How Independent Pet Partners is Reshaping the Pet Retail Landscape
This rising star in pet retail is bringing together some of the industry’s top chains and arming them with the resources needed to succeed in a fast-changing marketplace.
“Past success is no guarantee of future results.” This is a phrase we’ve all heard before—usually as a disclaimer attached to some type of investment opportunity—but it holds special meaning for today’s independent pet specialty chains. Regardless of what these retailers have accomplished over the years, their future success, and even their very survival, is far from assured if they cannot keep up with the rapid evolution that is taking place within the pet care market.
That’s a reality that the founders of Kriser’s Natural Pet, Especially for Pets and Natural Pawz clearly understood. Each of the three chains spent years carving out a sizable, loyal customer base in their respective markets and fueling growth by offering shoppers a reliable source of healthy, wholesome pet products in an environment where knowledge and service were in sharp focus. Still, they all faced considerable challenges in continuing to drive their businesses forward in an age where just about any product is just a click away for pet owners, and retail success or failure is often determined by who has the best data and digital reach.
“Any business has a certain capacity for growth and we realized that ours was getting bigger than us, and the market was changing,” says Nadine Joli-Coeur, co-founder of Natural Pawz, which operates 24 stores across Houston and Austin, Texas. “We looked at where the market was going and the skill set we would need in order to be successful in this new market, and while we knew we could continue to be successful, it wouldn't be to the degree that we wanted. So it came down to the question of, were we the best [choice] for moving the business forward?”
That is thinking that led Joli-Coeur and her husband Biff Picone to make Natural Pawz the latest independent pet store chain to join the growing Independent Pet Partners (IPP) family.
Founded by Jeff David, Mike Foss and Ted Root, three executives with deep roots in the retail pet industry, IPP is an organization that was created to take independent pet retail brands and elevate them to a new era of success while maintaining many of the elements that made those brands thrive in the first place. So far, a total of six chains—all leaders in their respective markets—have been brought into the IPP fold through strategic acquisition over the course of a little more than a year. In addition to Natural Pawz, these include Kriser’s, which operates stores in Southern California, Illinois, Colorado, Texas, Virginia and Washington, D.C.; Especially for Pets in Massachusetts; Pet Life in Maine, Massachusetts and New Hampshire; bark! Pawsitive Petfood in Maryland, and Whole Pet Central in Maryland and Virginia. As a result, IPP now comprises 107 locations in nine states and Washington, D.C.
According to David, IPP is driven by a real need among independent retailers who, while successful in their own right, may have reached the limits of what they can do on their own.
“IPP is really about the strength of character of the independent operators that we’re privileged to work with,” he says. “These are retailers who have a high recognition of their capabilities and the needs of their customers. They have, in part, driven this initiative by saying, ‘We need some help.’ And Mike, Ted and I have some experience that we can draw upon that enables us to come in and help them apply some additional skills, capital utilization and thoughts to their businesses that will ensure the brands they’ve built live on beyond their initial ownership cycle and their capability to run these businesses on their own.”
The mission of IPP is not to build a massive, homogenized retail chain that spans from coast to coast. Instead, the company plans to build upon the expertise and brand equity that its acquired retail chains already have in place.
“They are all strong retailers with good real estate, product selections and great people,” says Foss. “We expect to continue building on that by keeping the individual brands alive and enhancing them by laying over some of the tools they don’t have access to. One of the things that we treasure is the relationship that each of these brands have built with their customers. We desperately want to keep that independent feel. That is a guiding light of ours.”
This philosophy resonated with the founders of Natural Pawz, who had no shortage of suitors looking to acquire their burgeoning chain. “Over the years, we had a lot of people inquire about buying Natural Pawz, but they wanted to buy it and change it,” says Picone. “So when IPP came to us, it was a breath of fresh air. They weren’t talking about changing Natural Pawz, they were talking about taking what we’ve created and bringing it to the next level.”
