By Jessica Yun
Woolworths’ $586 million bet on man’s best friend has triggered a shift in Australia’s pet store landscape, allowing a family-owned business from Sydney to triple its business and scoop up 66 new retail stores and vet clinics.
The dominant supermarket’s bid to acquire 55 per cent of pet goods business PETstock was scrutinised by the competition regulator and ultimately approved in December after PETstock offered to divest 41 stores and 25 vet clinics. All of these have now been bought by PetO, a network of 17 stores that began in Sydney’s northern beaches, for an undisclosed sum.
Co-founder brothers of pet retailer PetO Nick Greenhalgh (left) and David Rowe.Credit: Edwina Pickles
But PetO co-founders and brothers Nick Greenhalgh and David Rowe are not done: the ink has barely dried on the paperwork and the pair is already looking at future expansion to be a “credible third player” to compete against market incumbents Petbarn and PETstock.
“If we can put another 100 stores on it from 60, let’s say to 160, we still wouldn’t be the equivalent of number two. So there’s a lot of runway,” said Greenhalgh, who co-founded PetO with Rowe in 2006.
“There’s a real excitement that we’re not going to hit a ceiling for a long, long time.”
Australians spend an estimated $33 billion every year on pets, which has been one of the faster-growing categories of spending, a trend that accelerated during the COVID-19 pandemic as many people sought furry companions during lockdown and remote work. Pet ownership rose from 63 per cent to 69 per cent after the pandemic. Supermarkets and major retailers including Bunnings have been moving into the space to capture a growing slice of the revenue pie.
With PetO’s acquisition, its revenue triples to about $200 million and its store footprint expands out of NSW to Victoria, Queensland, Western Australia, Tasmania and the ACT.
Many of these stores currently trade under the Best Friends, My Pet Warehouse and Pet City brands, which PETstock had previously acquired.
The brothers have not yet decided whether to rebrand all the stores to PetO or retain some existing brands. The Our Vet pet clinics will continue to trade under that name.
“We’ve just got to evaluate the brand equity and how it resonates with the customer. We really want to go through that process first just to see what it tells us, and it will give us some clarity once we’ve done that,” said Greenhalgh. “But of course, on some level we do want to harmonise the business.”
PetO has been shoring up its customer support and management team to adjust for the expansion, which has resulted in a tenfold increase in staff head count from just over 100 to around 1000. PetO’s core range will be introduced to the newly acquired stores, while retaining well-performing product lines that are popular among certain locations or demographics.
Sales of pet treats have been growing well, as well as vitamins and fresh pet food that needs to be refrigerated, such as mince and diced meat.
The pair hopes the acquisition will be completed by July 1. They will use the first 120 days to visit new stores and assess key priorities.
“We’re really quite comfortable and confident we’ll get to the point where we’re crystal clear about what’s ahead of us in phase one, which is about stabilising the business. Phase two will be to harmonise the business,” said Greenhalgh. “The third phase, or the third horizon, is to launch our road to even more growth.”
Greenhalgh, whose role focuses more on people and operations while Rowe oversees store rollouts, product, finance and forecasting, said the acquisition had removed a lot of uncertainty for store staff who had already seen at least one ownership change less than two years ago when acquired by PETstock.
“They’ve gone through quite a lot of turmoil and in a relatively short period of time … People want a sense of belonging, they want to be supported,” he said.
“Pets generate a real emotion in people … Despite all the various crosswinds and all the uncertainty, there was really a raw passion, a lot of smiley faces.”
PETstock, Australia’s second-largest pet retailer with more than 200 stores, was also founded by two brothers, Shane and David Young, from Ballarat. Pet Circle, founded in Sydney in 2011, received a $75 million funding boost last year.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.