Pandemic pet boom continues to benefit Pets at Home
In the Interview, the specialist identified a number of market trends and insights explaining the company’s strong performance in 2021, and its future plans.
The specialist began by looking at new market trends in the pet food industry – a key market for Pets at Home – including “premiumisation”, increased focus on nutrition, as well as the different types of pet food on offer as customers continued to “humanise much more of what they feed their pets”.
The specialist said that while the industry as a whole has been flourishing since 2011, growth has accelerated over the last 18 months. But inflation is set to put the industry “under pressure”, with huge rises in transport, shipping and labour costs. Nonetheless, the specialist remarked that Pets at Home will “always try and push that onto the manufacturer… to mitigate that price point increase”.
Christmas could also delay this impact, the specialist said, particularly as Pets at Home sells “very margin-rich” products over the festive period. Furthermore, the specialist said in times of economic downturn, pet owners “rarely drop down into an inferior diet for their pet”, a factor that could further ease any offset caused by inflation, as pet food remains a “big, big, important part” of the company’s sales.
In terms of generating sales, the specialist said moving more of the business online 18 months ago was “ginormous” for the company, as was growing its subscription offerings, which now generates circa GBP 800m. Pets at Home’s omnichannel business has also “thrived massively” over the same period, and the specialist said the company has now found a “nice balance” in how customers can purchase products.
In the future, the specialist identified “pockets” where new superstores could be opened, but expects the company to focus on investing in “new-format stores” – those that focus on veterinary and grooming services.
As for expansion outside of the UK, the specialist said: “There are some big players outside, in Europe… and if you start treading on toes there and spreading yourself thin, I don’t think you necessarily capture this at all”.
To access all the human insights in Third Bridge Forum’s Pets at Home – growth sustainability amid supply challenges – 5 November 2021, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
For any enquiries, please contact firstname.lastname@example.org