Pets at Home saw its omnichannel sales grow by a fifth in the first half of its financial year, as pet ownership grew faster than expected. The retailer now expects to turn over £2.3bn in the medium term, up from £1.4bn last year – and says its business is relatively unaffected by wider supply chain issues.
Omnichannel sales at the retailer, ranked Top100 in RXUK Top500 research, came in at £93.7m, up by 21.5% from the £77.1m it reported at the same time last year – and by 101.4% on the same period two years ago. They now account for 15.1% of total first-half retail sales. Pets at Home says that its one-hour click and collect service, and its deliver from store trial are a “major driver” of its omnichannel growth, accounting for almost a fifth of omnichannel revenues.
The update came as Pets at Home today reported group revenue of £677.6m in the 28 weeks to October 7. That’s 18% up on the same time last year. Pre-tax profits of £70.6m more than doubled (+102%) from the £38.9m it reported last time. The retailer now expects full-year pre-tax profits to come at the top of end of expectations.
“Looking further ahead,” it says in today’s half-year statement, “the stronger than expected and continuing growth in the pet population over the past eighteen months, combined with continued customer themes of pet humanisation, premiumisation and renewal, is increasing the size of our market and scale of the opportunity facing us. In conjunction with the clear advantages of our omnichannel model in consistently taking market share by providing everything a pet owner needs through the full lifetime of their pet, we now see a pathway to £2.3bn of customer revenue across our business over the medium term.”
Pets at Home chief executive Peter Pritchard says: “Our business has never been more robust. Our pet care strategy continues to deliver, we continue to take market share and improve spend per customer, and the benefits of our investment in capacity an capability are really starting to deliver.
“Notwithstanding some near-term, industry-wide challenges, we continue to grow ahead of our plans and, based on trading year to date, we are on track to report a record year of sales and profit growth.”
The retailer says that although it is not immune to supply chain challenges, it has adapted its operations in order to continue to serve customers with minimal disruption.
It sources most of its product range from within the UK and on long lead times. Its goods are not perishable or seasonal, and Pets at Home says inventory levels in its distribution centres are currently good. The retailer has a small number of HGVs and in-house drivers, who it says it pays competitively and with a focus on wellbeing – helping it to retain staff as a result.
The retailer is going through a programme of rent reductions and cost savings when buying goods that are not for resale – and says is working with long-term suppliers and partners to “mitigate inflationary pressures across the supply chain and maintain our competitive price index”.
Operations and logistics
Pets at Home’s new automated Stafford storage and distribution centre is on track to become fully operational in summer 2023.
Pets at Home says convenience and speed are the focus as it brings digital into its stores. Its one hour click and collect service is now available at all of its stores, while a contactless collection service is now available from 360 of them. More than 130 shops are now able to deliver from store, with same-day delivery being trialled at more than half. Together, click and collect and deliver from store account for almost a fifth of of its omnichannel sales.
The retailer has launched Go-in-Store video calls to connect online customers live to in-store staff. It is also using a handheld ‘one device’ developed in-house in order to simplify daily tasks and empower in-store staff.
Its 100-strong in-house team is currently working on the Pets at Home digital transformation project Polestar, which aims to connect its data-led customers insights with its products and services across all channels. In the first phase, customers will be able to access all of its products and services through a single login, while its mobile app will also be updated.
Active members of its VIP membership club grew by 13% to 6.8m, while puppy and kitten club member numbers more than doubled on last year, growing by 107%. Members typically spend a third more each year compared to non-members.
Pet care subscriptions also grew, by 45% year-on-year to more than 1.4m, and generating more than £110m a year in recurring revenues. Subscriptions now account for about 9% of group revenues. This growth, says Pets at Home, came as it used data insights to identify which customers might take another product or service – and it sees more opportunity in growing subscriptions.
Meanwhile, marketing campaigns with ‘threshold offers’ that optimise incentives based on anticipated spending, have now seen basket spending grow twofold from those that redeem the offer, compared to those that do not receive it. Pets at Home now has a new pet lifetime value model for dogs that it is using to predict full lifetime spend across all major breeds, both in-store and in its vet practices.
Pets at Home has committed to reach net zero carbon in its operations by 2030, and in its supply chain by 2040. It is currently following science-based target initiative (sbti) guidance to reduce its supply chain emissions by 42% by 2030 versus its 2020 base.
The retailer sells almost 200m pet food pouches a year and is now collecting for those recycling in 75 stores, with plans to extend that to most of its stores by the end of next year. It says that 75% of its packaging is currently recyclable.