Interview: Pets at Home leads as pet care market growth continues

Between 2014 and 2019 the UK online pet care market is predicted to grow by 43.6%, outperforming total market growth of 9.3% – according to a new report by retail research group Conlumino.

The study suggested UK consumers still want to indulge their pets and that specialist operator Pets at Home is viewed as the leader in pet care, growing its market share – online and in-store – by 2.9% in 2014 to 19.6%. Recent figures from Pets at Home, which floated on the stock market last year, show total revenues from merchandise and services reached £182.2 million in the 12 weeks to 1 January 2015, with like-for-like sales up 4.1% year on year.

But with competition expected to mount from a growing number of online pure-plays, such as Amazon, eBay, Pet Supermarket and Ocado-owned Fetch, not to mention the supermarkets which Conlumino says have a combined 40.9% share of the market, Pets at Home multichannel director Matt Stead knows there is no time for complacency.

"The main focus for us over the last 12 months, since we re-platformed the website, has been about joining up the technology to give the customer that seamless experience," he told Essential Retail.

"It's a significant roadmap and investment, to allow people to start a transaction digitally and complete it in the store. That's been the big focus for us and continues to be."

Click & collect is a central pillar of the Pets at Home multichannel strategy, and has been from an early stage. The process of ordering online and picking up in a store has been well-received by consumers across various retail channels, with Verdict Research expecting 43% of shoppers to have used the service over the recent Christmas period, but Pets at Home has been offering it since 2010 – allowing customers to collect eCommerce orders in a store within two hours.

In the summer the company increased the size of its web range, and customers are able to order up until 8pm with the opportunity to collect the product in a store the next day. There are plans to narrow the two-hour collection window for  same-day click & collect orders, too.

"We're really trying to knit the internet capability into the convenience of having nearly 400 locations across the UK," Stead explained.

"We were really specific that the technology we wanted to use was a real-time stock-check; it probably was quite pioneering at the time."

Despite the early adoption of click & collect, which has now become a key part of many retailers' artilleries, Stead acknowledges that Pets at Home is not typically a leader when it comes to introducing new technology. Capital constraints as the business looks to get to around 500 stores across the UK and develop its veterinary arm, means funds for tech investment are not always easy to find.

But there are new services on the horizon, including a new mobile app for its VIP loyalty programme – a scheme that has now surpassed three million members and is used by Pets at Home as a way of understanding its shoppers' behaviour and rewarding its loyal customers.

"We won't be spending vast amounts of money on things we'll need to change two years on – that's why the app is only coming at this point," Stead commented.

"We re-platformed the site, we've always delivered to store. We will maximise the benefit of having so many geographical locations around the country and make the technology an enabler so that if the customers starts the transaction on the web, but wants to finish it in store, that's what they are going to be able to do."

Later this year, Pets at Home customers will also be able to order online products from the retailer's 'PetPads' – the mini tablet devices used by its staff to interact with customers on the shop floor – but there are no grand plans to put complex consumer-facing IT into its stores, as it is not seen as reflecting the business's culture.

"If you go into our stores you will talk to experts, and we don't want a computer to make that interaction," noted Stead.

"We want it to be a genuine knowledge transfer from a colleague straight to a customer. Around 95% of our staff own a pet."

Besides, Stead says retail technology vendors are often guilty of "overpromising and under-delivering", with sales teams sometimes misleading retailers into believing that their developers have previously worked with similar systems.

"The lack of understanding of some of those things is probably the most frustrating aspect of working with vendors. It's often a case of projects taking too long and costing too much money."

Relationships between retailers and suppliers were brought into focus during the Black Friday sales rush last November, when a number of large businesses operating in the sector experienced problems with their websites as thousands of consumers tried to access heavily-marketed discount deals.

Pets at Home ran some deals on Black Friday and implemented Intechnica's TrafficDefender tool on its website to help manage with the expected spike in website traffic that did arrive, but it was not a particularly big event for the company. Stead commended the retailer's delivery partner Parcelforce for ensuring all of its parcels got out on time, but called on the wider industry to address some of the issues that rose to the fore in November.

"Websites going down and deliveries from businesses the size of Marks & Spencer not being delivered until after Christmas – you've got to manage those peaks and you've really got to understand it," he asserted.

Referring to some of the larger electricals retailers that introduced complex queuing systems on their websites to filter inflated levels of traffic, he added: "If you're 465,000th or whatever in the online queue, that's not what I call seamless shopping or what multichannel experience should be. Not having your back-end systems ready is not on."

He predicts the pre-Christmas discounting push is "here to stay" in the retail industry, but argues that the delivery and infrastructure issues that occurred must be ironed out. Retailers and their suppliers must "build genuine relationships over the long term" to ensure customer service is maintained at all times, he said.

"We have an inherent trust from the customer, so having a website going down is not acceptable."

With Conlumino expecting the online pet care retail industry to be worth £496.2 million by 2019, there is minimum room for error in the battle for eCommerce market share. The sector as a whole is estimated to be valued at around £4 billion, and there are multiple players looking to gain their piece of the pie, undertaking an array of approaches.

"The seamless shopping piece is a deliberate thing we've done at Pets at Home, as we put the customer at the heart of what we do," remarked Stead.

"We've considered multichannel and omnichannel, but we were like 'no, this is about seamless shopping and making it easy for the customer'. That is what will drive us."

Visitors to this year's RBTE, which takes place at London's Olympia between 10-11 March 2015, have an opportunity to hear from Matt Stead. The Pets at Home multichannel director will be participating in a panel debate on the future of omnichannel retailing on Tuesday 10 March at 12:50.

Click below for more information:

Pets at Home