Innovative Retailer: Pets At Home
The Name: Pets At Home
The Place: Large stores all across the UK (around 450 of them), a full online presence, and some new small stores too.
The Story: If you could describe a retail business that was going to do well in an international pandemic restricting people’s spending and movement – what would it be?
I suppose classification as an ‘essential’ retailer would be a good start: Yup. Anything else?
I suppose having a strong in-built community aspect and capacity to scale-up online might be useful too: Yup. Anything else.
I suppose selling things for all these lockdown puppies could help: And I rest my case. If you can point me to a business better suited than Pets At Home for a period when people cannot spend on the things they normally would and are therefore turning their money inwards to the home, coupled with the need for more entertainment in that home, then I shall eat my hat.
Well, you say that but what actual proof do you have? Ha! I give you its latest trading update for the final quarter of 2020. Total group revenue grew by 18% to £302 million.
Fair enough, that’s good: Omni-channel sales were up by a whopping 70%.
Blimey: The number of Puppy and Kitten Club members was up by nearly 50% on the same time last year – and they spend more.
OK that’s enough now: Plus10,000 people a WEEK are registering to join the veterinary side of the business.
Stop: And don’t get me started on the premiumisation of pet food and what you can charge for it.
Right, I draw the line. Premiumisation – that’s not an actual word: I think you’ll find it is. But let’s just go over where this business came from before we look to the future.
Founded? In1991 in Chester with just one store but eight years later the company bought the 140 stores of PetSmart. In 2004 the private equity firm Bridgepoint bought the whole thing for £230 million and sold it six years later to another private equity firm KKR for £955 million.
Profit alert!! Absolutely. But really the pet market has skyrocketed since then and Covid-19 has turbo-charged even that market growth in the last year.
Yes events dear boy, but where is the innovation? First of all Pets At Home is extremely good at getting people into its stores for things other than buying rabbit pellets. For example you can have your animal pampered in the Groom Room and some genius thought of bringing veterinary practices in-store. These now work on a joint venture model (Pets4Vets and Companion Care Vets) and are going great guns with revenue up 22% in the last trading statement.
Fine but I’m going to need more new stuff I’m afraid: Um, well first of all they brought in an hourly click & collect service in October (obviously they could see another lockdown coming on the horizon) across the whole estate which proved very popular. Powered by OneStock it meant all the inventory was constantly being updated so customers could see exactly what was available. But then they took the delivery thing to another level.
How so? In around a quarter of the stores a ‘to-car delivery’ was introduced.
Well, that’s just lazy: Whatever it is, people used it so the upshot is that more people are visiting more often and spending more of their money when they do – via more channels.
Yes but the proof of the pudding will be in how they use that hard won data won’t it: Absolutely. And already on that front Pets At Home is charging on. The Very Important Pet (VIP) Club now has a whopping 6.2 million members. And a quarter of those same people shopped across multi-channels in the last quarter (up by a fifth).
Alright, alright: And did I mention the Kitten and Puppy Club members typically spend a quarter more than non-Club customers. Plus the number of people who have a subscription of some kind with Pets At Home is also up by nearly 20% to more than a million.
Ah subscriptions – I wondered when we would get on to those: If you can think of an industry where subscriptions fit in more snugly to the customer I’d be glad to hear it. The same animal eats the same thing at the same time each day and needs the worming and the flea treatments at the same intervals. The group’s range of subscription services now account for £85 million of turnover. One word – recurring-revenue. Second word – cash-cow.
Strictly speaking they’re both two really but what of the future? Astonishingly it seems that 95% of people in the British Isles live within a 20-minute drive of a Pets At Home store but not content with that kind of coverage the company has announced it is trialling two smaller ‘store of the future’ branches in London’s Camden and Putney, which will inform future development within the M25. And it’s on the lookout for up to 20 more high street sites in the capital.
Interesting and if you can’t premiumise it in London then where can you? See it is a word. But about the premiumisation thing – it is interesting because if you only shop in a supermarket for your pet food then you might never know that it is possible to get organic pet food or gluten free pet food or pooch wine. Pets At Home has upped its offer in a way that the supermarkets have not. And owners increasingly want to mirror their dietary choices on to their animals.
I can’t believe the lengths that some people will go to: But pets are more than ever now considered part of the family – not an addition to it. For goodness sake, have you never bought a masquerade batman dog costume so your dog can come out trick or treating?
Don’t be ridiculous: Or a wall-mounted cat hammock.
How ludicrous: How about the edible ‘I’ll eat my hat’ sombrero for rabbits. With earholes.
Get me one right now.
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