Clicks Targets R900bn Township Market With New Brand

KwaMakhi Launches in Tembisa to Target the R900 Billion Township Economy

Opening its first KwaMakhi outlet on Thursday, Clicks CEO Bertina Engelbrecht stated that the group’s core strategy is to compete on price, quality, and convenience. The inaugural store is located northeast of Johannesburg in Tembisa, an urban township whose origins trace back to apartheid-era segregation policies, as reported by Bloomberg. KwaMakhi, which roughly translates to “at my neighbour’s” in several local languages, is structured around the concept of a shop located within walking distance of home. According to Clicks, the format allows customers to pick up everyday essentials without paying for transport to a major shopping centre, mirroring the convenience of borrowing sugar from next door.

The expansion comes as slower economic growth pushes major grocery chains like Shoprite Holdings into categories such as health, beauty, and personal care—sectors where Clicks has historically maintained strength. Despite economic pressures, spending by lower-income consumers has proved resilient, according to Engelbrecht. Clicks estimates the total township economy is worth about R900 billion, or $56 billion, annually.

Addressing Pricing Disparities and Store Formats

KwaMakhi seeks to tackle a global tendency where poorer consumers often pay higher prices for goods, a dynamic Engelbrecht described as counterintuitive. “You would think it should be the reverse,” she noted. To counter this, Clicks has identified roughly 2,000 potential locations that its traditional store format cannot reach, even before factoring in areas where organized retail has yet to establish a footprint.

Unlike standard Clicks shops—which typically span 550m2 to 1,500m2 and house pharmacies or clinics—KwaMakhi outlets are significantly smaller, measuring between 280m2 and 350m2. The group plans to operate 10 such outlets by the end of the year. This strategy incorporates lessons learned from past industry attempts to treat lower-income consumers as a single, uniform market, according to Engelbrecht. Instead, KwaMakhi will tailor its merchandise to local demographics and preferences as it observes purchasing patterns in different communities.

Pricing Strategy, Private Labels, and Financial Outlays

Private label products will make up about 30% of the initial merchandise range, with the potential to rise to 40%, according to the company. Unlike discount-heavy traditional Clicks stores, KwaMakhi will utilize everyday-low pricing alongside smaller pack sizes specifically intended for customers who may not have cash available for larger bulk purchases. Additionally, the chain plans to introduce refill stations for items like creams and personal-care products starting around October.

Clicks has earmarked an initial R30 million for a 10-store “discovery phase” running through February. Engelbrecht stated that front-shop locations can typically break even within a year. Profitability is expected to improve further once KwaMakhi begins utilizing Clicks’s centralized distribution centres following a scheduled warehouse-system upgrade early next year. However, Engelbrecht also emphasized that formal retailers require regulatory authorities to do more to ensure that market rivals adhere to the same rules, such as strictly enforcing product standards, minimum-wage requirements, and taxes.

Frequently Asked Questions

What does the name KwaMakhi mean?

According to Clicks, KwaMakhi roughly translates to “at my neighbour’s” in several local languages, reflecting the brand’s focus on neighborhood-level convenience.

How large are the new KwaMakhi stores?

KwaMakhi stores typically measure between 280m2 and 350m2, making them substantially smaller than standard Clicks locations.

What is the financial investment for the rollout?

Clicks has earmarked R30 million for an initial 10-store discovery phase running through February, with outlets expected to break even within a year.