Services have become an essential element of todayâs offering for nearly all bricks-and-mortar retailers. Buoyed by trends such as the increasing pet population and shifts in consumer behavior, pet retailers are updating their strategy to offer added-value propositions for their customers. While retaining popular existing services such as veterinary care or grooming services, they are also venturing into new ones.
A large chunk of revenue
In 2023, 32.5% of consumer revenue for British pet retailer Pets at Home came from services. The group describes the ability to offer consumers pet care services in addition to pet products as a âkey competitive differentiatorâ. âGenerating sales from services is an essential part of being a pet care business and not solely a retailer,â says a company representative.
In the 6 months to October 2023, the pet giantâs vet business accounted for £311.7 million (â¬364.1M/$393.4M) of the total sales. This was 17% more than in the same period of 2022, whereas retail sales increased by 5.2%.
American pet retailer Petco has a similarly strong focus on services. The category hit sales of $981.5 million (â¬905.9M) in the 12 months to February 2024, an increase of 21.9% in comparison with the previous year. Services represented an important driver of the company’s performance in 2023 and they forecast this trend to continue this year.
For Spanish pet retailer IskayPet, in-store services currently account for 3% of the total revenue. However, the company plans to invest more in consolidating this part of the business over the coming years. Around half of the retailerâs store network offers grooming services right now, but this is set to change. âIn 3 or 4 yearsâ time, we should have 80% of our stores with a grooming area,â CEO Marcos RuaÌo tells PETS International.
More services equal more spending
Offering in-store services is a golden opportunity to incentivize some additional spending. âSometimes convenience is a winner. And getting your customers to stay in the store is the best thing,â points out Retail Analyst Bruce Winder.
âWhen people need to leave their pet with a groomer or with the vet for a while and thereâs a lot in the store thatâs attractive, then logically they will spend something during that visit,â adds Bart Scheffer, Chief Operating Officer at Dutch pet retailer Pets Place.
âRoughly 14% of customers use services and also buy products, but they account for 25% of the total revenue,â states IskayPetâs RuaÌo. Meanwhile, at Pets at Home, clients who engage across all its channels spend up to 9 times more each year compared with pet parents who shop solely in-store.
According to Lauren DeVestern, Managing Director and Partner at L.E.K. Consulting, bringing in the younger generation with in-store service concepts is good for âfuture longevityâ. It also helps to encourage in-store spending among those who are more used to buying online, she says.
Expanding the range
While grooming and vet care remain the most popular services, retailers have increasingly started to expand their range of services. For example, Pets Place recently added insurance to its in-store service portfolio. Scheffer believes itâs good to offer this option in-store as well as through the website, as it fits with some customersâ preferences âto come in and communicate with a real person and ask questions rather than doing it onlineâ.
IskayPet also recently rolled out its pet insurance product in-store, although it was a âcomplex processâ, according to RuaÌo. âWe negotiated with insurance companies for more than a year to have this product,â he admits. It is estimated that just 1% of pets are insured in Spain, but the retailer aims to triple the market penetration. Similarly, German pet retailer Fressnapf rolled out its pet health insurance across 800 locations last year.
Pet Lovers Centre is another retailer that has recently ventured into the pet insurance sector, making a product available across its locations in Southeast Asia. The Singapore-based company has also established a joint venture with a pet crematorium in a bid to offer services âfrom the cradle to the graveâ. âWe take care of your pet from insurance, food and toys, to providing vets for your pet in case of sickness. And when your dog dies, we cremate it for you,â says CEO David Ng Whye Tye to PETS International.
Ambitious thinking
Some retailers are seeing a big opportunity in converting some of their shops â especially those that have a bigger footprint â into seamless âservice destinationsâ for owners and their furry friends.
One of the most recent examples can be found in the Middle East, where in February UAE-based The Pet Shop launched a new 20,000 sq ft pet daycare and boarding facility in Dubai. The location is part of a 50,000 sq ft pet store, the largest one in the Middle East, which has been developed as an âultra-luxuryâ Greek-themed center. It features the countryâs first pet spa, chlorine-free outdoor pools, a âpet hotelâ with 100 boarding rooms, indoor and outdoor play areas, and dry fountains.
Similarly, Irish pet retailer Petmania recently opened a one-stop health-and-wellness destination in the central Irish town of Athlone for pets and their owners, including a state-of-the-art grooming studio and a custom-built dog training school.
âOur dog training courses are now operating a waiting list, which signals the quality of the classes we provide and the growing demand for dog training services,â says Shane OâKeeffe, Managing Director at Petmania operator OâKeeffes Group, in a conversation with PETS International.
Big retail corporations have also realized that pet services present a good business opportunity. In 2023, Walmart opened its first pet services center in Georgia. This was aimed at increasing its market presence in the space, and is also seen as a first step to a possible future expansion to other territories. In a similar move, American pet retailer Chewy launched its first veterinary practice in South Florida in January this year, and plans to open between 4 and 8 more over the next 12 months. Without a doubt, the ever-evolving field of pet services warrants close monitoring.
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