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Business Observer Thursday, Jul. 7, 2022 3 months ago

Crowning achievement: Royal Pets levels up as it takes on big rivals

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With a new flagship store in a prime location in Tampa, the pet market, hotel and veterinary clinic isn’t flying under the radar anymore.
by: Brian Hartz Tampa Bay Editor

Royal Pets has arrived.

Nearly a decade after it was founded, the Palm Harbor-based pet care company recently opened a high-profile, flagship store at Midtown Tampa, the new 22-acre, $500 million mixed-use development that’s home to major brands such as Shake Shack, REI Co-Op, Whole Foods and more.

Courtesy. Royal Pets' new Midtown Tampa location.

The company already had locations in Carrollwood, Palm Harbor and St. Petersburg, and founder, president and CEO Denise Wolin, a former PetSmart vice president, says several more are in the works — in Naples, Sarasota and The Villages — as she endeavors to beat her ex-employer at its own game and grab a chunk of the $124 billion pet products and services industry.

“I looked for a site for over 10 years south of 275,” Wolin says, “and with Midtown opening, I jumped on it right away. “As Midtown continues to evolve, it’s going to be like a hometown community. People will live there, eat there, take care of their dogs there. I’m excited. I believe our Midtown store, in year three, will end up being our No. 1 store.”

Taking on the big dogs of the pet industry, however, won't be a walk in the park. 

At the time Wolin, 52, left PetSmart, for example, the company had more than 1,200 stores across North America; that number has since risen to nearly 1,700. PetCo, another competitor, has some 1,500 locations, while Pet Supplies Plus and Pet Valu have both grown to more than 500 stores. How will Wolin and her staff of 100 put a dent in the armor of their giant competitors?

Courtesy. Royal Pets Chief Veterinary Officer Dr. Bryan McGoldrick with his wife, Kim, and their chocolate lab, Sam.

“Royal Pets is everything for your dog or cat under one castle,” Wolin says, pointing to features such as a luxury pet hotel with 24/7 onsite staff, veterinary care — led by Chief Veterinary Officer Dr. Bryan McGoldrick, a partner in the business — with full surgical and dental-care capabilities, a grooming salon and spa, plus a retail market stocked with food, toys, treats and accessories.

“We’re a hotel, not a boarding facility,” says Wolin, who describes herself as a “crazy” pet parent whose three shar-peis — Charlotte, Iris and Lily — are her kids, and they’re treated like royalty; hence, the name of the company. “You’d be happy to take a nap in one of our rooms.”

 

Pet care craze

Wolin is confident a slew of equally crazy pet parents are out there just waiting to become Royal Pets’ loyal subjects — and she’s probably right: The pet care market is projected to grow to $132.4 billion annually by 2027, with pet health insurance and wellness plans as major drivers of recurring revenue growth. Speaking of which, yes, Royal Pets offers wellness plans, for $39.95, $49.95 or $59.95 per month, depending on which options and benefits a customer chooses. The plans include two comprehensive veterinary checkups per year; free vaccines, blood work and health tests; $10 vet visits, and free visits to the hotel and spa.

Royal Pets’ big rivals offer wellness plans too, which is a challenge for Wolin and her team. But she has a plan to deal with their dominance, based on observations about how customers shop.

“The first thing that grows is the market,” she says, “because people come in and they see the store. And they buy food and things like that. But then they get a tour of the hotel and go, ‘Oh my god, I love this.’ They might not have a vacation planned for six months or a year, but then they come back for [hotel services].”

That brings up another key differentiator for Royal Pets: its mix of revenue sources.

“Once we get to be a mature store,” Wolin says, “what's nice is we end up being about 60% services and 40% market. If you compare that to any of the big-box [chains], they're going to be probably 11% to 12% services, with all the rest market.”

Mark Wemple. Former PetSmart Vice President Denise Denise Wolin founded Royal Pets in 2013.

She adds, “What that does for us is build in extreme [customer] loyalty: When someone uses a service, they’re four times less likely to go somewhere else and buy the food. So we’ve built our strategy on services, which gives us a very loyal [customer] base.”

McGoldrick is impressed at how Wolin has taken such lessons and observations from her time at PetSmart and used them to perfect the Royal Pets business model.

“Denise brings a lot to the table in terms of what worked and didn’t work in a big corporate environment,” he says, whereas “I have never worked in a corporate veterinary hospital. I've always prided myself on connecting with pet parents. We have to build rapport with them and provide a high level of service — that was a  major connection point for us.”

Wolin and McGoldrick like to talk about the three “lenses” through which they, and the Royal Pets team, view every decision they make: store and team, pet health and safety and the customer. Those might be fairly obvious priorities, but Wolin, again drawing on her extensive experience in the industry, says she’s seen companies “stray away from the customer or their teams when things get tight,” adding, “everything we do has to be about those three things.”

McGoldrick adds, “We take something that could be very challenging and very complicated, but we simply put it through the three lenses and it makes the decisions easier.”

 

Categorical imperative

Five is another key number for Royal Pets, representing how many service categories the company offers: retail food, treat and accessory sales; pet-sitting, both overnight and day care; grooming; preventative health; and dental and surgical services.

“There’s a lot of businesses that do one, maybe two, three of those services,” McGoldrick says. “But to put them all together is a win for the client, but also on the vet side, it’s a huge win for the overall care for the pet.”

Courtesy. Royal Pets' doggy day-care lounge.

The strategy is also win for Royal Pets’ revenues. Wolin says every time the company has opened a new location, it usually generates between $1-$2 million in year one, but by year five, thanks to customer loyalty and word-of-mouth referrals, sales top $4 million. The pandemic, however, was a huge setback, costing the company about $3.5 million in revenue over 2020-21, Wolin estimates.

“Things were hard,” she says, “but now the stores are doing great. The industry is relatively recession resilient and, therefore, we don't feel the impact that other businesses feel but COVID still hurt us because we had to close. I feel privileged to be a small business but still able to open the Midtown store, coming out of COVID.”

McGoldrick, who, along his wife, a veterinary technician, still owns and operates a small private veterinary practice in Palm Harbor, says Wolin’s approach to growth was also a factor that won him over. She aspired to create a high-touch veterinary department with 40-minute-minimum appointments and lots of follow-up calls to see how the pet is doing.

Courtesy. Royal Pets' hotel.

“Most large box stores — and this is just from my outside observation — are very task-oriented,” he says, “whereas we slow things down a little bit; we get to know the pet parent and their goals. And our goal is to build loyalty and have that long-term relationship.”

One of the challenges of offering so many services, as opposed to specializing in one or two, is finding enough qualified staff to ensure customers’ needs can be met —and the tight labor market hasn’t helped. One strategy is in pay: Wolin has increased Royal Pets’ starting wage to nearly $20 per hour, which she says is significantly higher than the company’s big-box rivals.

“I want somebody who wants a career,” she says, “When you're with a big company, it is hard to develop people and have your staff grow with you. We invest a tremendous amount in training and having our associates who start with us grow through different positions. Of the many people we have today who started in entry-level positions, several of them are store leaders.”

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