.6bn.“The group generated strong revenue performance in an environment where the consumer continued to be financially constrained, while improving total income margin and gaining market share across all core retail categories,” said Morais.He said that if an opportunity arises, Dis-Chem retains first rights of refusal on TLC franchise sales, giving the retailer a pipeline of potential future corporate store conversions. “There would be that opportunity,” Morais said when asked whether some TLC stores could eventually become fully fledged Dis-Chem stores.The franchise expansion strategy forms part of Dis-Chem’s broader long-term push to position itself as an integrated health-care ecosystem spanning retail pharmacies, clinics, medical and life insurance products, digital health-care services and wholesale distribution.The group generated strong revenue performance in an environment where the consumer continued to be financially constrained, while improving total income margin and gaining market share across all core retail categories.— Rui MoraisThe group reported full-year revenue growth of 9.3% to R42.8bn despite ongoing pressure on South African consumers.A major driver of that performance was the launch of Better Rewards, Dis-Chem’s revamped loyalty and discount programme, which management repeatedly credited for boosting foot traffic, market share and customer frequency.Morais described Better Rewards as an “always-on promotional mechanism” that combines standard retail promotions with additional member discounts layered on top. “It creates the credibility of the lowest price point across the Better Rewards basket,” he said.Unlike traditional promotional campaigns that run periodically, the programme continuously offers members additional savings, even on already discounted products.Management said the strategy was attracting customers from competing retailers and increasing shopping frequency among existing customers. “We continue to see momentum in the Better Rewards programme. We’re definitely taking shoppers from other channels into ours, and we’re gaining market share,” Morais said. Dis-Chem said it gained market share across all core product categories during the year, including pharmacy, personal care and beauty, baby products, health-care and medical categories, and general merchandise.The company maintained profitability despite the heavier discounting associated with the programme. It recently launched its “Health Hub” concept stores, which are designed to integrate pharmacy, clinics, digital health-care journeys and insurance offerings into a single customer experience.Dis-Chem Pharmacies will accelerate its footprint growth with plans to open 34 new pharmacy stores in the 2027 financial year, with the new outlets expected to follow the “Health Hub” concept store launched at Melrose Arch early this month. During the year to February, Dis-Chem added 31 new pharmacy outlets while closing three Baby City stores, bringing its footprint to 316 retail pharmacy stores and 42 baby stores. Business Times