Company Profile
Pets at Home
Pedigree Profit Protection Offering for a New Breed of Risk
It should not have taken a global pandemic to work out that the UK is a nation of pet lovers, but the widespread acquisition of domestic animals during the unprecedented disruption of 2020 and 2021 proved the point as the working-from-home protocols triggered by lockdown saw Brits seek renewed solace in the creature comforts of animal support, often for their own welfare and mental well-being.
For those faced with the new reality of working from home, the well-established workplace coffee and water-cooler colleague moments were replaced by “walkies” for many, as employees punctuated the new normal 9 to 5 of back-to-back Teams or Zoom meetings with a daily constitutional stroll around the park or the block accompanied by man and woman’s best friend.
Of all the newly acquired animals, canine companions proved to be top dogs, according to Pets Magazine whose COVID-19 survey suggested more than half of purchase enquiries during this time were dog-related, anecdotally in response to social isolation and because it would get owners out of the house for pandemic pound-shedding exercise.
In 2020, Germany had the highest pet dog population in the European Union with more than 10 million dogs, closely followed by the UK with 8.5 million. But figures for the lockdown period from the Pet Food Manufacturers’ Association (PFMA) confirmed the staggering rise in pet acquisition across Britain.
According to the PFMA, 3.2 million households in the UK acquired a pet during the pandemic bringing Britain’s overall tally to 17 million pet-owning households, 12 million of which are homes for dogs.
Young people are the main drivers of this trend, with more than half of new owners aged sixteen to thirty-four. The survey found over a third (35 per cent) of young British adults (age 24 to 35) had already embarked on lives as new pet owners, while 2.1 million (19 per cent) collected a new pet during lockdown. In addition, a further 1.8 million (16 per cent) were planning to add a pet to their households.
During 2021, UK supermarkets reported an “unprecedented” rise in pet ownership that caused shortages in cat and dog food, leading to gaps on shelves. This was supported by figures from Braemar Finance, which specialises in financing vets’ practices, that reported that a massive £8 billion was spent on pet food during lockdown, a 170 per cent increase in consumption over the fifteen years it has been reviewing pet consumption trends.
Nicole Paley, PFMA deputy chief executive, said at the time of the survey, “With millions working from home or furloughed from their jobs, many have clearly considered the numerous benefits of pet ownership. Now, more than ever, we know that the companionship and joy pets can bring to people’s lives should not be under-estimated.”
But she warned, “However, we’re keen to highlight the long-term responsibilities of bringing a pet into your life. This has been an unprecedented period with unusual working conditions. New owners have had to seriously think about possible obstacles that could make life with a pet slightly more challenging, including thinking about return-to-work plans, any possible future hit on finances, less time available, and the possibility of separation anxiety for their pet.”
Nicole added, “Also, when looking for a new addition, families need to do lots of research. Sadly, there are unscrupulous breeders out there who are willing to take advantage of the rising demand. And, as highlighted by Lucy’s Law, it is so important to buy from a recognised breeder and please don’t forget the importance of rehoming, too.”
Pets at Home
The rapid growth in domestic animal ownership resulted in a structural change in the pet care market, bringing with it a boost for businesses such as Pets at Home, the UK’s largest pet care retailer, providing everything owners need to care for pets apart from actually selling dogs or cats.
However, rapid growth brings with it a new breed of risk threat for pet owners and businesses alike, not least from fraudulent activity related to unregulated breeders in an attempt to capitalise on the high demand for animals during a cost-of-living crisis.
Although Lucy’s Law, the regulation that limits the sale of puppies and kittens as pets in England, is a well-established practice, there are still unscrupulous breeders using social media platforms to market animals for sale as well as stealing bulk food and accessories to order on an increasing scale.
Protecting the business from the plethora of far-ranging risks faced by the business is Neil Cadden, group head of profit protection for Pets at Home. “There are a number of scams out there including account takeovers to get hold of products for breeders,” said Neil.
Rather like sniffer dogs, Neil’s profit protection team includes six analysts who work across the various data streams in both the physical stores and online to identify risks facing a business that has evolved from a chain of pet stores into offering services covering everything from retail to veterinary practices and dog grooming salons, all under one roof in their new pet care centres.
