n though many households are feeling the pinch, only 14 per cent of pet owners say they would spend less on their pets if their income fell, according to a 2016 survey conducted by Canstar. This is just one example of the ‘humanisation’ of pets in Australia, a trend that analysts say is changing consumer behaviour and driving growth in the pet retail sector. “While ownership hasn’t increased significantly, spending on a per pet basis is starting to rise, especially among millennials who haven’t got children and have a lot of discretionary income,” IBISWorld senior analyst Nathan Cloutman told IRW. It’s not just that consumers are spending more; they’re also spending differently. IBISWorld in January revealed that pet services are the fastest growing product segment within the pet industry. Demand for adventure daycare centres and premium pet food – including gluten-free options, dietary supplements and vitamins – are evidence of a more holistic focus on pet health and well being, Cloutman explained. Indeed, PETstock, Best Friends and Greencross-owned Petbarn and City Farmers have all rolled out in-store veterinary clinics and an array of pet-related services, such as grooming salons and puppy schools, in a bid to become one-stop shops for pet owners. “Retailers are starting to provide more rounded offerings, which consumers are responding well to,” Cloutman said. One-stop shop The shift to the one-stop shop, or integrated model, in the Australian pet industry began in earnest in 2013, when listed pet care company Greencross Ltd acquired pet supplies retailer Petbarn for $338 million. The next year, it picked up City Farmers for $205 million, and by 2016, it had tripled its sales to $728 million. “Our customers are increasingly attracted to the idea of a one-stop shop for all their pet care needs,” said Greencross CEO Martin Nicholas. “This includes normal retail offerings like food and specialty products, as well as veterinary services, grooming salons, DIY dog wash stations, puppy training and adoptions,” Nicholas said, adding that expanding the integrated store model is his highest priority. “We continue to add to that suite of services. In the end, we want our customers to say, ‘Why do I need to go anywhere else?’” As of 21 February 2017, Greencross had 237 retail stores across Australia, 164 standalone veterinary clinics, and 25 in-store clinics. The company has a long-term target of 350 stores and a growth runway to over 120 in-store clinics, according to a media release published at the time. More recently, Nicholas said 60 per cent of Greencross-owned retail stores could comfortably handle a co-located veterinary clinic “in the fullness of time”. Besides the size of the store and potential foot traffic, he said same-level parking is a crucial factor for in-store clinics. To be sure, Greencross is not the only pet retailer pursuing this strategy. Specialty retailers PETstock and Best Friend, which also operate interstate, offer in-store veterinary services, as well as grooming salons and puppy schools. In fact, they’re all following the lead of PetSmart in the US and Pets at Home in the UK, which used a strategy of aggressive acquisition of independent vet clinics and expansion of physical stores to dominate their respective markets. But Nicholas bristled at the suggestion that Greencross is relying on the same formula for growth as its competitors. “I take umbrage at the fact that we’re just putting vet clinics in a store. Anyone could put a vet clinic in a corner of a store. We’re putting world-class veterinary knowledge and expertise and business know-how in our stores. “We only succeed based on the quality of our services and veterinarians,” he said. He said Greencross invests in veterinary training through graduate development programs and offers business partnership schemes to incentivise the best young vets to join the company. “The in-store clinics are growing faster than our business modeling,” he said. “Clearly people are voting with their feet.” The glue that holds it together With 10.8 per cent market share, Greencross has the third biggest slice of the pie after Wesfarmers (18.7 per cent) and Woolworths (16.9 per cent), according to IBISWorld data. Its long-term goal is 20 per cent of Australia’s pet care market. While the company’s plan to reach 350 stores across Australia will go some way to increase its market share, Nicholas is most excited by the newly relaunched Friends for Life loyalty program. The initiative is used by 85 per cent of customers, who are rewarded for spending in all parts of the business. “If you become a retail, vet and grooming shopper, you double your retail spend on average and multiply your total spend on average by five. And [the customers] come more often and are more loyal,” Nicholas explained. “The customer for a vet business, dog grooming business and retail business…they’re all the same customer. We’re just stitching them together.” Like other loyalty programs, Friends for Life gathers a wealth customer data, which Greencross uses to offer relevant products and services and tailor messaging to customers. “That data and engagement are really two sides of the same coin. The data makes for better engagement and engagement makes people shop more frequently on the loyalty card,” Nicholas said. “It’s the glue that holds the integrated model together.” According to Trent Duvall, national leader of consumer markets at KPMG, the humanisation of pets, which has been driving growth and change in the pet retail sector, is primed to cross over into other areas or retail. “I could also see it going the other way, [like] a café that has some sort of pet menu with the equivalent of smashed avocado for dogs,” Duvall told IRW. “If you look at the retail trends that have been really strong, I think we will see more doggie vitamins, health and well-being products that are marketed specifically for animal consumption.”