PetOctober 2020Insight 2020 Fastest Growing Pet Chains

Taking a closer look at how retailers’ informed decision-making and sustainable business practices have positioned them for year over year growth Inside

Special Report: Fastest Growing Pet Chains 2 Market Focus: Pacific Northwest 12 Special Report: 14 Retailer Viewpoint: Dog Toys 20 Retailer Viewpoint: Live Foods 22 Category Analysis: Training Treats 24 Category Analysis: Supplements 26 Category Analysis Premium Foods 28 Q&A Interview: Chantal Saelen, Moderna 30 HAPPENING NOW Fastest Growing Pet Chains or select pet specialty retailers this to its loyal customer base. “That might combined with a local owner experi- Fyear has been an exercise in practic- be cliché, but we do have Ren’s Reward ence has proven to be a winning combi- ing grace under pressure. With Covid-19 Program that’s very robust,” he said. nation,” explained CEO Chris Rowland. causing disruptions across each region “Eighty percent of our customers are “We’re growing with new franchisees in the pet industry, pet retailers were Ren’s Rewards members, and we were coming into the system, as well as exist- challenged to adapt and pivot in the really fortunate that they stayed loy- ing owners opening new stores. We’re face of the unknown and for many, the al to us through this pandemic. It also seeing growth both in store and online, tumult turned into an opportunity for helps that during the last four years the through our pickup in store and same select retailers to shine. Companies company has opened 22 stores many of day delivery options” that had already positioned themselves which are still growing. “ Woof Gang Bakery is currently oper- with a strong e-commerce presence in Additionally, during Covid-19, Ren’s ating 123 store locations and expects place faced fewer obstacles than com- Pets pivoted its central distribution to to open and operate 130 by Dec. 31, petitors who didn’t already offer pet 24/7 shifts to accommodate increased 2020. “This year and looking to 2021, owners the capability to shop online online demand and thousands of e-com- our growth is attributed to our current and have products delivered or picked merce orders. “The online business has franchise owners,” Woof Gang Bakery & up curbside. Retailers who focused on been terrific. It was a combination—we Grooming CEO Paul Allen summarized. being dependable and supportive of already had a good base of customers, “Approximately 80 percent of our new pet parents by providing uninterrupted online picked up and Ren’s was poised stores, this year and in 2021, are ad- supply of products and keeping up with really well for this new demand with ditional locations opened by existing the surge in online shopping and deliv- our e-commerce platform. We re-plat- franchise owners. Our franchise owners eries thrived. Distracted companies that formed two years ago to Work Area realize the benefits of operating multi- perceived change as an encroachment which gives customers an overall great ple Woof Gang Bakery & Grooming lo- to how things have always been done, shopping experience including auto cations. Because our business model is versus an opportunity to compete and ship/subscription. One of the differen- built on service and being ‘Your neigh- thrive, have had a less empowering ex- tiators for Ren’s; our guarantee is order borhood ,’ our stores are suc- perience. Amidst the distractions and by 2 p.m., ship same day, which is direct cessful because we offer professional chaos, action-oriented retailers contin- from our warehouse so we can control pet grooming and a personal customer ued to open stores despite delays out of the customer experience.” experience, unique to individuals and their control. These retailers prove that Professional products have played their communities, that cannot be du- controlling response to, is more import- a key role as well because “We are the plicated online.” ant than the obstacles that come up. No. 1 provider of grooming products in Hollywood Feed began the year op- Store counts and year-end growth Canada,” Arsenault said. “We’re kind of erating 104 stores with plans to open Ren’s Pets will end 2020 with 32 the PetEdge of Canada in the sense with two more, rounding out the total store stores with the most recent opening grooming products. We have more than count to 106 by the end of 2020. “Our scheduled for October. “With new store 6,000 professional groomers that buy diligent focus is on maintaining as much openings, we typically don’t open late in from us, it’s a really healthy business normalcy for the customer as possible,” the calendar year because of seasonali- that during Covid-19 also saw a signif- said Shawn McGhee, President of Hol- ty and weather but Covid-19 has pushed icant increase in consumer purchases.” lywood Feed, LLC. “We have seen an us a little bit this