Founded by businessman Anthony Preston, who received a CBE award in 2015 for services to entrepreneurship and philanthropy, the first Pets at Home store opened in Chester in 1991. Since then, the business has grown rapidly to offer everything a pet owner needs to be able to look after their pets, and they ensure that pet welfare and the needs of their customers come first in all decision-making.
While many businesses dabbled with bring-your-pets-to-work day, Pets at Home actively encourages owners to bring their dogs into stores and colleagues can bring their furry friends along with them whether in the group’s support offices or in stores.
Today, all around the modern high-ceilinged pet care centres, large images of Pets at Home colleagues with their pets look down on the customers milling below, all of which forms part of the brand’s welcoming personality.
History of Growth
During the 1990s, Pets at Home acquired Pets Mart, which saw its estate grow to 140 stores nationwide. After strengthening its distribution network with two new DCs during the early nineties, it continued to capture the consumer imagination through diversification of its pet care services with the launch of pet grooming in 2009 and the introduction of veterinary services after the acquisition of the Vets4Pets brand in 2013, which pushed its network footprint to 360 stores.
After two private equity acquisitions during this period, the business, voted the “Best Big Company to Work For” in the Sunday Times in 2014, was finally floated on the London Stock Exchange a year later, the same year it acquired its first vet referral service.
Five years later while COVID-19 had closed much of UK businesses down, Pets at Home stores remained open under essential retailer status and the business further adapted its offering with the acquisition of The Vet Connection, the UK’s largest animal telephone health provider, and the introduction of new services such as its one-hour nationwide “Click & Collect” service.
This all translated into a strong balance sheet with group revenue growth—including retail and omni-channel sales and vet treatments—showing a rise of 15.3 per cent to £1,317.8 billion in part due to acquiring an additional 1.2 million puppy and kitten customers over the last twelve months.
“We are well placed to accelerate our growth in market share,” said Pets at Home outgoing CEO Peter Pritchard. “The robust backdrop of the UK pet care market, coupled with our clear strategic priorities, proven omni-channel model, and strong executive team, mean that I hand over leadership of this great business to Lyssa McGowan with the utmost confidence that Pets at Home will continue to create value for all stakeholders in both the near- and longer-term.”
Now, a 457-strong store network with more than 8,000 colleagues, it has become a highly visible pedigree player in the pet care world having seen exponential growth in its VIP (Very Important Pet) loyalty card that now stands at more than 7.3 million members at full year 2022, representing an increase of 1.1 million on the previous year. The VIP card also has an app, providing a new landing page for a wide range of pet care benefits and incentives that has increased its digital paw print even further.
“The single sign-in app provides one customer identity and the ability to access shopping, grooming, vet care, and VIP loyalty all in one place,” said Neil Cadden, whose job is to keep one step ahead of the developments in the same way as a new puppy owner is tasked with looking out for multiple dangers that may befall it as it continues to grow.
“Customers can now organise everything from flea and worm treatments to repeat orders of food,” said Neil. “We can also monitor customer activity so that we can continue to improve the personalised targeting of our offering. The business has a vision that 50 per cent of sales will come from the services that we offer as we move to our new pet care centre formats that offer a one-stop shop offering.”
He explained, “People can come in to get just about everything in one visit. They can pick up their pet’s food, get them groomed, see the vet, and buy treats or pet toys. Of course, unfortunately, like all retailers, we do see some visitors to our stores who leave without paying as well.”
According to Neil, the cost-of-living crisis had had an impact with keeping costs stable and like many other retailers, supply chain challenges have sometimes fed through to the front line. Like all businesses, Pets at Home has been impacted by inflationary costs of energy bills, fuel, and shipping as well as some residual issues left over from Brexit. On the back of this, they have seen a small uptick in store theft, which can create other challenges including negatively impacting stock file accuracy.
“Like many retailers, we are facing into challenges both online and in store,” explained Neil. “This means its more important than ever that we reduce unnecessary or non-value adding tasks out of stores to give colleagues time to invest back into customer-facing activity. Stock accuracy is also a critical part of our journey, which is more important than ever now we have launched services such as Click & Collect and ship from store.”
He added, “The teams work hard to account for stock accurately, but it can never be accurate if the stock we think we have has been stolen or lost through poor process. We have been working collaboratively with our business improvement team on this recently to free up colleague time by using data to make improvements in time efficiencies, and we have reprioritised activity around stock control.”
