14 minute read
Interview: Michael Seitz, EarthWise Pet
Michael Seitz, CEO & Chairman, EarthWise Pet
“We saw the timing as perfect because as we are coming out of Covid-19, we are entering a golden era of the pet industry for the next three to five years. There is massive opportunity to do something that’s never been done before, and that is build a company based on a franchising model that can essentially allow, whether it’s independent retailers or regional chains, to have the protection and buying power of a large player without having to be one themselves and the ability to add services. It was the right match. A lot of our growth over the next six to 12 months will be similar, accretive partnerships and potentially a lot of acquisitions.” — Mike Seitz, EarthWise Pet
Earthwise Pet made multiple headlines in 2021 with a series of announcements reflecting its growth strategies both in the Pacific Northwest and nationally. CEO and Chairman Mike Seitz explains the thinking, strategy and plan for the growing company moving forward, starting with how the teaming up with Pet Stuff America came about.
Michael Seitz: It’s a very unique structure. We were very particular about using the term “strategic partnership,” because that’s what it is and it’s hard to call it anything else. It’s not a merger and it’s not an acquisition even though there was an acquisition part of it. So, it’s different. It’s different for sure.
One of the things, just to throw a wrench and complicate things even more, is Lisa [Senafe] and Marcus [Lemonis] who essentially own outright Pet Stuff America, have a minority ownership in EW now as part of the arrangement, so we are truly strategic partners in every respect with complete alignment. In terms of management control, it’s the EW management team, which now includes Lisa.
Who is in charge? Who reports to whom?
We [EarthWise Pet] are running the ship when it comes to franchising and they [Pet Stuff America] are now our largest franchisee newly empowered with the support of EarthWise Pet corporate team support as well as their own corporate infrastructure. It is a dream team.
Pet Stuff America, as a new franchisee of EarthWise Pet, still has 100 percent ownership in Pet Stuff America. They are a full-fledged franchisee, and in terms of how they operate the dayto-day operation such as personnel hirings, it’s their company. As a franchisee of ours, they will eventually be migrating over to EarthWise Pet, Dee-O-Gee, and GROOMBAR branded locations. It means when they add grooming or do remodeling, they’ll be brought up to our brand conversion standards. Nicole [Neal], our VP of vendor relations, now has a dual role. She leads our vendor negotiations efforts, but she also works for Bentley’s just to make sure there is complete alignment in terms of how those contracts work. “Alignment” is a good way to put it.
It’s a very unique arrangement but in simple terms: we are the franchising wing and Pet Stuff America is the largest multi-unit franchisee of EarthWise Pet. As of Nov. 17, 2021, the structure has become clearer as Pet Pros in the Pacific Northwest has also become a large franchisee of EarthWise Pet.
How will you work with Giovanni and Lisa Senafe?
Lisa is now an employee of EarthWise Pet. She is our Chief Nutrition Officer. She works side-by-side with our C-Suite executive team.
Giovanni is our VP of Store Acquisitions, and he leads our acquisitions wing.
Will the stores operate as franchises and corporate?
Pet Stuff America locations are all franchise-owned. We’ll likely be 100 percent franchisee-owned by the end of 2022.
What will the stores be called? Will they all become EarthWise Pet locations?
Everything will ultimately become one of our EarthWise Pet family of brands. These include EarthWise Pet, Dee-O-Gee, and GROOMBAR locations. The timing on when the Pet Stuff America locations change name is very flexible though. It may be a long time before some of the Bentley’s locations in Illinois, for example, become EarthWise Pet locations. Bentley’s has a very strong branding there and so it will be strategic as to if and when some of those locations migrate over.
All of the different brands that are under Pet Stuff America currently will ultimately become EarthWise Pet, DeeO-Gee, or GROOMBAR locations depending on their service offering.
Who is in charge of merchandising and determining which products and brands will be stocked at stores?
We have our mandated products as a franchisor that all of the locations including the new Bentley’s locations will ultimately carry, but there’s still a lot of flexibility at the local level. The individual franchisees also have flexibility in terms of some of the products they bring in.
Will merchandise be the same across stores?
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There will be a lot of overlapping of products as well as merchandising strategies that are representative of the EarthWise Pet branding, and we’ll also have a lot of private label products that will be rolled out across all of the locations. However, there will still be significant local flexibility and local customization based on the market.