year,” said President He continued, “Within the online en- accelerated shift to omni-commerce, Scott Arsenault. “We had planned to vironment we are not franchised and both curbside and same-day delivery. open seven stores pre-Covid-19— are corporately owned so there is no But holding true to our values of always two got pushed because of Covid-19. conflict with serving the customer. We doing what’s right for our customers is Through August and September, we just truly embrace the omni-experience. We what has given us the greatest growth.” finished opening three stores in 27 days have the capabilities to be makers of our Mud Bay kicked off 2020 with 53 which is a great accomplishment given own destiny whether we want to sell stores and will have 60 total by the end Covid-19 impact. Through Covid-19, it at that store or online. Omnichannel is of 2020. “Muddies, the employee own- has been definitely a real contraction something Ren’s has been doing for sev- ers of Mud Bay, have been the heroes of of timelines but all partners including eral years. It’s not new to us, we were 2020,” said Al Puntillo, Chief Merchan- construction and the many product happy that we were fully prepared with dising Officer of Mud Bay. “At our stores, brands have worked so hard to help a new platform to handle the rapidly our distribution center, and our home us accomplish this. Right now, we are changing business during Covid-19.” office Muddies have shown grace under headed up to Sudbury which is a good Pet Supplies Plus has 504 stores and pressure, incredible flexibility and have market in Northern Canada to open our projects ending the calendar year with managed to stay focused on the needs final store in 2020.” 520. “Our franchise model with great of our customers and their pets through Arsenault credits Ren’s Pets’ growth systems, support and buying power r Cont'd on Pg. 4 Pet Insight (ISSN 2164-9294), a monthly magazine, is published by Executive Insight Properties. Subscription rates $75 per year in the US, $100 Canada, all other countries $150. © 2020 Pet Insight. All rights reserved. No item or portion may be reproduced without written permission from the Publisher. PG 2 / PET INSIGHT Postmaster: Send address changes to: Pet Insight, P.O. Box 2067, Issaquah, WA 98027. Fastest Growing Pet Chains

r From Pg. 2 ground up,” Ng said. “Our website is a building relationships with pet parents this crazy time.” pivoting point of information that is not and fostering loyalty to individual store Pet Lovers Centre (PLC), headquar- standalone. It links information from locations for necessary services and tered in is currently at 142 our corporate headquarters and all methods to care for their pets. Specific locations in five countries. Digitalization our stores so that we continue to build categories tend to stand out from the has been Singaporeone of the key contrib- rest. For some retailers, con- utors to PLC’s growth since the sumables, either for reptile company began digitalizing near- or furry pets, in particular, is ly 20 years ago in 2003. “At PLC what draws heavy foot traf- we have been very fortunate,” fic to stores. Pet owners are said CEO and Executive Director making weekly trips, either David Whye Tye Ng. “Through- through curbside delivery or out the years the benefits of ordering online, and are ex- digitalization for us have been pecting a consistent supply more than just good processes from retailers. and good visibility for the busi- Suppliers Actively Con- ness. Digitalization has allowed tributing to Store Growth the majority of our office staff to “One of our favorite ques- work from home and yet achieve tions from our retail part- a level of productivity and busi- ners is ‘Can you make some- ness continuity that is needed thing like this?’” said Green during these Covid-19 times.” Coast Pet President, COO and “A related contributor has been Co-Founder Mike Bateman. the early adoption of e-com- “Our partners know to come merce,” he said. “We started to us if they see a gap in the e-commerce back in late 2003 market or a way a certain early 2004. Today, we under- product can be improved. We stand home delivery and online have been getting this ques- shopping much more than some- tion quite a bit as stores be- one new to this business. Even as gin to emerge from Covid-19. early as 2004 we knew we had to It has led to us creating some link product information at our very exciting and fun prod- retail front to our website. The Woof Gang Bakery & Grooming expects to end 2020 with 130 store ucts that you will be seeing more we integrated, the more ef- locations. / Photos courtesy of Woof Gang Bakery & Grooming launch on the market here fectively we could propagate data very soon. So what we are across all stores and the web. Since we our own Omnichannel O2O experience, seeing a lot of is stores that are