Pets at Home is bucking the high street trend, as one of the few retailers opening new stores rather than closing existing branches. The company currently has 435 stores across the UK, compared to 408 stores as of October 2015.
But it’s not just on the high street that animal lovers are turning to Pets at Home; the firm has also seen its omni-channel strategy delivering results, with online order volumes and basket spend both increasing. Overall this has led to H1 (Apr – Oct 2016) revenue growth of 2.5% year-on-year.
Pets at Home is also embracing mobile as part of its digital strategy. It launched an app for its VIP Club early last year, which lets customers swipe and build up points without needing to carry around their VIP card. The app has already led to improved voucher redemption rates and an increase in spend per transaction.
What’s great about the new app and the increase in usage is that it’s needy animals that benefit the most. Every time a Very Important Pets club member swipes their card or scans their app in store, at the vets or in the grooming parlour, the points they collect go toward VIP Lifelines for their chosen pet charity. The scheme has raised millions so far for charities including the RSPCA, Blue Cross and Battersea Dogs & Cats Home.
The VIP Club now has over 3.5 million members, and keeping in line with Pets at Home animal-oriented strategy, mail-outs get addressed to the pet, rather than their owner. Dan Harvey, Pets at Home’s head of Business Systems Design & Development, explains:
The challenge for us as a business is how do we take digital, and then try and incorporate that while keeping that engagement and that family feel.
As well as trying to retain the animals-first approach in a digital world, Harvey and his team have also been working to integrate a slew of disparate and outdated enterprise systems to make the company relevant for the digital era:
Like most retailers we’ve grown quite rapidly. Our estate was quite fragmented when it came to our application and technology stack.
Last year, the firm started the process of streamlining its promotions handling by rolling out SAP’s Promotions Management for Retail (PMR) software. The new system gives the firm a real-time single record for deals, offers and rebates across all channels. This is crucial for the business to bring together the various strands it offers – pet food and accessories, grooming and vet services.
The software, which runs off SAP’s HANA in-memory database technology, is also integrated with Pets at Home’s current SAP ERP systems, which Pets at Home has been using for three years. SAP also provides the retailer’s Master Data Management, sales and distribution, finance and HR applications, as well as Business Planning and Consolidation on Hana.
Prior to deploying SAP, Pets at Home was using Accord finance software acquired from a local company; its master data was held in a number of systems, including EPOS, spreadsheets and a warehouse system; and reporting was out of a spreadsheet and an own-brand reporting tool. The problem was, there was no single version of the truth, Harvey explains. The catalyst for moving to SAP was to consolidate its master data, and get stability and scalability:
We knew we were pretty much getting to the maximum. Nothing was broken but the amount of manual intervention we were having to do to make things work and talk together was huge. With SAP, we could build interfaces directly into systems; processing sales directly thru our EPOS solution into SAP enabled us to get things like flash sales and more importantly have a single version of the truth for all our commercial reporting.
Pets at Home considered a number of different ERP systems before choosing SAP, with Oracle the main alternative option. Harvey says SAP edged it through a strong retail focus:
SAP had a really clear roadmap. The retail specialism was part of the pre-sales process, they got our culture really quickly. The technology coming round the corner like promotion management for retail, we could see how it was going to fit in with our strategy going forward.
We went through quite a long process to try and keep the SAP process as vanilla as possible. We wanted to adapt our processes to support that vanilla SAP implementation. We don’t have much bespoke code in there, it’s a pretty standard implementation which means from an upgrade point of view it’s really easy.
While technology plays its part in Pets at Home’s success, the firm is acutely aware that its customers want that physical presence as a support. Unlike other retailers who are being forced to close stores or at least reimagine their purpose, Pets at Home’s decision to retain and grow its UK-wide footprint is key to its success with around half of all online orders picked up in store:
The website is going at a great rate for us. Similar to the other channels, it’s all about how we grab and engage the customer. What we’ve found is the more engaged the customer is, the more they visit the store and the higher the spend.
But when you look at the growth of pets in e-commerce, it’s not that great when you compare it to something like electronics. Although it’s growing, people don’t like to purchase 15kg packs of dog food online. They do like health and hygiene, like worming tablets and prescription services. It’s the smaller products where we’re seeing the competition, not the larger products.
Harvey explains that part of his remit is also to find ways technology can make life easier for the Pets at Home staff, as well as its customers.
We want to give them the equipment and the technology to enable them to engage with the customer in an easy and simple way. We went back a few years and looked at how we could improve the process in store.
One area the IT team identified was around pet welfare, something Pets at Home takes very seriously, according to Harvey. When a customer comes into a store wanting to purchase a pet, they are required to fill out a pet welfare questionnaire, to ensure they are being matched with the right animal and the animal’s needs will be met. Previously, this was all done via a paper form, which Pets at Home then needed to store, secure and then retrieve for any follow-ups.
Back in November 2014, Pets at Home rolled out iPads - renamed PetPads, of course – to replace the paper forms. Store assistants are now able to take the customer through the questionnaire on their tablet, making it much easier to ensure the form is completed properly. Moving from a paper to a digital process also means the company can capture information so they can email customers the relevant care sheets for their pet, and track follow-up contact to make sure the pet is settling in or if the new owner has any questions or concerns.
The PetPads are also used to support the company’s in-store adoption centres. Pets at Home takes in small animals like rabbits and guinea pigs to help find new homes for them, and all the information for the process of doing this is now entered and retained on the PetPads.
The firm is also using its e-commerce channel as a way to support its expansion of veterinary clinics and grooming on-site:
As we put more vets in store, it takes up slightly more space and you’re going to have to start reducing your range in store slightly. By doing that you don’t want to upset the customers. Giving them that extended range online has to be a good thing. We’re looking at how we develop that at the moment as part of that digital journey.