Our core strategy is to continue developing our value proposition and to better serve our customers in the Nordic markets, with focus on pet parents.
Winning new customers
Musti Group is well-positioned to continue winning new customers from the large Nordic pet pool of 5.3 million pets and gaining market backed by the pet parenting trend. This is enabled by our concept, leading brand, and customer focus. Our pet loyalty club is the largest in the Nordics.
In the financial year 2020 we continued to focus on market share growth in all markets led by Sweden and Norway. The number of loyal customers, friends of Musti Group, increased by 13.1% to 1,151 thousand during the financial year.
We also launched a new Puppy and Kitten Club that focuses on the puppies’ and kittens’ first year, giving them the best possible offers, communication and advice.
Grow share of wallet within existing loyal customers
Growing the share of wallet with the existing loyal customers is a clear opportunity for Musti Group. There is significant upside from educating lower spending customers about the health benefits of premium food and encouraging them to conduct most of their pets’ purchases at Musti Group.
Rolling 12 months average spend per loyal customer increased to EUR 178.5 in the financial year 2020 (EUR 176.1), driven by an increased average purchase value.
Expand store network and number of service points
We aim to continue rolling out further stores to win new customers through our strong concept attracting customers to switch to the Musti Group platform. Through the largest footprint in the Nordic countries, Musti Group can quickly gain further market share in the attractively growing pet services market, and we continuously evaluate new service point openings.
The number of directly operated stores increased by 25 during the financial year. This was supported by the increase in the demand for pet products during spring 2020 and thus higher growth expectations for the market.
Focus on driving gross margins through increased O&E share and leveraging scale
Musti Group has strong historical track record in driving gross margin improvement and is well-equipped to continue that going forward. Own and exclusive brands typically have 10–15 percentage points higher gross margins compared to global brands. In addition, we focus on leveraging scale in procurement, pricing and category management.
In the financial year, gross margin decreased due to a higher share of online sales, a lower share of sales of own and exclusive brands as well as non-recurring items relating to the ongoing warehouse consolidation project, offset by more efficient marketing campaigns and supply chain management. Musti Group continues to further strengthen its own brands, such as the successful product brands Feel Active and Little&Bigger. For example, we extended our wide Feel Active assortment by launching a new high-tech raincoat with our own trademarked membrane Feel Tech.
Leverage broadly invested platform to drive operating leverage and scale benefits
Previous significant investments to Musti Group’s IT and warehouses are expected to drive increased operating leverage and scale benefits to further increase Musti Group’s profitability as topline growth is expected to continue while fixed costs can be spread across larger net sales.
The impact of operating leverage was seen during the financial year as the adjusted EBITA margin reached the financial target level.