How did EarthWise Pet decide to partner with Pet Stuff?
We are always looking for opportunities to expand and build the right team, and there’s really two major things that contributed to this particular partnership.
First, the regional accretive nature of the relationship. We didn’t have a strong presence up in the Great Lakes area and they do. What’s amazing is even when they acquired Dee-O-Gee before this process happened, we didn’t have locations in Montana at that time, so really the collective two concepts were regionally accretive.
Second, the fact that Bentley’s was looking to franchise but were in the early stages and they needed help on how to accomplish that.
Third, the Bentley’s locations were essentially all retail and were ripe and ready to add services across the board, and we knew how to do that. We brought to the table the ability to have a service model that we could integrate into their concept. We had the franchising expertise and they had the footprint and the collective buying power.
Why is now the right time for EarthWise Pet to form this alliance? Is forming a partnership with Pet Stuff, or any like-minded pet retailer, something that EarthWise Pet has considered pursuing in the past?
Giovanni, Lisa and I had been brainstorming back and forth with the idea for quite some time. When Covid-19 hit last year, a lot of things changed and companies were looking outside the box for unique opportunities and different ways of thinking. From a timing perspective, it was one of those where we really have what the other company needs and they have what we need and there’s really nobody else that brings that to the table for either one of us. We saw the timing as perfect because as we are coming out of Covid-19, we are entering a golden era of the pet industry for the next three to five years. There is massive opportunity to do something that’s never been done before, and that is build a company based on a franchising model that can essentially allow, whether it’s independent retailers or regional chains, to have the protection and buying power of a large player without having to be one themselves and the ability to add services. It was the right match. A lot of our growth over the next six to 12 months will be similar, accretive partnerships and potentially a lot of acquisitions.
In terms of goals and values, what makes Pet Stuff compatible with EarthWise Pet?
Lisa has always been a stickler when it comes to pet nutrition. We have our internal Certified Pet Dietitian program, so she and our Director of Nutrition, Erika Spath, are right in alignment in terms of mindset. They are truly a powerhouse team and thrilled to be working together and putting forth that common Pets are Family goal central to our message to the consumer. From a cultural alignment perspective, there was actually tons of synergy. Our corporate teams love to spend time together and hang out together. We were in Orlando recently just having a powwow and my wife was there, Giovanni and Lisa were there, and it was a really great. The cultural fit is truly special.
Furthermore, we had to look at personnel and the reality was our gaps in infrastructure were areas that they had pieces of the puzzle already. And their gaps in their infrastructure were pieces where we had pieces of the puzzle. We had this amazing opportunity to bring these two infrastructures together to create a best in class infrastructure that would have taken us years to develop and vice versa.
From a timing perspective, it’s the right time, and from an economics and an industry perspective, it is the ideal time to make a call to create something special.
What are some of the advantages of partnering with Pet Stuff America?
I can think of several things. One of them is that they have private label products, we have private label products, and together we’re able to combine and rebrand them under one umbrella. We instantly expanded our house of brands offering of private label products, so we have a pretty substantial private label offering now. From a vendor perspective, it gives us tremendous negotiating power. We’ll have about 160 locations with more than $100 million in systemwide revenue. That creates a tremendous discussion point when our negotiators go in to sit down with our key vendors. It’s a different discussion than it was even a year ago. Most of our stores are still owner-operated, and we still have that local connection side of our model. I’m happiest for those owners as we are able to bring not only scale and size, but we’re also still able to bring the local buy in, the local expertise and the education process to the consumer for these vendors. So, it’s good for everybody.
From a staffing perspective, obviously there’s another layer of support that wasn’t there before. Our corporate support team is just amazing. Right now we’re updating all of our platforms and our systems and consolidating everything. We are making the onboarding process simpler and more streamlined and bringing all of the expertise of the different entities together. From a retail associate perspective, that ability to have access to information in an easy and timely fashion is going to be really important.
From a cultural perspective, it’s important too because there’s alignment now for them. They not only are connecting with individuals in their stores, but they’re also connecting with other individuals who are like-minded staff members across the country. There’s a connectivity that’s there for them, and let’s be honest, the idea of being part of something greater than oneself and having a purpose and feeling of connection will be really important in terms of employment retention moving forward.
