There are clear opportunities to harness synergies across both brands, says Rui.
Dis-Chem has announced that, on 11 May, it entered into “inter-conditional agreements” to acquire a 100 percent shareholding in Baby City from the Aronoff family.
Dis-Chem CFO and 2018 Young CFO of the Year Award, Strategy Execution Award and Finance & Technology Award winner Rui Morais said:
“There are clear opportunities to harness synergies across both brands. The brands and industries have very similar characteristics allowing for efficient synergy extraction. Baby City benefits from very strong brand equity amongst South African consumers, specifically from first-time parents, which is core to our vision of creating a further enhanced baby destination store and experience. We are excited about the return enhancing nature of the transaction. ”
According to the statement, the most value-enhancing of these synergies are:
- The Baby City retail stores will be integrated into Dis-Chem's current supply chain and serviced by CJ Distribution.
- The inclusion of a Dis-Chem branded clinic will enhance Baby City retail stores and offer ante and post-natal clinic services aimed at babies and toddlers. These services will enhance the destination store status of the brand and in turn allow the Dis-Chem clinic infrastructure within its own stores, which currently offer these services, to handle the growth it is seeing in primary care clinics services volume.
- Baby City does not currently have a loyalty offering. Extending the Dis-Chem loyalty and partner offering to Baby City customers will drive increased shopper frequency and bigger customer baskets.
- The ability for Dis-Chem to extend private label brands into the Baby City stores, opens up the opportunity for gross margin expansion in the Baby City business.
Michel Aronoff will continue to serve as MD of Baby City after the acquisition. The current staff will also be retained.
Michel says both organizations 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.”