This approach is also what helped catalyze the organization’s first acquisition, of the 45-store Kriser’s chain, in July 2017. Founder Brad Kriser was actively looking for potential partners when he decided that aligning with an organization that had the right vision for what pet retail could be and what it would take to get there was a better option than simply taking on investors with deep pockets.
“It was very important to have the right partner that was going to help the business grow correctly and had the same vision that we did,” he says. “That is why IPP was so perfect for us. Mike, Ted and Jeff had the same mission and goals we did of wanting to grow and spread the magic of unconditional love. They were passionate, they understood the market and they had expertise they could draw on to take things to the next level.”
To Michael DiTullio, founder of the seven-store Especially for Pets chain in Massachusetts, IPP’s ability to bring next-generation capabilities to established, successful retail brands will be key to the future success of all of the chains in organization.
“I knew for years that Especially for Pets would have to evolve to survive,” he says. “I just didn't really know how to evolve, and more importantly, I didn't have the financial resources and expertise to evolve.”
“The competitive landscape has changed. I truly believe that we are at the cusp of what I call ‘pet retailing 3.0,’” DiTullio continues, referring to the small traditional pet shops that sold animals as 1.0 companies, and pet supermarkets like Especially for Pets, Petco and PetSmart as 2.0 companies. “We’ve been at [the 2.0] level for many years now, and nothing has dramatically changed in this segment. Once I learned what IPP was all about, I realized that it is truly going to be a 3.0 retailer. That’s when I decided to sell and become a part of their team.”
Pet Retailing 3.0
So, what exactly goes into being a 3.0 retailer? Primarily, it’s about having the wherewithal to effectively utilize every resource available to streamline and improve operations, as well as figure out how to better engage and meet the needs of consumers.
“With 3.0 retailing, you have to invest a tremendous amount in technology, marketing, merchandising, analytics, store design and services,” says DiTullio, noting that these are investments that many independent operators are hard pressed to make.
According to David, it all comes down to making sure that you are giving consumers what they want, when and how they want it.
“One of the things that we do is listen to the consumer,” he says. “That starts with the understanding that Brad, Michael, Biff and Nadine have about their customers and what they’ve been looking for. Then we take that insight and build upon it by reviewing the data that’s available, as well as talking to customers through focus groups and surveys to make sure we are continually meeting their needs.”
Not surprisingly, a big component of keeping up with evolving customer demands is utilizing the variety of digital tools available today. Yet, while technology has opened up a whole new world of insights about consumer behavior, access to such technology—and the ability to use it effectively—is often beyond the reach of average independent pet stores.
“With the way that technology is advancing, the new ways to market and new tools to manage their business, most independents don’t have the capital to invest as much as they need to in order to remain competitive,” explains Foss. “Even if they had the capital, they generally don’t have the skill base to be able to become experts in areas like hardcore data analytics or customer relationship management tools, so it’s going to be a growing challenge for them.”
For the chains that have partnered through IPP, taking advantage of technologies like these has gotten a lot easier thanks to the efficiencies that come with combination and the access it provides to new resources.
“The focus we have in bringing the businesses together is to streamline the back-office process as much as possible so that we can apply that resource to putting in place some of the new technologies and systems that businesses need in order to be competitive in today’s fast-changing world,” says David.
According to Foss, the resources that IPP will provide to its retail brands are numerous. In addition to ecommerce capabilities, he points to areas such as customer relationship management and effective marketing as essential components.
“There are some great customer relationship management systems out there that can help you better understand the behavior of your customers and how to best meet their needs over time,” he says. “These are awesome tools, but they are very expensive and they require specific skills to operate.”
Similarly, says Foss, there are high-end loyalty systems that give retailers the capability to go beyond the typical ‘buy 12 bags of food and get one free’ proposition to further enhance customer relationships and even integrate the services side of the business.
“The goal is to understand customers better,” he says. “We do a massive amount of data analytics. We have several data scientists on the board who focus on the underlying transactions and the relationships we’re seeing. How does the behavior of the customer at the transaction level influence your decisions about where you need to have stores? How do you build customer retention? The science around data analytics can help you run your business better.”
