By Larry Claasen
WOOLWORTHS’s takeover of Absolute Pets cements its new growth strategy, as the pet chain will be housed in its newly created unit, Woolworths Ventures.
The new operation inside the retailer will enable it to acquire and incubate businesses that fit into its strategic goals of expanding into specialised liquor and apparel retail, food services and pet products.
“Woolworths Ventures is a potential game changer for us,” says Woolworths Group CEO Roy Bagattini.
“I’m really excited Woolies ventures will play, not only in accelerating new revenue streams and harnessing the potential of our talented people but also in attracting new customers to our trusted Woolies brand.”
Bagattini said the Absolute Pets acquisition is an example of how Woolworths Ventures would work, while speaking at the group’s interim results. The pet-focused retail chain, founded in 2005 and has over 150 stores, will position Woolworths to become “the leader in end-to-end pet care in the country.”
The deal will see Woolworths buy 93,45% of the shares in Absolute Pets from Sanlam Private Equity and Absolute Pets management.
The South African pet market is huge. There are an estimated 21,7-Million pets in South Africa, and annual consumer spending on pet food and accessories is estimated at R8-billion, according to Euromonitor.
Bagattini is clearly not blind to the pet market’s potential and said Absolute Pets, along with WPet, its existing pet care business, will fall under Woolworths Ventures.
Smaller and nimble
Aside from pet products, its venture business will also house WEdit, its smaller-format stores. Bagattini says W Edit is about 10% to 15% the size of its stores and enables them to be located in areas more suited to smaller-format stores.
He says the hope is that by being in these locations and selecting products based on its data demographics, W Edit will be able to broaden its customer base.
“We will be able to access a whole new customer and bring the brand to them.”
The group has already opened 30 W Edit stores and plans to open 20 to 30 stores a year.
The group’s liquor operation, W Cellar, and its Food Services — its coffee stands, standalone Now Now takeout, and W Café — will also be part of Woolworths Ventures.
An emerging trend
Though the move by Woolworths to create an operation to act like an incubator is new to the retailer, it is a trend that is not new in South Africa. Tiger Brands launched the Tiger Brands Venture Capital Fund in 2023, and made its first investment in Herbivore Earthfoods, a Cape Town-based business specialising in the manufacture and sale of plant-based and vegan products.
For Woolworths, the creation of its venture arm will allow the retailer to have greater speed and agility in executing new growth initiatives without compromising its core businesses.
It should be noted that this targeted approach to acquisition growth is a sharp departure from its strategy, which saw it make an ill-fated venture into Australia when it bought retail chain Davy Jones for R4 Billion in 2014, only to sell the struggling chain in 2022.
