‘Doggy day care, grooming, pet hotels, we're looking at it all,’ PetMania MD talks expansion, inflation and and the long and furry tail of Covid

The 47-year-old managing director of O’Keeffes Group is plotting a major expansion of its retail brand PetMania. With 16 stores employing 260 people across the country and a fast-growing e-commerce business, O’Keeffe is looking to open five more PetMania outlets as part of an investment worth up to €4m over the next two years.

But O’Keeffe has a problem. He is struggling to find the right properties.

“Our biggest challenge to expansion today is good quality real estate,” he says. “As you know, there has been very little new retail real estate built since back in 2007.

“If we could find five good sites tomorrow that we could fit all our services in, plus doggy daycare, we would be there.”

The expansion, which could create up to 100 jobs, is one O’Keeffe is sure will pay off.

O’Keeffe’s vision for PetMania includes new services. In addition to its usual retail offering, the recently opened Athlone store offers pet grooming, training, and health advice. The Kilkenny man is also excited about the prospect of offering other high-margin services, such as doggy day care and pet hotels.

“We are getting a huge reaction,” he says of the services offered in the recently opened Athlone store. “The professional grooming addition has been very warmly received.

“This is a more holistic pet service business. It is not just retail, where you come in, buy some food, and off you go home. It has more of a community feel. We see this model – including health, insurance, training, and grooming – as one we can take to big population centres like Dublin and Cork.

“Services have an enhanced margin but also make sense from a differentiation point of view. We are different to our competitors. They don’t have the services in their stores.”

At the moment, PetMania only has one store in Dublin. However, this latest expansion will push further into the capital city and Cork.

“There is lots of opportunity in Ireland,” he says. “We are going to stay really focused on that.

When it was decided that pet retail would be allowed to remain open through lockdown as an essential retailer, O’Keeffe thanked his lucky stars

“If we could have all that done, then we would have a really busy period for the next five to ten years.”

O’Keeffes Group was founded by O’Keeffe’s aunt and uncle, Eamon and Maureen, in the 1960s and is now owned by Edmund O’Keeffe, Shane’s cousin. The group includes the homeware store Meubles and The Wine Centre. It also backs the Sullivan’s Tap Room in Kilkenny. It employs over 400 people nationwide across its specialist retail outlets and e-commerce channels.

PetMania is the jewel in the crown of O’Keeffes Group. It comprised around three-quarters of the group’s €34.1m turnover and a hefty slice of its €1.93m pre-tax profits in 2022. Its sales were up about €5.6m in 2022, although profit fell marginally by just under €150,000.

Driving the decision to expand has been PetMania’s impressive growth, says O’Keeffe. Over the last three years, it has grown by about 48pc.

O’Keeffe said group turnover and profit would be higher again in 2023, with the performance for the current financial year set to eclipse both. He predicts sales will be around €45m this year, although profit will be put under pressure as numerous inflationary and supply-chain challenges build and bite into its margin.

“We haven’t pushed through all of the increases to our customers,” says O’Keeffe. “We are looking long-term and trying not to squeeze.

“Margins are under pressure, but the long-term view is that we need to grow market share.”

The cost-of-living crisis and Russia’s war in Ukraine contributed to the squeeze.

However, supply chain knocks in recent weeks have been of concern for PetMania – and with a geopolitical element attached, there is no end in sight.

The threat of Houthi drones hitting cargo boats in the Middle East has led to substantial price increases, says O’Keeffe, with some popular products facing delays of up to six weeks to reach Ireland.

Indeed, some of PetMania’s environmentally-friendly organic cat litter has been stuck in transit for some time due to the drones, leaving gaps in an otherwise product-laden Athlone store.

Despite those challenges, O’Keeffe has plenty of reasons for optimism in the Irish pet market.

Pet ownership in Ireland has surged. But that is not the only good news for PetMania. Spend per pet-owning household has also “increased significantly” in recent years, says O’Keeffe.

Ireland has also become a market more focused on cat and dog ownership. Previously, O’Keeffe said the market had a high proportion of smaller animals, like fish, rabbits, hamsters and guinea pigs.

“That is good news for our business,” he says. “The pet is very much a family member.”

Keeping on top of spending trends is vital for O’Keeffe. Belts are starting to tighten across the country, and he is conscious of driving the value consumers receive for every penny they spend on their beloved pets with his company.

PetMania also has an insurance offering via An Post.

Our biggest challenge to expansion today is good quality real estate

With the PetMania business thriving and looking to expand, could it require outside investment to achieve its ambitious goals?

Private equity has been swirling around Irish family-owned firms in recent times. With PetMania debt-free and profitable, could it be the latest to attract a suitor or two? Would it be interested?

