Should Woolworths kill the Absolute Pets brand?

Last year, Woolworths announced that they had successfully completed the purchase of a 93.45% stake in the South African pet speciality retailer, Absolute Pets.

Absolute Pets have been around since 2008 and today have 155 outlets across South Africa; establishing themselves as the definitive market leader in their category, ahead of some fierce competition from the Shoprite / Checkers-owned brand, Petshop Science.

The move to buy Absolute Pets (AP) is a good one for Woolworths and fills a gap in their portfolio that gives them a great vantage point from which to command control in a growing sector.

The question now on everyone's mind is 'how will Woolworths move into the future with the Absolute Pets brand?' What will become of the much-loved AP trademark? Will they keep it going separately or absorb it into their extensive network of domains?

On this exact point - we read with great interest a recent piece published on Moneyweb, 'Get ready for Woolies Pet' (a presumptuous title for something not labeled as an official press release from the brand owner), that concluded by confidentlystating:

Right, so let's stop right here...there are a few statements here that are prime for a counter argument, that will not go ignored by us:

#1 'Woolworths is a far stronger brand than Absolute Pets will ever be.'

Nonsense.

Within the category of speciality pet food and pet toy retail, the Woolworths brand is certainly not stronger than the Absolute Pets brand. The established market leader is Absolute Pets (and this position is reinforced by their loyalty program, e-commerce channel, visual identity and tone of voice). Even though much bigger competitors have been slowly encroaching on their dominance, Absolute Pets holds significant value ahead of Woolworths in the mental landscape of pet-owning shoppers.

This statement is therefore simply not true. The intangible brand assets that Absolute Pets has painstakingly built over a decade would have commanded a large chunk of the purchase price of the business. Simply discounting the value of these assets because the shadow of the Woolworths brand 'casts all other retailers in darkness' is a problematic assumption to lay down as fact.

#2 'It makes very little sense to operate Absolute Pets as a completely standalone business forever more.'

There is no argument that the power and scale of the Woolworths platform can offer Absolute Pets many advantages that it would not have feasibly been able to unlock by itself, but the Woolworths brand is also appreciably broad and cumbersome.

Maximising marketing efficiencies within categories while manoeuvring successfully within the constraints of such a big brand is incredibly challenging.

Clearly the writer of this article has never had to practically grow a segment of a business that is targeted at a particular distinctive customer, while adhering to complex layers of mother brand guidelines and the political nuances that go along with it.

It's a ball-ache I can tell you.

So contrary to what the Moneyweb article so emphatically proclaims - there are in fact numerous advantages in the counter argument of keeping the brands, and the operating processes, separate.

Country Road, Trenery and Witchery are brands within the Woolworths stable that are kept apart from the global brand, so it's not a huge stretch of the imagination to think that the same might also apply to Absolute Pets.

#3 'Its WCellar business provides the template. Get ready for WPet.'

Look...let's be totally frank here - WCellar is hardly a standout business school case study in how to build and manage a successful sub-brand of a corporate retailer. Suggesting that Woolies 'cut-and-paste' this model as an easy solution that effortlessly unlocks miraculous efficiencies is laughable.

As an outsider it is plain to see that Woolworths themselves are not having an easy time of clearly defining, understanding and managing their growing collection of category brands like WCellar. It's certainly not an easy task when you have so much brand complexity within the larger holding entity.

Why would they kill something that is working - like Absolute Pets - to just conform to a awkward brand architecture guideline that isn't totally working to begin with?

Our thoughts

Simply swallowing Absolute Pets into the vast Woolies machine, because the machine is bigger and has more leverage with landlords and service providers - is not a plausible reason to wipe out hard-earned brand equity.

The Absolute Pets brand (all of it) resonates with pet owners for a reason. It's a market leader in a category that is profitable and growing and has carved out that position thanks to clever strategy and lots of hard work and money. Woolworths would have bought this asset to exploit that specific category opportunity over the long-term; and by all projected accounts, this is a faster growing segment than just about any other retail specialisation in the region for the next 10 years.

Killing the Absolute Pets brand and placing it under strict curatorship of the bigger Woolworths mark would nullify the strategic opportunity that it offers.

As a standalone asset it'll offer the bigger retailer the nimbleness and agility it so desperately needs to dominate and win in the pet marketplace.

Woolworths have not as yet announced what their plans are for Absolute Pets brand; we wait in anticipation to see whether or not they agree with the Moneyweb commentator.

Woolworths Holdings also obviously haven't officially asked us to give a recommendation here, but if they did...the first thing we'd say over a quiet drink at The House of Machines is...tread lightly.

Think carefully about the long-term here (run a scenarios exercise where you normatively explore multiple futures of the business against a divergent series of competitive landscapes), recognise the unique strategic marketing advantage that the 'smaller' Absolute Pets brand offers you within the category and avoid making knee-jerk decisions based of legacy thinking that hasn't exactly worked out well in the past.

To perhaps flip the script to the opposite side of the 'kill / don't kill' continuum that Moneyweb have so elegantly offered us here; with the might and muscle of the Woolworths colossus the Absolute Pets brand can be ideally amplified and strengthen far beyond where it finds itself today. The AP stores need the legendary Woolies-touch and Petshop Science is pleading for a marketplace fight where they end up with a nose bleed.

Before you think about analytically-focused operational scale and efficiencies, explore the opportunity with a creative-strategy-hat on first. Embrace the uncertain, use the imagination, push yourselves to be more than just a bland, JSE-listed holding company...and take it from there.