Inside Retailing - Issue 1820 25/06/10.
BRUCE ATKINSON

PETstock, the national pet supplies franchise chain, plans to open 10 stores over the next 15 months with a
target of 100 stores in the next three to four years.

The growth will be determined by the availability of suitable franchisees, although PETstock’s business
model is built around both franchise and corporate stores.

The company will open its 62nd store in Hawthorn, an inner Melbourne suburb, next week.

The store was earmarked as a corporate location until a successful existing franchisee applied for the
Hawthorn outlet.

PETstock has 16 corporate stores and its business model ensures the company doesn’t lose good sites that
become available because there is not immediately a franchisee to invest in the store.

David Young, PETstock CEO, said one of the brakes on growth has been local government planning schemes.

While Woolworths and Aldi have queue jumped in Victoria’s planning system courtesy of a State Government
investment and development strategy, PETstock has found it a hard and protracted journey to obtain
planning approvals for its stores.

Young is particularly annoyed at losing a prime site with highway frontage next to Bunnings in Mentone, a
southern suburb of Melbourne.

“Our use does not seem to fit neatly with local government planning schemes. They have definitions for
supermarkets and hardware stores, but don’t seem to be able to reconcile where a big box pet store can
locate.”

Started in Ballarat Victoria in 2002, PETstock has grown rapidly in the past eight years and now has stores
in all markets but Tasmania and the Northern Territory.

The chain is keen to expand and has set a target of around 100 stores within the next three to four years.

It will take opportunities in all states, but has a particular interest in building its store networks in Western
Australia and Queensland.

The chain is operating stores in homemaker centres, freestanding locations and shopping strips with an
average store size of around 800sqm and footprints ranging from 600sqm to 1100sqm for most stores.

PETstock stores in regional towns are opened as franchises, while metropolitan locations can be either
corporate or franchise stores.

Young said the different geographic locations, customer demographics and buying behaviour, and
product category weightings have become easier in the past two years, with the company installing more
sophisticated IT systems.

“A number of chains, including ourselves, have invested in scan data in the past 18 months or so and it
has helped us with inventory planning.

“We have been able to assist our suppliers. Our industry is starting to get there in terms of professionalism
and the technology, particularly scan data, has made it much easier for us to stock and replenish stores and
monitor consumer buying patterns and product sales opportunities.”

Sales for the franchise chain are encouraging, with good growth in existing stores and new stores meeting
budget expectations.

PETstock's annual sales are currently around $90 million.

In the 2009 financial year, average sales per store were $1.46 million, up from $1.17 million in the previous
year. The chain is headed towards a further gain in the current financial year.

Store revenues have been bolstered by the incorporation of new services such as consultant vets, grooming
and dog wash services and aquarium testing stations.

PETstock outlets sell premium petfoods, petcare and accessory products for everything from horses to
guinea pigs and fish, with some flexibility in the retail concept to allow individual stores to customise or
expand their product offer to suit a local market demand.

Its product range has more than 5000 items, but the company also offers an internet-based service to
supply products that are not stocked in stores.

The company encourages customers to bring their dogs and cats into the stores and even allows them to
sample or test some products.

It also runs a computer-based loyalty program, allowing customers to accumulate points that can be
redeemed for free products and holds VIP nights with discounts and special offers.