Pets at Home

Background
Pets at Home are the UK’s biggest pets and pet accessory chains, with a turnover in excess of £586million, over 380 stores and more than 4,000 employees. Before they started working with us, they had been stocking magazines for more than three years, with a supplier shipping stocks to store and staff sending back unsold returns. While sales had looked strong initially, over the course of those three years, the category delivered less profit, with a shrinking margin all but disappearing. The next step for Pets at Home’s was most likely to pull out from selling magazines altogether.

Challenge
Although EPOS data showed that sales had started strongly, the magazine category was not one of the chain’s biggest performers compared to core products – so the focus naturally rested on other areas. In three years of selling magazines, the administrative processes gradually broke down; staff in store were not given the training or support on handling returns, while management were offered little guidance on checking returns or managing the category.

These issues had resulted in shrink averaging around 17%, slipping to more than 25% on some months – producing a loss on magazines. Sales showed that a well-managed offering could be profitable, even on falling sales, yet the waste involved was pushing Pets and Home to consider dropping the category. This not only would have deprived their customers of the product, but also would have been a blow for the publishers – as Pets at Home represented the single biggest outlet for their titles.

Solution
We started afresh – negotiating a solution with the publishers, ensuring that magazines would stay on the shelves at Pets at Home. With a new, streamlined operational process, there was less pressure on the store’s staff, while we have reduced shrink dramatically and restoring the category’s profit margin. As well as managing the administration and operation of the category, we were tasked with providing support for marketing magazines and working to grow sales through display enhancements, incentive schemes, new products (like one-shots and gift subscriptions) and a range of the promotions.

The new solution took around four months to be developed, with an agreement reached between publishers, distributers and the retailer in late 2013 and the process kicking off in early 2014.

Result
Pets at Home now have a system that allows them to continue stocking their full range of magazines. As well as reducing shrink – increasing profitability by around 17% – the new streamlined operation has halved the amount of time store personnel spend on administration, while the management team now has our professional support in managing the category, culminating in a new growth strategy being put into action.