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Dis-Chem says white dispensary clients left after CEO’s letter

Dis-Chem, SA’s second largest pharmacy group, lost some regular dispensary customers who pulled their scripts from stores in October after a memo was leaked about banning the hiring of white employees – but it gained black chronic medication customers, a customer analysis has found.

However, reports BusinessLIVE, the number of customers who left exceeded those it gained.

The memo placed a moratorium on hiring white people as the chain didn’t meet internal BBBEE ratios. In the memo, Dis-Chem CEO Ivan Saltzman warned that the company faced sanction because under existing employment equity laws, a firm can be fined up to 10% of turnover for failing to meet its own BEE targets.

Dis-Chem has subsequently done an analysis using 1 000 of SA’s most common surnames and splitting them into two pools, one for white, coloured and Asian people, and one representing more common black surnames.

It also split people into different groups: those who shopped using loyalty cards and did not buy medication; retail shoppers who occasionally used the dispensary; and chronic medicine monthly customers.

It did not ask customers why they had left or joined, relying solely on the study to gauge the effect of the memo.

It admits that some surnames, like Williams, are held by South Africans of various demographic groups but said the sample was just to get a sense of what happened after the memo’s leak.

“Our chronic scripts were definitely affected, but in certain areas of the country,” Saltzman said.

The group didn’t see major changes in the numbers of loyalty customers, who generally just use the front of shop and reward cards, with initial boycotts fading after a week or two.

While the memo did not affect numbers of customers who occasionally used the pharmacy, an analysis showed a 5%-8% increase in black customers bringing in new scripts for chronic medicines in October and early November, with a similar drop in regular white dispensary customers.

Dis-Chem COO Rui Morais said chronic script customers spent up to four times more annually, and that in global markets, very adherent patients could spend up to 20 times more than an ordinary shopper.

The Employment Equity Amendment Act tabled by Employment & Labour Minister Thulas Nxesi, due to be signed into law by President Cyril Ramaphosa, allows the Minister to set targets for different industries and sectors and then enact a 10% turnover fine if they are not met.

This has placed greater pressure on companies to pursue diversity, which Dis-Chem has done quite successfully. Its health insurance products were doing well, with it reinvesting money from that sector of the business into finding new customers: it also bought a 25% stake in health insurance firm Kaelo in 2021 and rebranded the products to include the Dis-Chem brand.

 

BusinessLIVE article – Dis-Chem says white dispensary clients left after CEO’s letter (Restricted access)

 

See more from MedicalBrief archives:

 

Dis-Chem revenue tops R30bn for first time

 

Dis-Chem purchase of Baby City will bring in-store ante- and post-natal clinics

 

Reputational harm causes Dis-Chem to abandon appeal

 

‘Imported’ PPE for SAPS marked up 400%, sourced from Dis-Chem

 

 

 

 

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