Leading pet retailer doubles down on building an ecosystem

Until 9 months ago, Marcos Ruao was Managing Director of FNAC Iberia, with a background in logistics and e-commerce. Now he is the CEO of IskayPet Group, one of the fastest-growing Iberian pet retailers.

Living apart together

IskayPet was formed out of a merger between 2 similarly sized pet ecosystems, Kiwoko and Tiendanimal. Although integration of the operating systems of the 2 retail brands is underway, Ruao intends to keep both brands active since the overlap in customers is less than 15%.

Kiwoko with more than 150 stores and a multi-pet approach is more focused on the experience, and sells live animals. Tiendanimal started as an online player in 2006, before entering retail in 2015 and now has around 70 stores. It is more value-for-money focused, selling high-quality products at the best possible price.

Not changing a winning team

“The 2 companies are gradually becoming one as far as culture and processes are concerned. But our brands will remain separate because they target different parts of the market, and they are number 1 and number 2 in the country. If we were to get rid of either of the brand names, we would definitely lose customers,” Ruao says.

Growing fast

In Spain, there are 29 million pets, with many more dogs than cats. The small dog segment is growing, but the cat segment is growing even more rapidly. About 40% of all households are pet parents.

The Spanish pet industry is worth around €2 billion ($2.26B) and employs around 200,000 people directly or indirectly. The IskayPet Group has more than 220 stores in Iberia, and its revenue was just over €300 million ($338M) in 2020. The company’s revenue in Spain grew faster than the national average in the first half of 2021, so it is gaining market share. By the end of last year, it had achieved doubledigit growth.

Pet ecosystem

IskayPet very much believes in the future of the pet ecosystem – with a holistic offer that creates more opportunities to retain customers.

IskayPet opened 25 stores in 2021. The plan is to open around 40 new stores every year, with the aim of having some 400 retail units by the end of 2025. These stores will operate alongside the grooming and veterinary services provided by IskayPet.

There are 2 separate brands of veterinary clinics in existence, with 70 located close to the stores. Half of the Kiwoko and Tiendanimal stores provide grooming services.

Making it easy for the customer

All these services are important to the IskayPet customer, as Ruao points out: “By offering pet care services along with all the necessary pet care products, we hope that people who usually buy in grocery stores will be attracted to our ecosystem and then – if we do our job well – become regular loyal customers.”

It all revolves around omnichannel

Retail and online are growing at the same pace, reflecting IskayPet’s store network expansion. 20% of sales now come from online, but omnichannel purchases involving more than one type of touch point being used by one consumer are growing faster than either online or physical retail sales separately.

Ruao believes this reflects customer demand and spending patterns, saying: “The idea before was that pure online players are really great when it comes to convenience. But that’s no longer the case. You have to be at home, waiting for the delivery, which isn’t convenient. Customers love the convenience of buying something online and going to the store in an hour to pick it up.”

He continues: “So even though e-commerce is a major source of growth, it must be part of an overall omnichannel retail concept. Physical and digital channels combined. There shouldn’t be a distinction between products and services, as they’re all part of a complete offering. Every cent invested in digital is going toward omnichannel at the same time.”

Seeking organic growth

IskayPet intends to achieve its expansion plans via organic growth rather than any further acquisitions. Ruao states: “We’re not against acquiring smaller players, but that is not the focus. There is no real need for consolidation in the market. The industry keeps growing, so smaller players will still be able to have a comfortable position too. It’s often too expensive to acquire smaller players when things are going well.”

Winning combination

Long-term plans will always rely on in-depth knowledge of a company’s consumer base, and this is no different for IskayPet. Being able to recognize exactly what the customer wants, and tailoring what you have to offer to each specific market, particularly in terms of service and speed, is the key to success. This retailer’s ability to combine physical retail and online facilities could well prove to be a winning combination in its part of the world.