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From a retailer perspective, the franchisees are loving the concept because they’re already seeing some of the improved direct support from our marketing, systems, and support teams that we have now which is just amazing. The tech team that is being built is secondto-none as well. The backend database, the expertise, the fact that we have developers on staff now, there’s a whole different level of support that we haven’t been able to offer and now we can.
What would you like for EarthWise Pet’s consumer base, manufacturer and distributor partners to know or better understand about EarthWise Pet’s decision to partner with Pet Stuff?
I would like them to understand that we have a very clear vision of what we’re trying to do and what we’re trying to accomplish over the next couple of years. Our company is a company that you can count on and our system and processes are streamlining to that ideal rinse and repeat state moving forward.
One of the things that a lot of people get afraid of when they see companies merge or acquisitions happen is the chaos that can consume that process. For example, we’ve seen this happen a lot when distributors go out there and buy a bunch of smaller distributors. The result is often a mess; where all of a sudden support drops off the planet and systems are crashing and the system becomes an absolute integration nightmare. We started the process of planning for this strategic partnership months before it actually happened. We have been really busy. It’s been very fast and very smooth, and the vendors and the consumers will see that we’re able to offer a better quality of care and a better product mix and that will happen pretty quick.
I remember when we were at SuperZoo originally announcing the partnership was happening, and it was funny because it took all of about five minutes for the rumor mill to fly. Giovanni and I went into damage control. It’s not an arrangement that’s ever been seen in the industry. It’s so unique and so different and it’s going to take some people some getting used to because they’ve never seen it before.
How do you feel about this next venture for EarthWise Pet?
Collectively, we’ve become something really special that I am extremely proud of, and we are just getting started.
In late 2021, EarthWise Pet acquired retailer Pet Pros: What would you like for us and our readers to know about the decision to acquire Pet Pros? How would you like for this to be characterized – as an acquisition? Partnership?
Pet Pros was an acquisition by a franchisee of ours and is now the second largest franchisee in our system
How did this development come about?
We are looking at expanding our footprint in specific targeted regions through acquisition and Pet Pros was the natural regional accretive as well as the perfect cultural fit. Harvey and Nancy spent decades building an amazing legacy, and we were the right fit to honor that legacy moving forward.
How will uniting with Pet Pros help EarthWise Pet further its goals?
We want to become the best-in-class pet service provider in the country. That requires us to not only have our service offerings dialed in, but it also requires that we have the regional presence needed. Pet Pros locations will be retrofitted with grooming and self wash with our service-centric model and become our flagship stores. We are moving our offices to the Seattle area as well from Wenatchee to assist in the transition.
Why is now the right time for EarthWise Pet to collaborate with them? How much consideration has EarthWise Pet given to acquiring more Washington-based pet retailers?
We have built a one-of-a-kind support infrastructure and are at the inflection point where we will be growing very fast. Acquisition is a big part of that growth strategy and Pet Pros was the first step. As for additional Washington-based retailers, we would buy all of the big players if they were available. We have the resources and backing to make those kinds of moves if they ever get to that point.
How are Pet Pros and EarthWise Pet compatible and like-minded?
We have a similar focus on staff and management culture as well as customer service. The corporate team at Pet Pros and the corporate team at EarthWise Pet blend very well. We held a summit just before closing in Seattle for everyone to meet and collaborate, and it was clear that we were creating something special.
What does this alliance mean for each companies’ retail associates and consumer following? What would you like for Pet Pros’ employees to know?
By integrating systems, processes, marketing strategies, and adding the power of franchising, associates will have more power at their fingertips to improve the consumer experience in the store and online. Also, with the addition of our pet services model, consumers will be able to get their grooming and self wash done along with their retail shopping all under the same roof. We are also rolling out a substantial private label offering over the next 12 months that will make our stores true powerhouses in the market with a substantial competitive advantage.
As for the Pet Pros locations: How will the Pet Pros locations operate (as franchised or corporate)? Who will lead these locations and make merchandise decisions on behalf of these stores? How will the locations be branded?
Pet Pros locations are under owned by our franchisees, Zeke and Sabino Arredondo. The store names will change to EarthWise Pet in the coming months as the stores get retrofitted for services. In terms of merchandising and product decisions, the Pet Pros corporate staff will still make those decisions, but with the guidance and direction of the EarthWise Pet team. Some products will change to adapt to our nutritional philosophy, but the leadership team at Pet Pros will have significant discretion at the local level to meet the consumer needs and demands.