O’Keeffe says he has no interest in selling the business or taking outside investment. While he had one approach from private equity “a number of years ago”, the door was closed and remains so to this day.

“It was a case of ‘hello, goodbye,’” O’Keeffe says of the approach.

“Private equity by its very nature has needs – growth needs. Our focus is very much on the customer. If we do the right thing by the customer and choose the direction the customer wants us to go in, then we believe that we can be the long-term winner in the Irish market.”

Running a nationwide retail group was never something O’Keeffe desired growing up. His ambitions were altogether more local.

Growing up on his father’s fields in Co Kilkenny, O’Keeffe was passionate about farming.

“My happiness always revolved around driving a tractor through the middle of a field,” he says.

However, O’Keeffes Group business became an attractive proposition for the one-time farmer.

O’Keeffe joined the group in 2002, selling furniture on the floor of one of its Meubles stores in Kilkenny.

Initially, business and farming co-existed for O’Keeffe.

“I would get up in the morning, milk some cows, and then go to work,” he says “but ultimately, the business’s needs and demands meant I moved in full-time”.

O’Keeffe was finding his feet when he spotted a gap in the market.

In 2005, O’Keeffe identified pet retail as being underserved in the Irish market. The company started a pet concession from the corner of a garden centre to test the theory.

The test confirmed the retailer’s suspicions.

Between 2006 and 2007, O’Keeffes group signed leases for five more stores. PetMania was born.

By this stage, O’Keeffe was the managing director of O’Keeffes Group.

“It’s a privilege, but it comes with a responsibility that the direction the business takes impacts a lot of colleagues. Our decisions are always long-term.”

That responsibility has tested O’Keeffe in the past, especially during the financial crisis.

“I woke up in the middle of the night in a cold sweat,” he says of the time.

The years of the financial crisis were tough. O’Keeffes Group had signed upward-only rental agreements on leases for its stores. In a time all about cutting costs, paying increased rent every year was an expense PetMania could ill afford.

In 2011, O’Keeffe decided to put the business into examinership due to those rent clauses. It had enough cash to trade through the process, but it simply had to get control of the leases to survive as a business.

The responsibility came to bear in that moment, he says.

“Thankfully, the discussions with our landlords were fruitful and we were able to right-size those rents going forward. That gave us the platform to be able to continue the business and ultimately, as Ireland returned to financial health, grow the business.

“Without that single piece,” he adds, “PetMania would not exist today.”

Coming through the examinership fuelled O’Keeffe’s confidence as a business operator.

It took PetMania a few years, but the business recovered and started to thrive again.

The real boom years were still to come for PetMania, and they came from an unexpected source.

Spend per pet-owning household has ‘increased significantly’ in recent years

When the Covid-19 pandemic first hit these shores, O’Keeffe feared the worst. Memories of the financial crash came flooding back.

However, when it became apparent that pet retail would be allowed to remain open through lockdown as an essential retailer, O’Keeffe thanked his lucky stars.

But that wasn’t all. The pandemic led to a massive surge in pet ownership in Ireland.

“All of a sudden, no one was going to the office, and they were going for walks every day,” says O’Keeffe. “That was the real boom for pet retail.”

The pandemic didn’t just bring with it a boom.

Challenges were plentiful, with surges in inflation and supply-chain issues hammering pet retail hard.

“We are still seeing the cost of goods increasing,” says O’Keeffe. “It is difficult for the customer to understand because they hear about inflation coming down.”

O’Keeffe said PetMania had tried its best not to pass on those increases to customers. Maintaining and growing market share is the aim of the game, especially with the competition in the sector.

O’Keefe is conscious of the need to open new stores and renovate others to stay ahead.

PetMania’s new Clonmel store is set to open this year and will be its 17th location. A store refurbishment is also happening in Tullamore, due to open by early May.

“We are very growth-focused,” he says.

O’Keeffe says the focus is on the PetMania expansion, but movements are being made in some of the group’s other parts, including some “improvements” at Meubles and a potential wine and whiskey experience at The Wine Centre.

With O’Keeffe purring about the PetMania expansion plan, the opportunities for the business seem to be endless. While he is short on certain specialist cat litters in Athlone, optimism for growth is plentiful.

“When you are working in a growing business and everyone is focused and looking in the same direction, yeah, family business is what it’s all about.

“Good culture and growth,” he adds. “That is living.”

Curriculum Vitae

Age: 47​

Position: MD, O’Keeffes Group, which includes PetMania and Meubles​

Lives: Kilkenny​

Education: Kildalton Agricultural College​

Family: Partner Jurga​

Child: Amelia (10)​

Favourite hobby: Still getting up on a tractor and doing a small bit of farming​

Business Lessons

What is the best piece of business advice you have ever received?

To deeply understand your economic model. If you understand that then all your decisions return to that and that is your basis for growth