The team have been working to tackle these “head winds” as a priority, because aside from looking after the numbers, the popularity of Click & Collect and same-day delivery services means it’s more important than ever that product is available for the customer.
Violence and Aggression
Theft is one trigger of violence and aggression when customers become agitated because, for example, they have been refused a refund. Situations like this have resulted in violence—both physical and verbal—toward store colleagues, which is something that has been seen across the retail industry.
“There’s always been incidents of violence and aggression in retail, but during COVID-19, we saw it jump up because of restrictions put in place,” explained Neil. “As those restrictions were lifted, there was a drop in the number of incidents, but it is now creeping back up. There could also be a link to people being under pressure again, this time linked more to the rise in the cost-of-living as opposed to COVID restrictions.”
Mapping New Strategies
As the business has grown, Neil has bolstered his team accordingly with three analysts looking at the day-to-day side of the business mirrored by another three forensically digging into the digital data from the massive growth in online trade that grew out of lockdown.
He has developed a risk strategy that maps the contours of new business streams and their respective growing pains. “A lot of managing online growth is about education. There are determined fraudsters, but there are also opportunist thieves taking advantage of where they think they can get away with friendly fraud, such as bogus returns or discount fraud.”
Some of the incidents of fraud he sees are currently masquerading as process errors, and he said there is more to do to understand the future risks in this area. “We are constantly monitoring potential future risks. One area we have started to map out is buy-now, pay-later simply because this is unregulated at the moment and fraudsters may be able to exploit this.”
All the above behaviour may seem alien in the pet care sector, a business that is primarily focussed upon the care and welfare of animals. “There is a widespread belief that because we are in the pet care business, we are not a target for fraudsters, but like any other retailer out there, we are in their sights,” he said.
“If you consider the growth in the pet market during COVID, we are just as much a target of fraudsters and thieves as any other retailer,” Neil explained. “We have witnessed and managed to successfully stop different types of scams, from account takeovers to insurance frauds.
“There is a lot of social engineering involved in the fraud. We see an increase in people using emotional blackmail tactics as part of their scams when they are dealing with our call centres because they are talking about their animals. All of this has led to an evolution of our team and its knowledge base working with all the other departments.”
Neil added, “We are not just all about security. We are integrated into the wider organisation such as the finance and HR or the people team as well as the business insights and business transformation teams, all of which are rich in valuable data. It is important that we are aligned to the wider business plan around customer experience that all ties into the earlier points around service and stock availability.”
Managing Online Fraud
To this end, Kay Birkby, Pets at Home’s online fraud manager who is part of Neil’s team, is fully integrated with the online team dealing with multi- and omni-channel fulfilment.
“My role is to analyse the data and act on the intelligence, but it is crucial to do this through engagement with customer service,” said Kay. “We are always on alert for attacks, but the reality is 99 per cent of our customers and visitors are fantastic, and it is important that we tailor our solution accordingly.
“This new way of working is benefiting us all. We can respond to the whole business by engaging through the right teams. The culture is now interactive and collegiate—I can jump on calls with anyone at any time, which was not easy to do when everyone was out on the road, for example.”
She added, “Now we are welcome as they recognise that profit protection should be party to the wider business conversation. We have become consummate networkers, and I feel better connected.”
Health Care and Colleague Care
The business looks after 440 vets, many of which are joint venture businesses. By the nature of the professional training, they are health care providers, and Neil and his team are able to assist with their unique business and profit protection issues. The operation works like franchises within the Pets at Home business so that vets who operate in highly regulated environments, because of the holding and use of powerful drugs, receive operational support and training, as well as guaranteed footfall through the stores.
In terms of the potential threat of internal fraud because of the cost-of-living crisis, the business is proactively promoting help to employees who may be struggling.
“We have a colleague hardship fund if a member of the business was struggling. This means someone can access grants of up to £2,000 anonymously if their need meets the criteria,” said Neil.
The Pets at Home profit protection team is not about guard dogs or silo security operations, but they work as an agility team second-guessing the hurdles and obstacles put in the way of the business. It is about running with the pack in terms of assistance and collaborative working by understanding the customer experience and culture of the organisation. At the same time, it is also sniffing out all the potential pitfalls as part of its own indispensable journey toward becoming the business’s best friend.
