New franchisees are drawn to the strength of the franchise system, which has experienced nearly nine full years of continual same-store sales growth since the Roark takeover.
“Our business model also allows them to have a home life,” says McNeely. “It’s not like running a restaurant.”
Further, more benefits come from the franchisor’s 45 merchants, who go to trade shows and meet with the aforementioned thousands of pet food supply companies that want to get their products onto Pet Valu shelves.
“Franchisees look to their franchisor for leadership and product sourcing is one way we provide it,” says McNeely. “We make their job easier by delivering everything in one truck per day. It’s a lot more convenient for them than if they were running their shops independently.”
Pet Valu is also well-known for its own private-label products, which currently account for 35 per cent of its sales.
“We design, make and sell our own foods,” McNeely says. “We also try out three to four other new brands each year.”
The franchisor encourages franchisees to give back to their local communities. In 2016, for example, stores raised more than $4.7 million for pet rescues and charities. They also support the Lions Foundation of Canada Dog Guides.
As McNeely puts it, however, simply stocking products on shelves does not sell them. One other significant way Pet Valu stands out from its competitors is by training both its franchisees and their sales associates about pet health and nutrition, so they can better inform their customers. This professional education involves courses developed with the University of California (UC) Davis Veterinary College and delivered online in conjunction with the US Davis Extension School.
“Our newly opened stores can take five years to mature, because everyone in the area is already buying their pet food somewhere else when you start, and this allows our franchisees to gain cumulative knowledge,” says McNeely. “They learn more over time as they serve more customers. So, what we look for in new franchisees are social, service-oriented people who want to be a helpful part of their community.”
Customers, in turn, become loyal to their local franchise because it is run and staffed by pet experts.
“Compared to the large staff of a big-box store, a Pet Valu franchise usually only has about six to eight employees, so our customers are more likely to see and get to deal with the same people again and again,” McNeely points out. “This is why we do well in both large cities and small towns. A true customer is one with whom you have a relationship.”
The franchisor-franchisee relationship goes both ways, too. With one district manager assigned for every 15 stores, McNeely explains, there is plenty of time for the franchisor to hear its franchisees’ concerns.
“We seek suggestions from them for improving our products,” he says. “Many of our best product and promotional ideas have come from our franchisees. Seniors’ Day, for example, was successfully tested by a franchisee in Manitoba and is now a national event that doubles our regular sales.”
Another innovation that has gained widespread acceptance across the system is the addition of in-store dog-washing services.
“We encourage prospects to do their homework, call at least eight to 10 of our franchisees—not just in their home province—and ask them about their experience with the Pet Valu brand,” says McNeely. “We believe strongly enough in our model that we’ll set up a new store, offer a royalty-free period for the first six months and cover unlimited expired-product costs for the first 18 months.”
Made in Canada, growing in the U.S.
Another frontier for expansion is the U.S., where Pet Valu operates 400 corporate stores across 16 states.
“Our presence there is more regional and backed by a good management team,” says McNeely. “We’ve had seven years of double-digit same-store sales growth. We see the U.S. as a major part of our long-term strategy.”
In 2016, Pet Retail Brands was founded with the merger of Pet Valu with Petsupermarket, which operates 225 locations, mostly in Florida and Texas.
“They’re a little different from Pet Valu,” McNeeley explains. “Each store is typically 7,500 square feet and also carries fish, birds and small animals. With Pet Valu’s management now in charge of purchasing and distribution for both brands, we’ve gained more leverage across the U.S.”
Indeed, Pet Valu is the rare—perhaps only—retail business to have started in Canada and achieved a similar level of success in the U.S.
“We’ve grown more than most Canadian retailers, other than Dollarama,” McNeely says. “This is thanks to our great team of franchisees and store managers.”