growing have so many products, we had to work fulfilling the needs of our customers. are looking for things that are new and on a single point of entry to informa- When customers shop at PLC, they are different. Our independent partners tion so that we could have productivity. supposed to have the same wonderful have always been looking for things that During the early days, there were no experience both online and offline.” are not in or PetSmart, but in ad- solutions and we had to come up with “I would say that our branding and dition to that they are now wanting to our own.” early e-commerce adaptation had be launch partners in new products and “Those were the early days of om- buffered us from the perils of store they know to ask Green Coast Pet how ni-channel retail,” he continued. “The closures,” he added. “While many pet to make it happen with new items.” term ‘omni’ was not even known at that stores had their sales come to a com- Brick and mortar pet specialty retail- time. I coined the term ‘Clicks to Bricks’ plete halt when lockdown occurred, we ers can provide services and a memora- and spoke about it for many years at were blessed to be able to see sales di- ble experience which can’t be replicated international pet conferences. Today verted to our website.” online, some suppliers point out. “The technological advancements on e-com- More recently, retailers have noticed reason customers return to indepen- merce have come a long way. We no category growth was driven by a series dent retail stores time and again is for longer need to develop systems by our- of factors. With more people spending product education and a level of service selves. In April 2018 we launched our time at home due to shelter in place they can’t experience online,” said Lara fourth generation improvements to the orders and working from home, there Bernhardt, Director of Consumer Mar- PLC website with a commercial engine was a rise in pet adoptions as a result keting for H&C Animal Health. “Our re- to power our website.” of people using their extra time at home tail partners continue to offer the same “While many companies use website putting it to good use to socialize and level of excellent service, while also builders, we had decided to use specific train a new pet. For other retailers, expanding their offerings to include engines and build our website from the in-store services played a key role in r Cont'd on Pg. 6

PG 4 / PET INSIGHT Fastest Growing Pet Chains

r From Pg. 4 to make money. Instead we consider: a trend would be the rising demand for things like ‘Buy Online Pick Up In-Store’ Does it fit the brand? Is it right for the pet food and accessories and pet care and delivery options.” pet parents and the pet? That’s how we services. Our online arm will continue “We have a strong relationship with approach business.” to play an important role in our online neighborhood pet (NHP),” said Mol- Retailers like Pet Supplies Plus have offerings. Our customers will also find ly Mulcahy, VP of Brand Marketing for seen an uptick in store traffic thanks us on Lazada. We are currently working Stella & Chewy’s. “We have built this to the rise in households adopting pets with Shopee. We want to be even closer business together, they have a lot of during Covid-19. One upside of shelter to all our customers online and offline.” confidence in our products and as a re- in place orders meant people had more PLC’s company website serves as its sult, we get strong placement and solid time, which they decided to spend on corporate online store and a one-stop product recommendations.” training and bonding with the newest shop for of its products and services. One of the many ways Earth Animal’s member of their families. “We’ve expe- “We will continue to build a close com- retailer partners have contributed to rienced growth across the board with munity focusing on every aspect of pet their store growth this year is through Covid-19 and neighbors adding more care,” Ng said. “Building a website is exemplary customer service. “That’s a pets to their homes,” said Rowland. “We more than just putting products on a Business 101 thing, and it’s not always expect those new additions to the fami- platform to sell. There is so much going fun, it’s not always easy, but customers ly will drive incremental sales and traf- on that is beyond the scope of this in- like going to stores where customer fic for years to come.” terview. I envision our website to be the service is key and where they feel that The biggest opportunity for growth de facto website for all of Asia! Our cus- relationship and connection,” said Brett at Woof Gang Bakery is its in-store tomers will no longer see us simply as Zingle, Head of North American Sales. grooming services. So much so, Allen an online presence. PLC will be a house- “When I think of really strong