The ‘gorilla in the room’ that scares every retailer in South Africa

Shoprite has become the “gorilla in the room” among South African retailers, as the retail giant’s growth puts it in direct competition with established players in other sectors.

This is the view of Merchant West Investments portfolio manager Richard Henwood, who told Business Day TV that Shoprite has become a force to be reckoned with.

“Shoprite is definitely the gorilla in the room here when it comes to retailers,” he said. 

Henwood said this in relation to Shoprite’s continued expansion into retail sectors outside its core food offering.

He highlighted Shoprite’s move into the pharmacy market, in particular, saying this could put pressure on established players such as Clicks.

Shoprite participates in the South African pharmacy market through its Medirite and Transpharm businesses, which have shown strong growth over the past year.

Medirite is a retail pharmacy chain owned by Shoprite that competes directly with players such as Dis-Chem and Clicks in South Africa.

Medirite Plus, in turn, is Shoprite’s stand-alone health, beauty, and wellness store format within Medirite.

In Shoprite’s 2026 financial year, Medirite saw its sales increase by 13.5%, with Medirite Plus’ retail pharmacy sales up 73.5%.

Transpharm, also owned by Shoprite, is one of South Africa’s largest pharmaceutical wholesalers and distributors that supplies 30,000 items to stores nationwide.

This business saw its sales grow by 5.5% in Shoprite’s 2026 financial year.

The combination of these businesses makes Shoprite a force to be reckoned with in the retail pharmacy sector.

What makes them especially intimidating to local players is that they have the backing of the wider Shoprite group, which is valued at R186 billion on the JSE and spans 2,747 stores.

“I don’t think any retailer in South Africa is not scared that Shoprite might come looking for them or look to take market share,” Henwood said.

Clicks’ secret weapon against Shoprite

While Shoprite is the “gorilla in the room”, Henwood said this does not necessarily mean that established retail players like Clicks will go down without a fight.

“The reality is that a lot of the producers that feed into these retail stores like Shoprite don’t want Shoprite to be the only gorilla in the room,” he said. 

“So a lot of the producers are looking to help the other retailers, if it makes financial sense, just to reduce that massive exposure that Shoprite has in the sector.”

“So yes, Shoprite is looking to take market share, but I think Clicks is keeping in their lane.”

Henwood believes that Clicks, in particular, has strong growth potential for the coming years, though he acknowledged that its share price has taken a beating over the past year.

Clicks’ share price is down 44.68% over the past year, having slipped 39% in 2026 to date.

“Clicks has been a blue-chip company that has traded at a massive premium to its peers in South Africa for many years,” Henwood said.

He explained that many South African asset managers complained that the company was too expensive to own, with its valuation driven up by international investors seeking stakes.

However, Clicks’ shares have since been devalued significantly, which has coincided with its main competitor, Dis-Chem, rolling out a new loyalty programme and expansion strategy.

“I think the market is quite fearful that there’s been a structural change to the Clicks business and that there’s a lot of competitors knocking on the door,” he said.

“But we’ve always wanted to own and have owned shares in this company in the past when it has been relatively cheaper,” he said. 

“So we are actually taking the opportunity now to own it again. It is trading at a discount to Dis-Chem, and also has a dividend yield now north of 5%.”

“The investment thesis is that this is maybe more of a market overreaction.”

Henwood said Clicks’ management team has made several encouraging moves over the past few months that support this thesis. 

“They’ve changed their rewards program, and they’ve also launched a new, smaller rural store format,” he said. 

“Management is reacting, and they are obviously trying to defend their market share. They’re not sitting back.”

“They’re just going to try and improve and make sure that they retain their clients and their market share.”