Clicks is betting on South Africa’s township economy as its next major growth opportunity, rolling out a smaller and more flexible store format aimed at reaching thousands of locations its traditional outlets cannot serve.
The retailer has launched KwaMakhi, a compact store concept designed specifically for township communities and neighbourhoods, marking a strategic shift towards smaller sites, more frequent shopping and lower-value transactions.
The first store opened in Tembisa, with planned outlets in Khayelitsha and Cravenby in the Western Cape.
Clicks intends to have 10 KwaMakhi stores operating by the end of the year, committing R30 million to the initial pilot.
Unlocking 2,000 new locations
The biggest opportunity for Clicks may be the locations its existing business model cannot reach.
CEO Bertina Engelbrecht said the group has identified around 2,000 potential sites that are unsuitable for conventional Clicks stores because of their size.
KwaMakhi gives the retailer a way to enter these smaller markets without having to replicate the footprint and cost structure of its traditional outlets.
That could significantly expand Clicks’ addressable retail market if the pilot proves commercially successful.
The smaller format is also designed around the spending patterns of cash-constrained consumers, with a focus on smaller pack sizes and everyday products that encourage frequent shopping.
Clicks takes aim at informal retail
KwaMakhi puts Clicks into more direct competition with spaza shops, convenience stores and discount retailers that already dominate many township shopping environments.
The challenge for Clicks will be to translate the strengths of a national retail brand — including its healthcare, beauty and personal-care offering — into a format that can compete on convenience and affordability.
The product mix will include baby products, personal care, beauty, household essentials and front-shop healthcare products.
Smaller pack sizes could be particularly important, allowing customers to buy according to their immediate cash flow rather than committing to larger purchases.
A new growth engine for Clicks?
For Clicks, the pilot is more than a store expansion exercise. It is a test of whether the company can build a commercially viable retail model around smaller locations and underserved consumer markets.
If the first 10 stores deliver the expected results, the concept could be scaled significantly across South Africa.
The potential opportunity is substantial. Engelbrecht’s estimate of about 2,000 possible locations suggests KwaMakhi could eventually give Clicks a much larger physical footprint than would be possible through its traditional stores alone.
The company has also indicated that the format could eventually be expanded beyond South Africa.
The immediate focus, however, will be proving that KwaMakhi can generate sustainable returns while competing in some of the country’s most price-sensitive retail markets.