Strategy

Winning new customers

Musti Group is well positioned to continue our track record of winning new customers from the large and growing Nordic pool of 5.8 million dogs and cats.

Success in new customer acquisition is a key driver of continued market share gain across our Nordic markets. Acquisition of puppies and kittens is especially important from a lifetime value perspective. This is supported by our concept, our leading brand awareness, and customer focus. The underlying pet parenting trend, favoring Musti Group’s concept, continues strong.

Musti has gained share of new puppies over the recent years augmented by two initiatives, new puppy and kitten clubs launched in financial year 2020 followed by an upgraded breeder club launched in financial year 2022. Both concepts have been continuously improved since their launch. These investments into early stages of the pet parenting journey continue to pay off.

The number of loyal customers, Friends of Musti, increased by 6.1% to 1,543 thousand across the Nordic countries.

Grow share of wallet

Growing the share of wallet within our base of 1.5 million loyal customers is a clear opportunity for Musti Group. To deepen the engagement of our customers, Musti is developing an ecosystem approach for Nordic pet parents with an ‘All you need is Musti’ mentality across the pet lifecycle. Supported by data we are able to customize our value proposition to individual needs of Nordic pets and their parents.

Rolling 12 months average spend per loyal customer increased to EUR 182.7 in financial year 2023 (EUR 181.5 on 30 September 2022), despite unfavorable currency exchange rate effects.

Expand store network and number of service points

We continue rolling out further stores to win new customers through our strong concept and increased convenience, with local presence in Nordic communities enabling customers to switch to the Musti Group platform. This is complemented by a strong online offering, representing 23.0% (22.2%) of sales.

Musti Group has the largest pet specialty store footprint in the Nordic countries. Expansion investments come with long term benefits, as the number of directly operated stores has increased from 231 end of financial year 2020 to 330 after financial year 2023, a significant share of our network is currently at ramp-up stage. We continue to see ample room for expansion especially in the Norwegian market to support further market share gains through the added convenience of local presence.

Along with expanding the store network, Musti Group has invested into adding services to our network. At current, over 100 stores have a dedicated service point, bringing physical services to the reach of most cities across the Nordics. With this platform, Musti is clearly the largest grooming operator in the Nordic countries along with other services such as lighter nail clipping available in most stores.

The number of directly operated stores increased by net 11 stores during financial year 2023.

Focusing on driving gross margins through increased O&E share and leveraging scale

A core element of Musti Group’s strategy is developing the offering of own and exclusive products sold only in Musti Group’s channels. This comes with three main benefits of the uniqueness of our offering, loyalty especially in food and other consumable categories, and higher gross margin profile.

Musti Group has strong historical track record in driving gross margin improvement. Own and exclusive brands are a cornerstone of our high gross margins as these brands typically carry 10–15%-points higher margins compared to global brands.

In financial year 2023, gross margin decreased to 45.7% (46.4%) Gross margin was negatively impacted by increased inflation and unfavorable currency exchange rate development, despite the positive development in supply chain performance and production integration during the second half of the financial year.

Increasing Musti Group’s ownership of Premium Pet Food Suomi Oy factory in Lieto (Finland) to 100% was a key event of 2023. Full ownership of the ‘Musti kitchen’ allows Musti to respond to increased demand for locally and sustainably produced pet food. Having our own production asset directly supports developing our own branded food offering, and further investments to increase capacity are underway.

Share of sales of own and exclusive brands continued stable at 52.4% (52.7%) during the year.

Leveraging broadly invested platform to drive operating leverage and scale benefits

Significant investments to Musti Group’s IT, digital platforms, warehouse and production facility 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 may be spread across larger net sales. In the financial year 2023, group functions cost excluding the impact of the acquisition Premium Pet Food Suomi Oy (group overheads and Eskilstuna central warehouse) brought clear operating leverage, supporting Group profitability.