The pet supplies, accessories, pet care and training sector

There is a song by Carrie Underwood called “The More Boys I Meet” where she writes in a funny way about all the men she met being inferior to her beloved pet (and also her dog being less messy than the guys!) … We all love our pets and many love their furry dogs, cats, lizards, and turtles more than humans!

Pet ownership significantly increased during Covid which led to increased demand for all pet services including veterinary services, on line accessories, pet care, home pet sitting and walking, dog washing, training even hydrotherapy.

Australia has one of the highest pet ownership rates around the world with over two-thirds of households owning a pet. I now get my boxer Bella’s dog food home delivered in bulk on auto delivery, so I don’t have to stress about running out of dog food and then I usually pop into a pet store to top up on treats.

the sector

The sector has had a huge variety of smallscale operators providing these services online retailers, with larger retailers and on line pet sales companies emerging such as PETstock (now 55% owned by Woollies) and Bunnings ramping up their sector in pet supply products.

Industry revenue has grown at 3.8% over the past five years to reach an estimated $3.7bn in 2023 yet despite healthy growth in revenue, profit margins have failed to rise at the same rate.

Demand for pet supplies will continue to grow with pet food being around 55% of the overall revenue and animal healthcare products at around 16% the balance being products and accessories.

The specialty pet sector is estimated to be worth an eye-watering $10 billion a year

and includes pet training, dog washing, dog walking and training.

Franchising

Franchising as a business model is well entrenched in this sector in retail and on line pet supplies, pet accessories, pet minding services, pet training, mobile dog wash and Veterinary services.

The cost of entry into all of these franchises varies hugely as do the demands and obligations on franchisees both in cost and time and attention needed.

Some franchises such as a retail pet store or dog training facility require large capital outlays of up around $300,000 to $400,000 whilst other franchises such as mobile dog wash franchises around $40,000. to $60,000.

As with any business franchisees should consider the business model that best suits their needs and budget.

Here are some key issues to consider:

• The budget - work out how much do you want to invest comfortably to take up a franchise – ensure you are not too highly geared on borrowing, and you have enough working capital to cover the first 6 to 8 months of operation.

• Full time or part time? - Do you want a full time or part time commitment or have a work life balance?

• Financial due diligence - As much as you may be dealing with something you love around pets you are still running a business and need to ensure the numbers work - so do your due diligence and financial analysis that is:

- Can you take a salary for your efforts?

- Do you need to operate from premises, or can you operate on line or mobile which has substantially less overheads –no lease, less insurances, less staff?

• The longevity test - Can you see yourself doing this work in 3 or 5 years’ time or is it something you will get bored with quickly and then need to exit ?

• Feedback - Talk to other franchisees in the system you are interested in and get their feedback on the system and the franchisor - do they get the support they expected from the franchisor? have many sold their franchises and if so, how easy was it and were they able to realise a reasonable return on sale or did they have to walk away and crystalise a loss?

• Specialist Advice – Have you sought specialist Franchise legal and financial advice before committing to the franchise? Are you aware that you have the right to cool off and or change your mind in the 14 day disclosure period?

the main players in the sector

The main players in the sector are Greencross Group (Petbarn), PETstock, Pet Shop Direct and more recently Bunnings.

Greencross Ltd operates around 275 specialty large format pet stores (City Farmers & Petbarn) throughout Australia and New Zealand with an enterprise value of around A$1.7 billion.

The cost of becoming a franchisee is not cheap for example a turnkey PETstock

franchise will cost around $350,000 which includes fit-out, stock, forklifts, signage, and computer system.

Woolworths’recognised the value in the sector when it acquired a 55% stake in PETstock with almost 300 stores, 160 grooming salons and 65 vets bringing in $979 million in annual sales.

Bunnings has recognised the value in this sector and announced this sector as their “biggest category expansion in 20 years,” doubling its range of pet products including food, toys, and accessories.

Lonely Pets Club is on expansion plans around Australia for those that love dog

walking and doggy day care and is an affordable entry for franchisees not looking for a full time commitment.

If you are more interested in dog training there are new franchise opportunities with companies such as Pro Dog Training, although this requires a bricks and mortar presence with an outlay of around $300,000 to $400,000 which includes the initial franchise fee of $50,000 and a flat 10% royalty on gross sales with no additional hidden fees.

Other more affordable franchises include dog training, pet sitting and walking and dog grooming like Blue Wheelers or Aussie Pooch Mobile Dog Wash for an investment of around $15,000 to $20,000.00.

As with many sectors there are more and more players coming into the sector and larger retailers are now realising the value in the sector and like all sectors it is becoming a very competitive market.

summary

As I say in most of my articles if you are considering entering this sector as a franchisee, your best insurance, and the best way to make an informed decision is to seek advice from a Franchise Law Specialist and do your financial analysis before you commit as once you get into a franchise it is not easy to exit. v

Lawyers with over 35 years of experience in franchise, licensing and distribution law.

Lawyers with over 35 years of experience in franchise, licensing and distribution law.

Robert is also an Accredited Commercial Law Specialist and regularly publishes articles on franchising in Australia and overseas journals and acts for a number of overseas, local and master franchisors and acts in dispute resolution and mediations. contact robert@sanickilawyers.com.au or even call him on mobile 0412 67 37 57 www.sanickilawyers.com.au