A leading pub chain of our acquaintance, trialled a new drinks promotion amongst all of its pubs in a single city. The promotion was an instant hit, with one pub tripling its sales over the four-day mid-week promotion.
A few weeks later the pub chain reported its results to the City and invited the leading analysts to breakfast. During the course of the presentations, the CEO announced that this year’s great financial results were only the start, and that they would be rolling out the highly successful trialled promotion across the entire estate of pubs over the next six months with very high expectations. Cue much cheering and a surge in the share price.
What no-one was aware of was that the launch of the drinks promotion in that city coincided with the arrival of tens of thousands of seemingly very thirsty Glasgow Celtic fans into that particular city for a football match. The net effect of that three-day drinking session was to add tens of millions to this company’s share price.
As a result of these shenanigans, we generally take a jaundiced view of announcements to the City, if a group of parched football fans can influence the FTSE in such a way, who knows what’s really behind the success or failure of a listed company.
Not that we’re suggesting that there is anything underhand going on at Pets at Home, where the announcement of increased quarterly sales with retail revenue rising by 6.9% and vet revenue up by 18.4%, immediately sent its share price surging by 10%.
The main reason for our lack of scepticism, is that it very much chimes with what we have been saying in this column for some time, and let’s face it, if something backs up what you’ve been banging on about, you’re much more inclined to believe it!
Pets at Home CEO Peter Pritchard puts its improved results down to a number of initiatives:“great promotions and more lower prices, capitalising on the hot weather with our biggest ever summer and cooling product range, the launch of our easy repeat online delivery service, and an excellent ‘Best Start in Life’ puppy healthplan campaign in vet practices.
“We are also bringing our offer together more effectively with the launch of the VIP puppy club online and on our app, which introduces customers to both sides of our business.”
As we said right here a few months ago, the UK pet ownership model is changing, pet owners are becoming younger and as a result they are shopping in different (younger) ways, they want value, but they want the best for their pet in terms of diet and well-being and they want convenience. Crucially they are prepared to pay for it, when they are satisfied that their purchasing criteria are met.
If you look at where Pets at Home is attributing its revenue growth, it is ticking all those boxes, plus it acknowledges that it needs to up its game in terms of “customer experience”, because it knows that is exactly what this “new” type of customer is looking for.
Alongside the Jesuit-like idea of “give me a puppy before the age of … and they’ll be mine forever”, the company has recognised that the new younger pet owner is inexperienced and will value the support that the Pets at Home team can provide. And of course you have to go in-store to see the Pets at Home vet team. Hence its commitment to improve the in-store experience, and of course it’s no accident that the vet section is usually right at the back of the store.
Pets at Home is doing so much right it’s difficult to see where a smaller retailer might compete, and yet…
It is these very consumers who are shunning the big corporates, who prefer small independent cafes to Starbucks, who buy craft ales and not Fosters, who buy boutique gin and not Gordons. Whilst those Celtic fans weren’t so picky, the new generation is, which is why there is room for optimism for the smaller retailer and manufacturer.
Retailers and manufacturers need to take heed from what Pets at Home is doing and capitalise on it. Right now your core in-store market might still be the Horse and Hound brigade, but could you do more to tempt in this new customer to your independent store, where great service and experienced advice costs nothing? A tightly targeted social media ad campaign could be just the start you need, or even a stroll up the high street, saying hi to all the dog owners, making a fuss of the dog, and (in the name of research) asking where they go to buy their food and accessories, and what they look for.