GREENCROSS SEES CLINICS AS KEY TO AMAZON FIGHT
GREENCROSS admits it is not immune to Amazon but believes its shift towards putting veterinary clinics inside pet care stores will give it a strong competitive advantage.
The group’s Australian retail outlets Petbarn and City Farmers make up 62 per cent of its annual revenue, while its vet clinics account for 26 per cent. The other 12 per cent comes from clinics and pet care stores in New Zealand. After unveiling a group net profit of $42 million and an 11.4 per cent lift in revenue to $817.5 million for 2016-17, chief executive Martin Nicholas reassured analysts on Tuesday that Greencross could withstand the arrival of online behemoth Amazon.
He said Amazon has taken just two per cent of the US pet market. “They are a competitor but they are not the only competitor,” Mr Nicholas said.
“Although no business is immune, Greencross is extremely well placed to thrive both today and tomorrow.”
He said the group’s retail business provided customers “unmatched” pet care advice and the ongoing rollout of instore clinics gave pet lovers more reasons to shop there.
The group’s click and collect service and increasing number of own-brand pet foods and products also help, he added.
Mr Nicholas said in-store clinics used existing real estate and would generate superior margins to standalone clinics as they matured.
“Our client spend is now higher at in-store clinics than it is at stand-alone clinics,” he said.
The group says 15 per cent of its 239 retail stores have vet clinics, with 60 per cent the target.
Greencross’ Australian retail division had a 10 per cent lift in revenue in 2017 and crucial like-for-like sales, which strips out new store openings, grew 4.3 per cent.
Australian vet clinics revenue lifted 10 per cent – with a 4.8 per cent rise in like-forlike sales – and its New Zealand clinics and retail stores’ sales rose 21 per cent, or 4.9 per cent on a like-for-like basis. Shares in Greencross closed down 17¢ at $5.96.