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How The Dis-Chem Founders Went From $1,000 To Over A Billion

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“If you want to go fast, go alone. If you want to go far, go together.” This African proverb is the glue that binds the Saltzman family. It has ushered in fame, fortune and happiness for Lynette and Ivan Saltzman.

This husband and wife duo founded Dis-Chem, one of South Africa’s fastest growing pharmacies. It is a specialist in beauty, health food, sport supplements and health and wellbeing. The company reported an impressive R17.4 billion ($1.46 billion) turnover in its full financial year results for the year ending February 2017, giving it a R30.43 billion ($2.56 billion) market capitalization.

It is big money.

As we meet, it is a clear summer’s day in Greenside, Johannesburg. Clarity has played a big part of Lynette and Ivan’s life. On this day, they feel the warmth of success born of a strong family bond.

“You know Ivan used to stay upstairs when he first moved to Johannesburg to study,” says Lynette as the pair walk into the studio.

Inside, the fan moves sluggishly through the stifling air as the power couple sit for a rare interview.

“I had an inclination towards retail from early age and I’m happy we now employ 15,000 people,” says Ivan with utmost humility.

It is an empire built through passion and love. Four decades later, you can still see it in their eyes whenever they look at each other.

Lynette Saltzman (Photo by Motlabana Monnakgotla)

It all started in a pharmacy class in 1972.

“We were doing a science experiment and he lent me an eraser or something like that and that’s basically how we met. We started dating quite soon thereafter and we got engaged in our final year,” says Lynette.

Once married and working as pharmacists, Ivan says he was frustrated about how things were done at his workplace in Mondeor, south of Johannesburg. He had many ideas of how to make the business more profitable so he made an offer to buy out the owner.

It worked. Lynette left her job to join Ivan in the business. It was time to put their innovative ideas to test.

“We were just anxious to start putting all these new things that weren’t in the shop before. People started coming into this tiny neighborhood shop and they wanted to see what we had. We were always looking for new things, like putting earrings into the shop. The day we unpacked the earrings we had queues of people,” she says.

It marked a breakthrough. According to the Saltzmans, the shop started making profit almost immediately.

Growth was inevitable. Six years later, an opportunity to open another pharmacy in the northern suburbs knocked.

“A lot of people turned down the opportunity to open shops at the newly build centre in Randpark Ridge because of high rentals. We thought this is our opportunity, let’s take it and let’s make it work, which is exactly what we did,” says Ivan.

The answer was discounts on medicine. It was a case of volume over gross profit. It may have been an old theory but it worked. From there they improved their supply chain which gave them reasonable pricing, which they’ve kept to this day.

“We would go to other stores and check their prices and then take our prices down. Our customers knew that we were always cheaper. We made sure we had plenty of stock and the concept of a discount pharmacy was born,” says Lynette.

“There was a time when we couldn’t advertise discounts, so the Dis-Chem could be dispensary chemist or discount chemist, but most people took it as a discount chemist,” says Ivan.

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To keep expanding, they advertised the business on mass media and continued to innovate.

“When people needed medicine and came to our store, we could sell other things too. We were unique and our stores were always larger than any other pharmacy. And we had the variety in that space. We discounted heavily on medicines and we were competitive on the rest,” he says.

The discounts paid off. The second store expanded about four times within the mall; but not without challenges.

“It was unusual for a retail operation to have a wholesale operation at the same time, so that was a challenge to get wholesale prices,” says Ivan.

There were also unkind comments from people. In those days, most women stayed at home with the children. Lynette says she faced some negativity for being a working mom.

“I used to get comments from people, and a few of them that hurt at that time came from family members. I tried to juggle my time. In the earlier days, I used to try and get home in the afternoons, where I used to do homework or take kids to wherever they had to go to and work at night. Our marriage has come out stronger and our children are closer to us, we are more a family than some of the people that were making the comments about how I should spend my time with my family,” says Lynette.

Ivan Saltzman (Photo by Motlabana Monnakgotla)

Although some couples may find working together a problem, the Saltzmans made it work.

“Sure you have disagreements, on how to do things and how not to do things, but a strong factor is that we do different things in the business and we were not in the same office. Ivan has the foresight on most things. He can see the possibilities into the future and once the idea grabs me, I can then take it into implementation,” she says.

Ivan says they always move together and Lynette is an innovator in her own right. For example, being the only woman in the family, she built the business’ cosmetics and beauty category.

Lynette says she found that in the early days, although she would have been in charge, people would want to go to Ivan when it was time to sign agreements.

“There is a time when we were in the pharmacy, and I was dispensing and one of the customers said to me, ‘just because you are married to a pharmacist doesn’t make you a pharmacist’. But now everybody accepts it,” she says.

“In the business side there are assumptions that I’m the boss, but we are both bosses,” says Ivan.

Teamwork has earned them 135 stores and 15,000 employees. It’s a remarkable story considering they started with one store and one employee. They will open 21 stores this year alone.

The company also has stores in Namibia and will be getting into Botswana this year.