When it comes to reaching current and prospective customers outside the store, Foss says that the advent of email, mobile communications and social media has made the science of marketing much more difficult. “But if you’re really good at it, you can mine tremendous relationships with customers by how you market to them,” he says. “We’re trying to provide these skills and tools, over time, to all of these independents to help them run their businesses better.”
Another important element of IPP’s approach to next-generation retailing is services. The company believes in-store offerings such as grooming, daycare, training and wellness clinics will be a huge differentiator for its retail brands—a fact that shouldn't be surprising given the success that three of the chains in the IPP family have had with services in the past.
“We’ve had great learning from all of the chains we’ve acquired, but in the case of Kriser’s, Especially for Pets and Natural Pawz, in particular, we’ve had tremendous learning about the services side of the business,” says Foss. “In a world where ecommerce penetration is growing in every retail category, services are an element that the Chewy’s and Amazon’s of the world haven’t figured out how to disintermediate yet.”
“They are important for maintaining strong, loyal relationships with customers, but they are also very complex to do well. There is a science around grooming, wellness, daycare and training; these aren't things you can just throw out a shingle and offer those services; you have to do it really well, or it’s worse than if you didn't offer it to begin with. So, we spend a lot of time trying to enhance how we do services.”
The Next Act for Founders
While acquisition has brought a host of benefits to the various retail brands that now reside under the IPP umbrella, the founders of those brands have also found the experience to be quite rewarding—and not just financially. That is because the organization is open to the continued participation of the folks who built their businesses in the first place.
According to Foss, the independent retailers that IPP approaches tend to fall into one of three groups. Of course, there are founders/owners who just want to sell their business and get out. However, there is another group that, while they’ve chosen to sell their business, still wants to be involved somehow.
“In this case, they cash out their business and we find the right job so they work for us moving forward, whether that’s for a month, a year or longer,” Foss explains.
Picone and Joli-Coeur are among this group, having signed up to continue working for IPP for 90 days—and possibly beyond. Both are happy to be shed of the overwhelming responsibilities of running a 24-store enterprise to focus on the areas of the business they enjoyed the most. In Picone’s case, it’s planning and executing new store openings, while Joli-Coeur continues to be engaged on the product side, working closely with IPP’s merchandising team.
The third group of founders/owners is made up of those who choose to roll some of the proceeds of the sale back into IPP and become shareholders. In these cases, the new shareholders are given a role within the organization that is meaningful for both sides.
“We love when owners decide to roll a piece of their proceeds into IPP because we think there is a bright future for this company, and we love to see founders wanting to continue from both an investment point of view, as well as an employment point of view,” says Foss.
Kriser and DiTullio fall into the shareholders group, with Kriser taking on a leadership position in merchandising, product development and education, and DiTullio spearheading new store openings along the east coast from New England to the Mid-Atlantic. Both men say they enjoy the fact that they’ve been able to shed their old responsibilities to take on new roles in a bigger venture.
“It was like the weight of the world was off my shoulders,” says DiTullio. “Now I’m doing the fun stuff.”
“I wasn’t ready to retire,” says Kriser. “I love the business and what we’re doing. [Selling to IPP] was about being part of something bigger. It was about being part of what I believe will be the most successful retail organization of its kind.”
With six successful retail brands now in the fold and having built a great brain trust that includes a number of pet industry veterans, IPP is poised to grow at an enviable pace. That growth will most certainly include new store openings under its existing banners. However, according to Foss, the organization is also focused on looking for additional acquisition opportunities.
“At the end of the day, we’re trying to invite other independents to consider joining us,” he says. “If you talk to any of the [founders/owners] we’ve worked with, I think they’ll all tell you we were very fair and we live up to anything we commit to as part of the merger process. Hopefully our reputation for being fair and operating with high integrity will convince more independents to at least consider joining us on this road.” PB