Interview with Nicolò Galante, CEO at Arcaplanet: “We want to become the leading digital pet company in Italy”

Things are going well for the third-biggest European pet retailer. The combination of businesses, and the integration of Maxi Zoo into Arcaplanet’s network last year, are expected to positively impact the company’s figures. It is expected to post sales of €600 million ($637M) for 2022.

With all this, the Italian retailer is starting to think big. A new strategy will be rolled out in the coming months, with the objective of becoming more omnichannel and digital, and a plan to expand its footprint both nationally and internationally. Nicolò Galante, who recently celebrated his first year as CEO, tells Pets International how he sees the retailer’s future.

How’s the Italian pet market behaving?

The number of pets in the country is increasing, as is the consumer’s willingness to invest in improving their pet’s quality of life, along with their own lives.

Despite the weak economic environment, Italian pet parents are continuing to spend money on their pets.

There is clearly a big opportunity for us to tap into the premium segment, as the pet consumer’s approach to healthcare is still extremely reactive. For example, pet parents in Italy only visit a vet when their pet is unwell and they don’t see why they need pet insurance.

Inflation is having an impact though…

Inflation in pet products in Italy was 12% in 2022, and we passed a significant chunk – a bit more than half – on to the customer. The rest we managed to absorb ourselves.

Many pet food brands have come to us in the last 12 months with price hikes, which we try to push back. But honestly, they have a point, because raw material costs have increased. Some of them went too far though, and I am starting to see signs that they 

are beginning to bear the brunt of their decisions. Those that were too greedy and aggressive are starting to suffer the consequences, with consumers shifting to other more affordable options that offer the same quality.

Is this a golden opportunity for private labels?

If international brands continue with aggressive price increases, consumers will naturally shift toward private label products because price hikes in that category are about half.

Our private label offering is about 50% of our portfolio, but I deeply believe in a customer-centric approach and giving the customer what they need. If they are happy with an international brand, there’s no reason to push them to move to a different one. There’s so much more we can offer to our customers, rather than trying to switch them from a brand to a private label.

But private label market share is increasing everywhere…

Yes, and I think we will end up seeing a shift. What used to be a gap of 10% between third-party brands and private label producers has now become 20%.

Who is your average customer?

Arcaplanet has 2 million loyal active customers, and this is growing very rapidly. Our average customer has a good income and has more than one pet, often a dog and one or more cats. Our customers care a lot about their pets, they are very open to new trends and they are concerned about the environment.

Do they prefer offline or online purchases?

Customers don’t really care about the boundaries between offline and online. Within 3 weeks of launching our click-and-collect service in 2021, we had 30% of our online orders picked up from the store. And it remains at the same rate even today.

Our e-commerce sales were above €40 million ($43M) in 2022, a 50% increase on the year before. And this year we expect this trend to continue. We want to show that it is possible for a physical retailer based in this country to be the number one in digital as well, and today everything points to the fact that we will get there in the next 5 years.

That will be challenging…

Our online assortment is increasing every day, and this summer we will start promoting those products in-store as well, so customers can go to the store and place their online orders while they’re there.

Today, we have an app that is a copy of our website. But by the end of the summer, we will launch our first real native mobile app, which will be the first pet retailer omnichannel app in Italy. The new app will allow the customer to not only purchase products on our e-commerce platform, but also use the discount coupons in-store. Our loyalty program will become digital – we will no longer distribute plastic cards.

What’s your strategy for new store openings?

As much as 90% of our stores are located in the center and north of the country, so we are looking to increase our footprint in the south. We recently opened 18 new stores in Sicily and we believe we could reach 200 more stores within the next 5 years in southern Italy.

We are also going to test a new model for stores in the city center: a 200 sqm location, very much oriented to consultation and advice, promoting services, and with a collection point for online orders. We will be testing this new format in the second half of the year.

I believe that with 1,000 stores we would cover Italy pretty well; a target that we could reach in about 7 years. I think in the next 3 years we will reach 700.

Is it time for Arcaplanet’s international expansion?

In 2023, we need to prove that this omnichannel customer-centric model can create a lot of value in Italy. Once we achieve that, I believe we have a green light to look further into expanding to other countries where we can create real value and win. Especially countries that are geographically close to us.