stores predicts Woof Gang Bakery & Grooming hold name for everything pets. We during the last six to 12 months, they’re will groom more than 1 million dogs in should be a pet supplies store near you the ones that remember the customer’s 2021. “Our focus now is groomer rela- wherever you may be in Asia. Today’s name, remember the dog’s name, re- tions and groomer development,” he consumers want to be able to get their member what food they feed or what said. “As an organization, we wholly re- daily necessities as conveniently as pos- treats their dog likes, walk out from be- spect and appreciate our groomers, and sible and as fast as possible. Pet owners hind the counter and shake their hand cultivate opportunities for them to de- are no exception. They want their pets’ and say ‘hi’ and pet the dog as they come velop and prosper in their careers.” daily essentials to be highly accessible. in. Those are the types of environments At Hollywood Feed locations, food is Omni is about being everywhere, i.e., that made it so people weren’t willing to the predominate growth driver. “Food being totally accessible. Our website in- buy food at the grocery store instead of being the largest category, it is always formation is integrated with our stores pet specialty, even though it might have going to present the greatest opportu- and warehouses. Which means if, for ex- been slightly more convenient.” nity,” McGhee said. ample, our customer wants to know if a Growth-driving categories Having to adapt this year to pet own- particular product they are looking for At Ren’s Pets, the mission is, “We’re ers shopping from home and curbside, is available for sale, not only will they be here for your pets’ best life,” and it’s a Mud Bay associates uncovered oppor- able to know in real time, but also which combination of passionate associates tunities. Where many retailers resisted of our stores is carrying it, or if our and the products they stock that helps change and perceived online as an en- warehouse is carrying it for that matter, to deliver this. “We’ve always had pre- croachment, Mud Bay evolved and pro- so that they can head to the store that is mium products but that doesn’t have to vided uninterrupted service to new and most convenient for them, or even call mean you are paying more,” Arsenault loyal consumers when they couldn’t our delivery hotline, or place an online said. “Kibble has continued to perform visit Mud Bay locations. “The growth order, depending on what suits them great. We’ve expanded some of the best of our e-commerce business and the best.” brands in kibble, and it’s really helped expansion of local Mud Bay store based Driving in-store foot traffic and us with our overall growth and making delivery are big opportunities for us to repeat purchases sure we’re carrying the right diets for serve new customers and provide more The live foods category continues to your pet. Raw pet food has been mas- flexible buying options for current cus- drive steady foot traffic to brick and sive, we’ve been putting walk-in freez- tomers,” Puntillo said. mortar pet retailers because unlike ers into all of our new stores, 16 to 20 PLC continues to see a rising trend canned and dry foods, reptile and am- doors, and more than half of the compa- in pet ownership. “Such a rising trend phibian pet owners obviously can’t ny has walk-ins. Raw and freeze-dried creates a knock-on effect where the stock up on live foods. With the current combined has seen enormous growth demand for pet food, accessories and tumult impacting the pet industry, live but kibble is still a leader. Making sure pet care services are also rising corre- foods suppliers are trying to keep up we’re evolving the diets that we’re car- spondingly,” Ng said. “This is not hap- with demand to offer uninterrupted rying and having what the pet parents pening just to a specific type of pet service. Although, these suppliers wish want to give their pets their best life. but across all pets types from dogs to people realized that amping up supply We don’t want to approach anything hamsters. The knock-on effect of such r Cont'd on Pg. 8

PG 6 / PET INSIGHT Fastest Growing Pet Chains

