Woolworths’ acquisition of Absolute Pets received a nod from the Competition Commission, paving the way for the retailer to accelerate its position in one of the fastest-growing areas.
On Friday, the commission said it had recommendedthat the Competition Tribunalapprove Woolworth’s proposal to buy a93.45% stake in the company from Sanlam Private Equity and Absolute Pets management, saying that the proposed transaction is unlikely to substantially lessen or prevent competition in any market.
Absolute Pets has 150 stores and Woolworths plans to add more shops.
To deal with public interest concerns, the commission said Woolworths had committed to creating new permanent employment opportunities at the new stores and establish an employee share ownership programme. It would financially support the participation and expansion of black-owned small to medium enterprises that supply products to the company.
Woolworths said at the end of February when it released its half-year financial results to December that the remaining management stake in Absolute Pets will be acquired over an agreed period. The acquisition will allow Woolworths to accelerate its growth ambitions to become the end-to-end pet care destination for consumers, said Woolworths CEO Roy Bagattini during the presentation.
Absolute Pets sells pet food and a range of other products including accessories and toys, hygiene and cleaning, clothing and fashion, health and travel items for cats, dogs, and small pets.
This is a big opportunity for us. It is a high- and fast-growing category. Our customers are certainly spending a lot of money on their pets and we want to provide them with the absolute best experience
“This is a big opportunity for us. It is a high- and fast-growing category. Our customers are certainly spending a lot of money on their pets and we want to provide them with the absolute best experience,” Bagattini said in an interview after the presentation.
Woolworths competitors Shoprite and Pick n Pay are aggressively expanding into adjacent categories including pets, baby and clothing. Spar this week announced its intention to expand into non-grocery areas such as pets and other niche areas.
Woolworths, which is investing R10bn over three years, is doubling down on its expansion of the business and has created Woolworths Ventures to accelerate the rollout of new categories including pet care, food services WCafe, standalone liquor business WCellar, new small store clothing formats of WEdit clothing, and also finding other revenue streams.
“While the concept of ventures for an accelerator is nothing new, it is a first for our group and a potential game changer for us. The role is not only accelerating new revenue streams … it is also to attract new customers to our trusted Woolies brands,” Bagattini said.
Woolworths has so far opened 30 WEdit stores and will add 20 to 30 every year. It has 18 WCellar shops but did not comment on how many stores it plans to open by the end of 2024. While Woolworths has always sold wine at its food stores, by opening standalone liquor stores it is entering a market where its rivals have entrenched their position and are raking in huge profits.
Liquor sales are about 2% of Woolworths’ total revenues while competitors are at double digits.
“The liquor category is an exciting space. We’ve been very successful in wine for a number of years, and the addition of spirits, beers and ciders offers an opportunity to build on that by curating a range that allows our customers to complete their entire drinks shop with us,” the company said.
Bagattini said WCellar is not like any other liquor store. “It’s got the best wine assortment, best spirits and beer assortment and it is set up differently, and the service is not the same as others. We invested in training and our people to really be product experts in these particular areas. And the overall service experience is significantly elevated,” he said.
