Clicks Group, Cape Town-based retailer and South Africa’s largest listed pharmacy operator, is moving deeper into the country’s township economy with a new store format designed to attract consumers who often shop outside traditional retail centers.

The company opened its first KwaMakhi store Thursday in Tembisa, northeast of Johannesburg, as part of a plan to reach communities where its larger Clicks stores have limited access.

Chief Executive Officer Bertina Engelbrecht said the new brand will compete on price, quality and convenience, with stores positioned close to where people live.

KwaMakhi roughly translates to “at my neighbor’s” in several local languages. The concept is built around the idea of a nearby shop where customers can buy everyday necessities without having to spend money and time traveling to a shopping center.

Clicks bets on everyday spending

The move comes as South Africa’s major retailers look for new sources of growth. Shoprite Holdings, the country’s biggest retailer, has been expanding further into health, beauty and personal care, categories where Clicks has long held a strong position.

Clicks, however, sees room to grow among lower-income consumers. The township’s economy is estimated at about R900 billion ($56.3 billion) a year, according to the company.

Engelbrecht said consumers with less disposable income can sometimes end up paying more because they buy smaller quantities from nearby stores or have limited access to larger retailers. “You would think it should be the reverse,” she said.

Clicks estimates there are about 2,000 potential locations that its traditional store format cannot currently serve. That number could increase in communities where organized retail has yet to establish a significant presence.

KwaMakhi stores will be smaller than conventional Clicks outlets, measuring about 280 to 350 square meters, compared with 550 to 1,500 square meters for the company’s standard stores. They will not have pharmacies or clinics.

Clicks plans to operate 10 KwaMakhi stores by the end of the year, using the initial rollout to learn more about shopping patterns in different communities.

Smaller stores, local products

The company said KwaMakhi will not treat township consumers as a single group. Product ranges will be adjusted based on local demographics, preferences and demand.

About 30% of the initial merchandise range will consist of private-label products, with that share potentially increasing to 40%.

The stores will also use everyday-low pricing rather than relying heavily on promotions. Smaller pack sizes are expected to appeal to customers who may prefer to make frequent purchases instead of paying upfront for larger quantities.

Clicks plans to introduce refill stations for products such as creams and other personal-care items from around October.

The company has allocated R30 million ($1.9 million) for the first 10 stores through February as part of what it calls a “discovery phase.” Engelbrecht said front-shop operations can typically reach break-even within a year.

Profitability could improve once KwaMakhi begins using Clicks’ distribution centers following a warehouse-system upgrade expected early next year.

Engelbrecht also said formal retailers need stronger enforcement of rules covering product standards, minimum wages and taxes so that organized retailers are not competing against businesses that do not face the same requirements.

Engelbrecht expands Clicks’ reach

Engelbrecht, who has led Clicks Group since 2022, has overseen an expansion of the retailer’s store network and continued growth in its pharmacy business.

Founded in 1968, Clicks Group is South Africa’s leading health, beauty and wellness retailer and the country’s largest retail pharmacy chain. The company has been listed on the Johannesburg Stock Exchange (JSE) since 1996. Clicks recently reached 1,000 stores, taking its total footprint to 1,003, while its national pharmacy network expanded to 795 locations.

The company reported turnover of R24.87 billion ($1.55 billion) for the six months ended Feb. 28, 2026, up 7.4% from R23.16 billion ($1.45 billion) a year earlier. Profit increased 6.6% to R1.53 billion ($95.6 million) from R1.44 billion ($90 million), while total assets rose 11.1% to R23 billion ($1.4 billion).

The results came despite a difficult consumer environment and operational disruptions, giving Clicks more room to test a smaller format aimed at one of South Africa’s largest but most fragmented consumer markets.

For KwaMakhi, the next test will be whether a neighborhood-focused store can deliver lower prices and greater convenience while generating returns for the group.