Jollyes boss Joe Wykes has big plans for the pet retailer and, following its buyout by Asda’s private equity owner TDR Capital earlier this year, is vying to transform it into the “best value pets superstore” in the UK.
Wykes, who has led the business for two years, says: “We’re gearing ourselves up for our next phase of growth where we really, really want to attack the market in a big way.”
On his sizeable list of priorities is growing Jollyes’ store estate, revamping its existing portfolio, overhauling its loyalty programme, improving product ranges, and building brand awareness.
“We’ve been growing the last few years, and we’ve refined our proposition, our people model and we’ve refined some of our ranging,” he says. “There’s still a lot of work to do…Now we’re in a phase where we’re refining our customer proposition and really strengthening our management team”.
Store expansion
When the TDR deal was unveiled earlier this year, Wykes said the investment would “help us build a much bigger stage, accelerating our growth plans and giving us the resources we need to bring more value to more places”.
Store expansion has been ramped up since then and Jollyes opened its 106th store in York’s Monk Cross shopping park in September, in which Wykes took Retail Gazette on a tour.
The store, which represents its sixth out of nine new locations this year, spans across 5,000 sq ft and stocks general merchandise, pet food, frozen food range as well as a community vet clinic.
Wykes may not be a pet owner himself, but he seemingly knows what they want, and one feature that all Jollyes stores have is “piss proof” floors, to cater to the flood of pets that are taken into the shop.
Jollyes is very targeted in finding the perfect store location.
Wykes explains the retailer uses the UK’s census results to target specific locations that are likely to create the biggest opportunities for the business.
“We look for things like whether you live in a semi detached or detached house. We think that’s a proxy of having a garden and having a garden is proxy to having a pet.
“We look for areas that have got high concentrations of families,” he adds.
Jollyes focuses its efforts on retail parks, in locations next to discounters like B&M, Home Bargains, Aldi or Lidl, which Wykes says “floats our boat”.
However, finding the perfect spot can be difficult.
“Retail park space is hard to find of the right size – the High Street isn’t – but we need car parking spaces,” he says, explaining that “typically customers spend about £20 every visit with us, and the weight of their basket is about 20 kilos”.
Compared to Jollyes’ first store in 1971, which spanned 12,000 sq ft, Wykes explains the retailer now targets units less than half that size at around 5,000 sq ft.
Part of this comes down to range rationalistation, which the chief executive shares also includes an exit from selling live animals in stores.
“I get lots of letters handwritten to me by people who say it’s not ethical what you are doing,” he says, adding “a lot of our store teams don’t like it because they take up a lot of time, both to sell and to maintain and upkeep”.
The move, which will be completed in all stores by end of January, helps free up space in on the shopfloor and allows the retailer to “reinvest in value for our customers”, he explains.
Getting the Jollyes proposition right
Wykes, who was previously COO Bensons for Beds before he joined Jollyes, has presided over the pets retailer for two years, in which it has been “growing at pace”.
However, he is not resting on his laurels and is frank about where he sees opportunities for improvement.
“There’s a lot of work to be done and we’ve grown really quickly but if we really want to accelerate new store openings, let’s get the fundamental proposition right and then we go, as opposed to going and then amplifying the errors of the past.”
One focus right now is how Jollyes merchandises its stores.
“We’re looking at the space we give to general merchandise versus food,” says Wykes. “50% of what we sell is dog and cat food. But it’s about 15% of the store.
“The flip side of that is that 85% of the store is 50% of the sales so do we give too much space to our general merchandise? Are we a bit cluttered?”
Another question for Wykes is what to do online.
Store expansion has been a priority over ecommerce and, like many value retailers, Jollyes has kept a low profile online.
While it offers services such as click and collect and home delivery, Wykes admits that ecommerce represents just 1% of total sales.
“We find that 80% of our online sales come within a 15 minute drive time radius of our stores. We think that’s our customers who just happen to shop online,” he says, adding that “barely a third” of orders are delivered via click and collect.
“Moving pet food around online is hard to do in an economically accretive way because it’s heavy and it’s low value,” he explains. However, it could be soon be on Jollyes agenda.
“We’re now getting to a situation where we can do it and from a perspective of the overall market, we know that the digital pet market is growing much faster than bricks and mortar and we are not playing it so that’s a massive opportunity.”
However, he hopes to “grow quicker in bricks and mortar, and then use ecommerce in parallel to that”.
Bringing membership pricing to pets
A bigger priority for Wykes is “getting sticky, loyal customers through our doors”.
Key to this will be Jollyes’ Pet Club loyalty scheme, which according to the CEO, includes about 80% of customers, or 1.1 million people. The loyalty scheme will start to become a lot more prominent for shoppers, he says.
“Previously, we would never advertise like Tesco Clubcard on the shelf. What we’re starting to do is proper discounting on the shelf edge,” he says.
He admits that the move was in part stimulated by its new owner.
“[Loyalty has been] growing at sort of 20% year on year for the last few years and so we were like, ‘Well it ain’t broke, so why fix it’. Now we’re being challenged [by TDR] in different ways to actually think more like customers,” says Wykes.
However, the ever-honest CEO believes the extra pricing on shelf labels and around the store is “a bit confusing” at the moment.
“It’s all a bit cluttered, so maybe we have some decluttering to do. But I think one of the core areas of the proposition that we changed is actually moving from being a till-led pricing mechanic to being a shelf-led pricing mechanic.”
Jollyes is also seeking to develop its loyalty proposition by doing “really hyper-personalised offers, maybe through an app or something like that, across all areas of pet categories”.
TDR may be pushing Jollyes to explore new opportunities, but one that might not be on the table any time soon is a tie-up with the private equity firm’s largest investment Asda.
“Our proposition is very welcoming to animals, and fresh food and grocers do not like animals in their stores,” he notes. “That’s probably a massive obstacle to get over if we were to do some sort of partnership with them, because effectively, we want to welcome animals.”
The best value pets superstore
As a value retailer, keeping prices low is pivotal and when the TDR deal was struck Jollyes highlighted that it would enable it to “invest in lower prices”.
The retailer managed to hold steady with prices through last year’s record inflation, which saw many shop prices reach a 40-year high.
“We absolutely held our prices. One of the challenges we found is that the brands, particularly 18 months ago, pushed through big inflation so we did see a large erosion of margin.
“But that’s driven some of the growth in own brand because we held our own pricing so the gap between own brand price and the Mars or Nestle price got even bigger.”
Jollyes has seen further changes to shopping patterns as a result of the cost-of-living crisis.
“We’ve seen the big 12.5 kilo bag dog customer shop to a 2.5 kilo bag, and we’ve seen the 2.5 kilo bag dog customer shop down to tins.”
Wykes points out that at one period tins were the retailer’s fastest growing product.
“Customers still shop the brands that they always shop. They’re shopping a bit more frequently, but they’re spending less each time they shop.”
However, Jollyes is eager to serve the customer looking for ever more value – and is keen to make that message clear.
“We position ourselves as the best value pets superstore [however] I’m not sure you as a customer walking in would get.
The candid CEO admits: “You would think we’re certainly York’s most confusing pet superstore. We’re certainly York’s most differentiated pricing pet superstore but I’m not sure you’d come away thinking that’s really sharp value.”
But Wykes is on a mission to change that and – with the firepower of its new investor – plans to cement Jollyes’ place as a worthy value rival to Pets at Home.
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