“We are encouraged by the resilience of super premium pet food in South Africa”

With most of the pet supplies in South Africa still being purchased in-store, the country’s largest pet retailer focuses on providing advice and customer service across its network. In the last 5 years, Absolute Pets added 90 stores and its revenue jumped by 300%. PETS International had a chat with the firm’s CEO, Stephen Warner.

Where are South African owners buying their pet supplies?

Grocery stores account for about two-thirds of retail sales. Vets and the specialty channel are still very significant, with the latter growing the fastest over the last 5 years. We are the leader in that space with 155 stores across South Africa. In fact, we are in all but 2 of South Africa’s provinces and cover about 60% of the population. Our strategy is to be closer to where the customers are going and provide for their product service needs. We are also located in malls, which makes pet shopping convenient.

How would you describe the average profile of your shoppers?

7 out of 10 of our shoppers are female, aged 25-40. Just over 70% of our customers have at least 1 dog. Customers in our most common profile have 2 canines – most of them small breeds – and 1 cat.

What are the particularities of South African pet stores?

The shops are much smaller compared to those in other countries – usually around 100 sqm – and their main focus is on providing advice and personal service. Bigger-box formats including services like grooming and vet are growing, although they are still relatively small. Around 10% of our stores have a pet spa (grooming parlor).

How strong is the competition?

There has always been a high level of competition in the South African market. The competition between e-commerce, vet clinics and chains run by corporations has led to supermarkets losing market share. But they are responding with store concepts featuring both private label and supermarket products and improving the mix of accessory items.

What impact is inflation having on the sector?

Discretionary items such as clothes, toys and the like have seen more pressure. Inflation is probably not quite at the levels of Europe; we have been between 10 and 13% over the last year or so. Accessories underperformed that growth by around 5-8%. They didn’t experience negative growth, but less growth than the other categories.

How’s consumer behavior changing in these times?

Trends within South Africa have always focused on super premium nutrition, and we have been very encouraged by the resilience of that segment. Pet parents are not compromising on giving their pets the best nutrition for a healthy and happy life, and that also extends to the health and wellness products we sell. There’s also a trend of moving to more value items, but in general we’ve seen that most people have stuck to their brand.

What are the trends in online purchasing?

Online sales across all retail, not just pets, are relatively low (7.5%) in South Africa. This year, the forecasts predict 25% growth. We do see e-commerce growing faster than traditional channels, but there’s still a very strong preference for going into stores and engaging with staff. We’ve seen that, as the staff are highly trained, they’re able to give expert advice to customers. We also have a group of customers with a clear preference for both bricks and mortar and e-commerce. Our approach is definitely omnichannel-focused, and besides our physical stores, we have a website and an app where we offer delivery within 1 to 3 days at an affordable price.

You recently launched a 1-hour delivery service. How does that work?

We fulfill demand from our 155 stores and use a logistics partner to do last-mile delivery. From an economic point of view, we are able to deliver products in a cost-effective way as the customer is prepared to pay a convenience fee for the time saved. We do have to increase the level of stock that we hold in-store to cater to the increase in demand. To facilitate the deliveries, our app is integrated with our logistics partner.

How are your private label brands performing?

The brands have resonated strongly with the customers and have been performing well in terms of product quality and the benefits provided. In the current environment, the value aspect has also helped. The large price increases from international brands seem to have forced pet parents to look for alternative products and I think private label has taken up that opportunity.

Do you have plans for international expansion?

At the moment we don’t have any aspirations to expand outside of South Africa or potentially the neighboring countries. There are opportunities within the Southern African space and it’s a market that we know and understand.

What’s next for Absolute Pets?

We’re going to continue to increase our real estate, increase the number of stores and focus on our e-commerce and omnichannel capabilities; we’ll be putting significant investment into that aspect. In the next 3-5 years, we would look to add about 100 stores. We would also aim to cover 80-85% of the market.