NAB senior leaders discuss the economy and why there’s good news ahead for business.
At last count, the Australian pet industry was estimated at $8 billion. Business View looks at the changing nature of pet ownership and talks to three businesses tapping into the trend.
It’s not that their numbers are growing – in fact, with an increase in apartment living, numbers are dwindling or at best static – it’s that we’re spending more on pets.
Australia has one of the largest proportions of pet owners in the world, with dogs our number one four-legged friend, closely followed by cats (19 dogs per 100 people and 15 cats, according to the Australian Veterinary Association). We love our furry companions and increasingly humanise them by regarding them as family members – and spending on them accordingly.
Just think about it. Whereas, say, a generation ago, a tin of food from the supermarket, a couple of bones from the butcher and a kennel outside might have been considered perfectly good for Fido, today he’s more likely to be eating gourmet food tailored to his dietary requirements and sleeping inside on a bed perfectly suited to a small child. And when we go away for a few days, instead of asking the neighbours to drop in and feed the cat, we’re more likely to send her to a ‘pet resort’ where she’ll be pampered and pandered to, just like she is at home.
All these goods and services cost money, which many of us are more than happy to spend. So what about the businesses that provide them?
It’s no surprise that businesses have popped up to meet (and even predict) the growing needs and demands of pet owners. One of these is Diggiddy Doggy Daycare, an award-winning daycare centre for dogs, established in 2008 by sisters Jeanette and Nicole Farren. Their decision to create the business was a spontaneous one, according to Jeanette.
“Nicole’s dog went to a local dog daycare centre at the time. I still remember the conversation: I called her when I was on the train to work and said, ‘Why don’t we do one ourselves?’. It was quite random!”
While the initial idea was an impetuous one, once the sisters had made the decision they approached it with sound business sense, taking their time to find a location in a high demand area, based on market research.
Today, in the new premises they moved to in 2015, Diggiddy Doggy Daycare offers a day spa, a boutique and a taxi service as well as day care. It even provides function hire, to utilise (and monetise) the space on weekends when the dogs are home with their families. Who hires a dog daycare centre? Pet industry trainers, for one; if they are teaching animal care to students, it can be challenging to find somewhere with a licence for live animals on the premises
According to the sisters, the business is much like other small businesses. “You’re dealing with the same things: staff, services, products, philosophies. It’s the variants like dealing with human beings and dogs as well that can be challenging.”
Typically for a successful small business, the time came where everything was running smoothly and a decision had to be made – stay where they were or aim for a more ambitious business model. Diggiddy Doggy Daycare is doing the latter, and they’re currently developing a franchise model which will launch in 2017. Expect to see one near you soon.
Like Diggiddy Doggy Daycare, Pet Angel came to be because the founder could see the need from a personal perspective. Director Tom Jorgensen explains (while walking his dog!) how a newly retired commercial builder came to set up a pet crematorium: “Need was the impetus. Need for respect, for grace and dignity,” he says. “I’m an animal nutter – I’ve always had dogs or cats or both. The way my last border collie, Sophie, was treated, I wasn’t happy. I thought ‘I can do this better’ and here we are.”
With a lifetime’s building and business expertise under his belt, and a passion for what he was doing, Jorgensen created a purpose-built facility. It includes a cremator designed and built in Florida, a fleet of fitted-out black vehicles, handmade caskets and urns, and what he refers to as a chapel, a remembrance room where people can spend time with their pet before a cremation.
It makes sense that people who treat their animals as family members during their lives are going to want no less at the end, and the business has been a success from the start. Opening in March 2015, it’s now providing 50 cremations a week.
Of course, there is a darker side to the business, and Jorgensen is frank about it.
“Staffing can be a challenge, because it’s not for everybody. It’s sometimes not pretty, there’s no getting around it. There is that aspect to it.”
Nevertheless, he says he finds a great deal of satisfaction in providing a service to people who are grieving for their pets – and the business is growing at 15 per cent a month, with another custom cremator already ordered and on its way
Alongside the family and niche operators, pets are also big business. When Petbarn and Greencross Vets merged in 2013 the deal was worth an estimated $338 million and created the largest integrated, consumer-facing pet care company in Australia and New Zealand.
Today, ASX-listed Greencross Limited has over 350 business outlets across the two markets. And it’s growing rapidly, both through acquisition of locations such as vet practices and retail outlets and through putting new stores on the ground.
David Hutchinson, Chief Customer Officer, says their approach is effectively “to curate all the things that a pet owner needs in an easily accessible way, a one-stop shop. What we’re doing is creating locations that have a shop, a vet practice, a grooming salon, a do-it-yourself (DIY) dog wash, an adoption centre, pet insurance and a range of other services.”
Greencross has a strong focus on the human aspect of pet ownership, as they recognise this drives value in the sector, even as volume is dwindling. Growth is in premium products and services such as grooming salons, insurance, and hotel and walking services. Hutchinson likens our treatment of pets to how we treat small children, and if we wouldn’t leave a small child at home alone, why would we leave a pet?
Of course, it’s not just Australians and New Zealanders who love their pets. The markets in the United Kingdom and the United States are booming and it’s there that Greencross looks for inspiration. It has strong relationships with large players in those markets, sharing ideas and innovations.
One of the latest trends is the use of technology, Hutchinson adds, such as cameras that allow owners to watch their pets at home. If their dog is doing the right thing, owners press a button on an app and a mechanism at home releases a treat!
What next? According to Hutchinson, what’s emerging is Uber-style businesses designed to connect consumers and providers with all the services pet-owners need, from dog walking to sitting and more. Rest assured, whatever you need for your pet is being developed right now, even if you didn’t know you needed it.
This article was first published in Business View magazine (Issue 23).
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.