“Namibia is different but [also] very similar to South Africa. The consumers are very similar, the supply chain is different, there are different laws and regulations, but it is very busy and competing very well with the South African stores,” says Ivan.

The Saltzmans currently own just over 50% of the group. Dis-Chem has become a major retailer of health products, with annual sales of more than R15 billion ($1.26 billion). In 2016 they listed the company on the Johannesburg Stock Exchange (JSE). Its shares opened at R18.50 ($1.50). At the time of going to press, Dis-Chem shares were R35.39 ($2.97).

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Being on the JSE may have posed some questions when it was found that other listed companies were cooking books.

“We are not worried about our own company, but it is just sad to see, that some companies have misrepresented their assets. I think it taints the country,” says Ivan.

Although they say they haven’t made major mistakes in the business, Ivan says they were, and still are, cautious. He wishes they had expanded faster and earlier. On the other hand, Lynette feels they grew as they were comfortable.

“We expanded as we felt we could cope. We could handle everything properly, do it properly and get it right. So it’s taking us a bit longer to get more stores; it’s a great business. I feel that we’ve done it the right way,” she says.

The business has had its share of struggles. Lynette remembers some bad days. One of them is an employee strike eight years ago. The striking crowd threw a gas cylinder into one of their shops in Pretoria. The second is when an electrical fault caused a raging inferno in their store in Roodepoort.

“That was absolutely terrible. The whole roof came down. The whole shop was destroyed and it took us a year before we could reopen the store,” says Lynette.

Ivan says those were disasters that happened when the business was strong. They were able to pick up business in surrounding stores.

With all this success, they don’t hesitate to offer advice to young people.

“The basic thing is that, whatever fields anybody wants to go into, they have to have a passion for it, they have to want to do it. If it’s just a job, it’s not going to succeed,” says Lynette.

One of Dis-Chem’s warehouses in South Africa (Photo by Motlabana Monnakgotla)

Ivan says the next boom is artificial intelligence and information technology.

To ensure smooth processes, the company already makes use of technology. A few days after our meeting, we visited the Saltzmans at their head office in Midrand to see the technology at work.

As we walk up the stairs of the 40,000m2 building, many awards hang on the wall. We meet Saul Saltzman, one of Lynette and Ivan’s three sons who takes us on a tour.

The warehouse is semi-automated. Processes are still run by humans with the help of robotic technology.

“It will be impossible to run ourselves without some sort of robotics. I don’t believe that robots have replaced jobs, it has probably, in our case, created jobs because it enables us to do far bigger volumes and there are always people involved,” says Ivan.

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The group has three other warehouses around the country. Most of the business comes from Johannesburg, with Cape Town accounting for 25%.

“We have the ethical, beauty and retail departments and the warehouse doesn’t shut down. We work 24 hours a day and seven days a week and there are 2,500 employees in this warehouse. We are always busy and the technology we use helps us with efficiencies,” says Dis-Chem’s Logistics Manager, Brian Sher.

There are machines which wrap 500 pallets in plastic per day and some that help sort 4,000 boxes per hour.

“Because we deal with sensitive things like medicine, we always have pharmacists available and have controls in place to make sure things are done properly. For example, you can find medicines that need to be kept under certain conditions and we also use these technologies to track orders and progress within the warehouse,” says Saul.

Giving back also forms a big part of Dis-Chem’s DNA. In 2006, Lynette founded the Dis-Chem Foundation to help South Africa’s impoverished communities.

“We started a loyalty card program to give back to the customer and the community. We then started the foundation which works closely with registered NGOs who work with orphanages, rehab centers, abandoned babies and old age homes. We also have two mobile clinics in the Western Cape,” says Lynette.

Dis-Chem Foundation’s food garden in South Africa feeds 10,000 people a month (Photo supplied)

She also saw a need for nutrition and in 2013, the foundation decided to use two hectors of vacant land in front of their offices for farming. As we walk through the garden, we pass all types of vegetables, from onions to carrots to spinach. Lynette introduces us to farm manager Lebo Malinga.

“We have 13 farmers working here to make sure we feed 10,000 underprivileged people per month. Now we even have students interested in agriculture visiting us to learn. We even get students studying agriculture in college coming in to test the soil, look into irrigation systems and water catchments,” says Malinga.

As we leave the garden, the sun blazes down from a cloudless azure sky and the heat bounces off the streets creating a mirage of wavering images but Dis-Chem’s future cannot be clearer – brighter than ever.

How we made it:

  1. Convenience – We made sure to create a shop that offers many things so that it’s convenient for our customers. They can come into our store to get their make-up done or buy medicine or buy healthy food items.
  2. Hiring the right people – Our employees know who we are and we are not inaccessible to anybody. We are still very much a family business. I think our employees feel this loyalty. They see our passion and and they feel the passion and they go all out to help run stores. So having passionate, well-qualified and well-trained staff has helped us.
  3. More for less – Being a discount pharmacy helped because we were always affordable compared to our competitors.
  4. Passion – When you love what you do it becomes easy to grow the business. You have to love your job.

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