The hidden opportunity in pure pet play

We are as much of a pet loving nation as any other in the Western world. We have the micro-businesses, websites and pet shows to prove it.

Mrs Moore runs a small online business called mydachshundonline.com which sells gifts and accessories especially sourced for sausage dogs. The monthly “Dachshunds in the Park” event in Sydney’s Centennial Park, advertised via Facebook, is a sight to behold. Up to 100 sausage dogs of all shapes and sizes running around, it makes the park look like it’s full of eels!

However, we still haven’t seen anyone build a significant pure pet play in retail. By that I mean that we haven’t seen significant money enter the space to transform this retail sector. We have seen private equity transform Kathmandu and Myer, but we haven’t seen the likes of Tim Sims at PEP, or Chris Hadley at Quadrant take a share in a private pet retailer or two, to further develop them and take them public.

There are no more passionate shoppers than those shopping for their pets. The first time I walked a US grocery store I was staggered by the fact that the pet aisle was longer than the baby aisle. This in retailing is a serious leading indicator.

You don’t need an MBA or an expensively commissioned market sector value report to understand the potential for a standalone retailer. When the largest retail grocery chains are committing this much space to a category, it screams opportunity. That visit was eight years ago.

In the US there is PetSmart, a fantastic store I first visited via a store walk with retailing guru Paco Underhill, two years ago. This retailer now has over 1,000 locations and is a huge growing business. Even at this size it remains a very innovative retailer including in its store locations vet services, pet hotels, adoption services and doggie day camps. The website is also linked to Facebook and Twitter and is a source of photo competitions for pet owners, news on upcoming events, as well as the more functional buying portal.

Within the UK the hugely successful Pets at Home chain looks likely to float soon. It was founded in 1991, taken over by private equity in 2004, acquired PetSmart’s UK stores for $52 million (AUD) and now has almost 250 stores. It made a profit of almost $65 million last year, and will likely float with a value of over $600 million (AUD) allowing enough space for the private equity firm that took it over to make a comfortable return over the $370 million (AUD) it paid in 2004. Not bad for a pet food, toys and food bowls retailer.

So to Oz. We have some good regional multi-store chains and we have a couple of national metro chains privately owned or part franchised. We also have some large and well run single site pet retailers across the country. What we don’t have is an 80 store chain that mirrors either PetSmart or Pets at Home, and we could have.

Watch this space…

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.