Newly floated Pets at Home unveiled its results yesterday. Retail Week looks at growth prospects for this fragmented sector.
Why are we talking about this now?
Pets at Home last week revealed its first results since its stock market listing in March, with underlying EBITDA jumping 12.4% to £110.7m over the year. Total sales rose 11.2% to £665.4m in its year to March 27 as the retaier has become the clear market leader in the pets sector with 369 stores compared to 223 for the five largest competitors combined.
The company has also grown its pet vet business to 277 practices, making it the largest in the UK. It wants to more than double this to 700 practices through its Vets 4 Pets and Companion Care brands.
What is the size of the market?
Pets at Home reckons the domestic pets market is worth over £5.4bn, which includes food, accessories and services. The Pet Food Manufacturer’s Association estimates that there are around 65 million pets in the UK in total, including 8 million dogs and 8 million cats, with 46% of households living with a pet.
Beyond the UK, The European Pet Food Industry estimates that sales of pet food alone across the continent total €24 billion annually, with 70 million pet-owning households while the Pet Food Institute in America estimates that US households own over 84 million dogs and 75 million cats, with over half of US households owning at least one of those animals.
Who are the biggest players aside from Pets at Home?
The highly fragmented pet care market includes specialists, the supermarkets – which account for around half of all sales - and increasingly the value retailers. Pets at Home is by the far the largest retailer dedicated to the sector, while Essex-based Jollyes is the second largest specialist, with 56 shops. Ocado launched pet site Fetch 12 months ago and Asos co-founder Quentin Griffiths and Will Cooper, who founded online homewares retailer Achica with Griffiths, launched Astarpets.com this year.
Value retailers have also become increasingly active in the sector, with Poundstretcher opening 13 shop-in-shop Pet Hut stores within its outlets last year and looking to roll this out to 200 stores by the end of the year. It also hopes to open 50 standalone stores of 3,000-5,000 sq ft.
What are the growth prospects for Pets at Home?
Pets at Home clearly believes it can capitalise on its growing domestic domination, while inevitably questions will be asked about whether it could take the format overseas. Online player Pets Pyjamas has confirmed expansion plans for Germany and the US.
If Pets at Home does foray into Europe it will come up against market leader Fressnapf, which has nearly 1,300 stores across 11 markets - including Ireland - under its eponymous banner and the Maxi Zoo fascia. Two-thirds of Fressnapf stores are in its home German market.