r From Pg. 6 it keeps those customers coming back & Chewy’s said. “Once animals and pet of live foods isn’t resolved by adding and buying CBD. Additionally, Green parents experience the positive differ- shifts and manufacturing more product. Coast Pet has one of, if not the most, ag- ence they are customers for life. The “There isn’t enough supply because gressive Astro Loyalty programs in the best driver of repeat purchase is a diet it’s not a factory—it’s a farm and that performs very well, that is all these things have to grow,” the role of premium pet food.” said Timberline Live Foods’ Andy “Stores have found Earth Pettit. “Reptiles sales are through Animals’ natural, herbal reme- the roof. Our specialty catego- dies line to be a great tool be- ry has been keeping pet stores cause it requires a bit of con- afloat during the pandemic. I’ve versation with consumers and been on several calls with the big that’s another way of allowing boys and the little guys, and ev- the store to offer an enhanced erybody says, ‘If you’re a cat food, level of customer service,” Zin- cat litter, dog food or treat sup- gle said. “If I go in and my dog plier, you should hope customers has itchy skin, being able to go own bearded dragons because somewhere where they under- they’re driving all the traffic to stand that, they ask about it, the stores.’” they appreciate it, and they of- “The supply issues are almost fer a targeted solution to cure a result of the demand,” Pettit it, you certainly can’t replicate continued. “The demand is so it online and you can’t replicate high that any misstep creates a it at big box stores. We’ve seen little miss and then a little miss really strong category growth, turns into added pressure the especially with our stores that next week. Demand has just got have fallen into that natural everybody so maxed out on their world to begin with. Right now bandwidth on what they’re able they’re really seeing those cus- to do. Every single one of us can tomers embracing that. It’s very scale. We can scale, it just takes difficult to replicate that in any us time. With a farm, us reptile other sales channel for sure.” people, we can’t just add a third Pet Lovers Centre currently operates 142 store locations across five Helping Retailers ID Top shift. You’ve got the same number countries. / Photos courtesy of Pet Lovers Centre Issues of eggs, and you have to wait for “With CBD products now on them to grow. You can’t add another as- space by offering each store’s customer shelf at places like Petco and PetSmart, sembly line to make mealworm eggs, as a Buy 5, Get 1 Free offer on any of our stores once thought they had great an example. You have what you have un- CBD oils. This keeps customers invested partners they could grow with and now til you change what you start with, and in not only the store, but the brand. And they are beginning to realize that may it takes time to get what you need. It’s most importantly, we offer an incredi- not be the case,” said Green Coast Pet’s not as easy as, we’ll just get some raw bly effective product. If it doesn’t work, Bateman. “Stores we partner with are materials and add a second shift and ad- people don’t buy it again. So we must facing the same issues they have in the ditional assembly lines.” make sure efficacy is at the top of our past, now there’s just more on the line. “The CBD category is incredibly im- list with any product we make.” People are shopping online much more portant in driving repeat business to “When pet parents are looking for an and in big box much more. Green Coast stores, especially partners with Green over-the-counter solution for their pet, Pet is helping navigate that with our Coast Pet,” Bateman said. “Green Coast they tend to turn to pet specialty stores,” promise that Green Coast Pet will nev- Pet’s philosophy is to offer amazing Bernhardt of H&C Animal Health said. er be in big box or mass and also peo- products at fair market prices and not “Because independent retailers are se- ple shopping in independent pet stores to jack the prices through the roof just lective with the supplements they car- now really want to support small busi- because it says ‘for dogs’ on the label. ry on-shelf, the salesperson can help ness and support local business.” Just by offering a product that com- direct them to the solution that’s right The top issue H&C Animal Health’s re- petitive price point for CBD is a great for their pet and educate them on how tail partners face is bringing traffic into offering instead of someone buying a to pick the right supplement. As for re- their stores. “From a Covid-19 stand- product once, noticing it’s the same peat purchases, once a pet parent finds point, each state differs in terms of re- thing they can buy down the street at a a brand that works well for their pet, strictions and all shoppers have varying CBD store or online for humans. By hav- they’re likely to stay loyal to that brand.” comfort levels with shopping in-store,” ing products in stock that are priced in “Premium pet food works, it allows Bernhardt said. “To help support our re- line with those other human products, animals to thrive,” Mulcahy with Stella r Cont'd on Pg. 10

PG 8 / PET INSIGHT Fastest Growing Pet Chains

