Petz: bright future in a market full of opportunities

Despite the negative financial impact of the pandemic, the Brazilian pet market proved to be resilient. Never before have Brazilians spent as much on their pets as during the past 2 years.

Creating momentum

The pet ownership trend is impacting the local industry, creating real momentum. Brazil’s leading retailer Petz, headquartered in São Paulo, posted a profit of R$91.6 million ($17.3M) in 2021, a 23% growth against 2020. In September 2020, it joined the Brazilian Stock Exchange with an initial public offering (IPO) of R$3 billion ($570M). The company is currently worth R$6.6 billion ($1.25B).

Accelerating the pace

A while ago, the pet market was a novelty for Sergio Zimerman. In 2002, when his food and perfumery distributor went bankrupt, he got to know the sector by visiting a store belonging to now-competitor Cobasi. His initial thoughts were to become a franchisee, but today he dominates the Brazilian pet market with his own company.

In an exclusive interview with PETS International, Zimerman shows that Petz never tires of accelerating the pace and puts the focus on its omnichannel strategy. Of every 10 sales made through the Petz website or app, 8 are delivered using the click-and-collect system.

How does Petz trade in different channels?

The Brazilian market is changing from offline to online and the customer is now looking for a different retailing experience. Until 2015, the pet industry in Brazil was basically formed by physical stores and dominated by small pet stores. 7 years ago, we started creating an infrastructure for an online platform integrated with offline, and we’re now a truly cross-channel company.

In 2021 you opened 42 new stores. And you are increasing the numbers…

We currently have 185 stores across 20 Brazilian states and we plan to end 2022 with 50 more. Petz will then be present in 22 of the 27 Brazilian states. In the coming years, we want to expand in the 5 remaining states and continue to open new stores in small and mid-size cities. Each of the new stores will also be a point of digital distribution as part of our omnichannel strategy. Every time we open a new store, our online sales multiply by an average of 6.

How are online sales performing?

In the first few months of 2020, online sales jumped from 7% to 25%. We estimated that the online channel would go back to an average of 18-20% of our business after the pandemic, but the opposite has happened. Currently, about a third of our sales are online, and almost 90% are distributed by our stores. This makes Petz the best omnichannel case in the world within the pet segment.

Will online replace offline anytime soon?

I see both channels as complementary to each other. Having a pet store in your neighborhood, and walking just a couple of blocks to make your purchase, is complemented by an app. You can order anything, and in a couple of hours, you have it at your home. But online cannot replace the experience of a physical store, especially for grooming and veterinary services. The consumer also likes to take their pet to the store and socialize. The future for us is both opening new stores and investing even more in digital.

What makes Brazilian pet stores different from those in the rest of the world?

European countries, with the exception of Germany, are dominated by small pet stores. When we look at the US, we see megastores but online sales are not integrated. We had the advantage of entering this market later and were able to design a process of integration between offline and online. The size of our stores has been expanding to 800 sqm, which is practically half of the average in the US.

And your goal is to increase the services you offer in the store even more…

We have the vision of Petz being recognized worldwide as the best pet ecosystem by 2025. We already have our veterinary services as well as an aesthetic center, but there are a number of services that we don’t have yet. Our goal is to go further and offer a total experience to pet parents from a single platform – from hotel, daycare, dog walker to training – in all stages of the pet’s life.

Earlier this year you acquired e-commerce platform Zee.Dog and dog pad manufacturer Petix. Are you satisfied with how that’s going?

Since it was officially announced in January, we’ve been doing an extremely interesting job of integration and reciprocal learning, especially in developing new products and new business opportunities. We’ll see the outcome in the second half of 2022 and the first half of 2023. The merger with Petix took place in July and it will be integrated into our structure this third quarter of 2022.

Are you planning any further acquisitions?

Yes, because we believe there’s a lot of room for growth in Brazil. We are focusing on expanding more during the next 3-4 years. Zee.Dog and Petix already have an international presence and that makes us aware of opportunities to test our business in other parts of the world.

How is inflationary pressure impacting your business?

Non-essential products, which represent around 20% of our sales, are being hit the hardest. Pet owners are changing their pet’s clothes, collars and toys less frequently to compensate for the food price increases. In normal times, we managed to migrate many consumers from mainstream to premium products, and this is now more difficult. But the customer who already spent more before will rarely spend less now.