Strategy spotlight: Five ways Pets at Home will retain its position as pack leader

Having announced record results in May and with plans to launch the “world’s best pet care platform”, specialist retailer Pets at Home continues to dominate the £7.2bn market, achieving 24% share. 

However, with the departure of former chief executive Peter Pritchard signalling the end of an era, competitor Jollyes hailing its “strongest-ever” full-year results and a flock of challenger brands snapping at its heels, there’s no place for complacency. 

Our Retail Week analysts explore five ways the retailer will stay one step ahead.  

1. Unified platform 

Breaking down barriers to purchase, Pets at Home’s medium-term vision of being the “world’s best pet care platform” includes an app and website that allow customers to move frictionlessly between products, services and advice, giving them little reason to leave its expanding ecosystem. 

Progress is under way to combine its swathes of data ahead of the platform’s full launch, when customers will be able to use a single identity to fulfil their needs, from ordering repeat prescription deliveries to booking surgical appointments. 

Shop employees and vets will also use the app to access pet information, such as clinical records and diet, enabling them to seamlessly help customers. 

Giving customers a positive initial experience on the new platform will be crucial, particularly in light of the significant amount of personal data that will be stored.   

2. Laser focus on omnichannel

Blending products and services is also the focus of its recent rebrand, and chief executive Lyssa McGowan’s newly appointed leadership team.    

McGowan’s reshaping of the board around omnichannel goals and a clear customer focus will help drive growth. Chief consumer officer Kathryn Imrie, operations director for retail Steve Shirley and chief operating officer Lisa Miao are working closely with chief operating officer of the vet business Louise Stonier as part of “a single, streamlined executive team”. 

The retailer’s new brand identity and advertising campaign, launched in April, further reinforces the connected vision of the business. Under the unified brand identity – Pets – Vets4Pets becomes Vets for Pets, while the grooming business will be named Pets Grooming. 

With the average customer spending £160 a year and the retailer’s most engaged customers spending more than £900, an omnichannel focus make sense. Providing consumers with compelling and simple journeys across channels and services will drive “revenue, share of wallet and lifetime value”. 

3. New chief executive driving sales growth 

McGowan – who joined from Sky – brings strategic and operational nous, as well as experience in customer and digital-first initiatives. She hit the ground running, with group sales continuing their upwards trajectory, driven by estate expansion, improvements to the VIP loyalty programme, growing customer acquisition and the pandemic-driven surge in pet ownership.  

Group revenue rose 6.6% to £1.4bn in the year to 30 March 2023, with sales growing steadily in line with the VIP loyalty scheme’s popularity. VIP consumer revenue was up 9.7% to £1.2bn in 2022/23. 

The retailer remains profitable, despite margins being impacted in recent years by price investment, the growing lower-margin mix omnichannel business and the increasing proportion of lower-margin services across the group.

The most recent financial year was also impacted by one-off costs related to a new distribution centre and higher digital investment for the new platform.

Despite rising supplier costs, Pets at Home remains agile on pricing. A spokesperson said: “In the future, we will remain focused on keeping pet care as affordable as possible and will avoid passing on costs wherever we can.” 

Pets at Home has ambitions to grow sales by 7% per annum over the medium term and Prospect forecasts that, buoyed by physical expansion and the thriving market, total sales will approach the £2bn mark by 2027. 

4. Astute innovation  

Food remains Pets at Home’s dominant category, accounting for 58% of retail sales in 2022/23. Miao said: “I truly believe if you win on food you win across our business.”

A highly engaged food shopper will spend 60% more across the entire business annually. Within retail, robust availability and a “strong price position” helped food sales rise 11.4% in 2022/23, while accessories slipped 0.9%. 

Moving forward, frozen, fresh and raw food are expected to be key growth areas as pet owners recognise their health advantages, with highly trained staff on hand to provide guidance. 

Value food, including  Pets at Home’s own-label products, is appealing to squeezed wallets, but as inflation declines increased appetite for advanced nutrition represents a growth opportunity.  

5. Unrivalled scale 

Pets at Home recently revealed plans to open at least 40 new stores across the UK and carry out 200 refits, funded by 40% of investment of some £400m over the next five years. 

Many new openings will be within the M25 and other urban areas, catering for increased pet ownership in these localities, with the format likely to be smaller than traditional retail park models, and services and product ranges tailored to local demographics.

Pets at Home’s store design is professional and clean without being clinical, with feeding and water stations encouraging shoppers to bring pets, and digital elements such as virtual consultations bringing physical stores and online together for hybrid experiences. 

With stores also acting as mini distribution hubs, scale not only gives Pets at Home an edge over Amazon, and specialists such as Pets Corner, Pet Planet and PetShop.co.uk, but also Jollyes, which has around 90 stores across the UK and Ireland.   

Although Jollyes is growing, opening 12 new locations in 2022/23 and pledging £100m investment to “supercharge” provision of vet clinics, grooming salons and other services into stores, Pets at Home already has services well ensconced in its operations.  

With pet spend notoriously resilient during economic downturns – more than 75% of products and services the retailer sells are non-discretionary – and armed with a brand refresh, unmatched scale, ambitious expansion plans, a new automated distribution centre and product innovation, Pets at Home has good reason to be optimistic.