r From Pg. 8 ny’s Net Promoter Score (NPS) at 70+, log of new deals and independent pet tail partners, H&C continues to launch an achievement which is something store conversions in the pipeline. In ad- new products that drive customers to the retailer is proud of. “NPS is really dition, we have made and will continue stores for trial, such as Catwater and to make major strides with Dental Doubles by dailydose. We also our online offering, including use our advertising dollars to support both delivery and subscrip- in-store shopping as a call-to-action tion services.” and we create and share assets that “As a franchise-driven busi- our retail partners can use online and ness, the success of our fran- in their social media accounts as they chise owners and continuing continue to find alternative ways to to build the Woof Gang Bak- communicate with their customers.” ery & Grooming brand is par- “The pandemic has certainly creat- amount in 2021,” Allen said. ed challenges in the marketplace, with “Looking ahead, our growth people staying home has impacted strategy will include devel- store traffic, but neighborhood pet has opment as a multi-service demonstrated how resilient the chan- concept to include groom- nel has become as well the great value ing, wellness clinics and dog they add for pet parents in service, ex- walking services.” perience and education,” Mulcahy said. McGhee with Hollywood “We offer a red door retailer program Feed expects Covid-19 will that offers exclusive marketing and linger with safety precau- sales programs to help drive traffic and tions and health and safety sales for NHP. Additionally, we provide concerns continuing to be top online retailer training to educate NHP of mind for the pet industry to keep them informed and knowl- well into 2021. “Covid-19 will edgeable on our latest products. Our continue to require a height- support is working and NHP is bounc- ened focus on sanitation and ing back and our brand continues to safety,” he said. “Keeping all grow at impressive rates!” our employees and custom- “A lot of the conversations I’ve had ers protected while continu- with accounts is your customers are Pet Supplies Plus will end the year 2020 with 520 store ing to operate as normal as locations. / Photos courtesy of Pet Supplies Plus your customers, they’re not brick and possible will continue to be mortar customers,” Earth Animal’s Zin- our highest priority.” gle said. “At the end of the day, the cor- a truth question,” he said. “If anyone is “2021 will be a very special year,” ner pet store down the street from my looking at your business, they tradition- Ng with PLC said. “I would like to say house, the customers that went there, ally want to look at your bottom line, we are cautiously optimistic at best; went there because of the store. Stores but if they ask for your NPS, they would things are more likely to remain status that have positioned themselves to em- probably get a better indication of how quo like now in Singapore. During such brace these different types of commu- you are performing. You can’t have Covid-19 times, our top goals are to fo- nication and buying experiences that a low NPS and do really well. A good cus on creating excitement both online those customers want, those customers score in retail is 40 and we’re in the 70s. and offline. We will continue to focus on don’t want to go to Amazon or Petco. That’s Starbucks-like. That’s our goal digital process enhancements such that com. If they did, they would have three is to keep that level of service, and it’s we can be slimmer and faster in prepa- or four years ago. Instead, they want to been hard through Covid-19 because ration for the upturn to come. While keep supporting that local store. Stores there’s new challenges. We had a sale retrenchments seem to be prevalent that have given them a convenient and recently and had to limit people into the in the coming months to come, we will easy way to shop with them, no matter store and customers can become frus- continue to keep our people and train how they want that shopping experi- trated because they want to shop like our people and improve our processes. ence to be, have moved beyond obsta- they used to but we have to adhere to While I don’t know when Covid-19 will cles and are actually excelling because new legislation and safety. We kept that pass, I am certain that this is a transient of that.” score throughout Covid-19, we’ve got a phase. We will get through this like any Top goals and priorities for 2021 lot of positive feedback on our cleaning other crisis and be stronger and fast- Looking towards 2021, Arsenault stations, closing early, wiping down, er. Our team is prepared for the many said Ren’s Pets plans to continue up- Plexiglass and directional arrows.” challengers that will come our way. The holding its mission to allow for pets Rowland with Pet Supplies Plus antic- storm will pass. We hope to be ready for to live their best life, and one way of ipates seeing “rapid store growth over the sunny days to come.” achieving this is by keeping the compa- the next few years, as we have a back-

PG 10 / PET INSIGHT