South African drugstore chain Dis-Chem Pharmacies is planning to buy Baby City, a one-stop-shop with a range of branded baby products.
Dis-Chem will spend R430 million to buy 100% of shareholding in Baby City from its owners, the Aronoff family.
The South African drugstore chain informed investors on Friday that it recognises that the characteristics of the baby product sector align with the those of the pharmacy sector.
The company added that both sectors are extremely resilient to perpetual new entrants – the baby sector sees approximately 900 000 new babies annually.
Dis-Chem’s current offering is very focused on the FMCG and basic essentials categories which are extremely sensitive to price and promotion.
To both deliver a destination baby experience to the first time parent and allow growth into more specialised baby categories such as baby gear (prams, car seats, swings, bouncers and other nursery equipment), clothing and developmental toys, amongst other categories, Dis-Chem requires a standalone baby destination store network whose brand positioning aligned with its own brand.
“The acquisition is a great cultural fit and has been a target of ours for many years. The brands and businesses were built with similar philosophies, ensuring management team alignment as we take steps to unlock the value we see in the Baby City brand” says Ivan Saltzman, Dis- Chem’s CEO.
Baby City is a specialist destination baby retailer that operates a network of 33 stores across South Africa. It sells a comprehensive range of branded baby products at reasonable “Everyday Low Prices”.
The brand’s focus is primarily on first-time parents and caters for moms and babies’ every need.
For the 12 months to February 2020, Baby City generated revenue of R855 million. It has continued to trade well relative to the COVID-19 lockdown environment demonstrating both the resilient nature of the industry and the inherent brand equity of the retailer.
Michel Aronoff, managing director of Baby City, says both organisations share the same ethos and passion inherent in entrepreneurially run businesses.
“Our trajectory echoes Dis-Chem’s history and growth, and we are confident that our shared philosophy of customer-focused quality and service will translate into solid growth for Baby City as part of the Dis-Chem stable.”