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In this final episode of the 2026 World Retail Podcast series on Unlocking volume growth, Niamh Stone, WRC Programme Director, is joined by Markus Schmid, Partner and Managing Director at AlixPartners, to interview Torsten Toeller, founder of Fressnapf, the leading European pet retail brand. Together, they explore how differentiation can be a powerful catalyst for driving demand, how Fressnapf grew into the business it is today, and what the future holds for one of Europe’s most successful specialist retailers.
Listen to the episode on Spotify or Apple, or read the transcript below.
Niamh Stone:
In this final episode of the series, I’m delighted to be joined by my co-host, Markus Schmid, Partner and Managing Director at AlixPartners, to interview Torsten Toeller, founder of Fressnapf, the leading European pet retail brand, to explore how differentiation can be a powerful catalyst for driving demand, how the brand came to be the success it is today, and what the future holds.
Markus, it’s lovely to have you here on the podcast today. Can you tell us a little more about yourself and the work you’re doing with AlixPartners at the moment?
Markus Schmid:
Happy to, Niamh. Thanks for having me. It’s great to be here.
Compared to you, Torsten, I’m a relative newcomer to retail, but I’ve been doing this for 25 years, leading retail work in the DACH region for AlixPartners and working across almost every retail category. Not so much across the globe, as I said at the beginning, but broadly across all kinds of retail verticals.
The topic we wanted to focus on today is one no one will question. In an environment shaped by macroeconomic tension, difficult fundamentals across many economies, and worsening consumer sentiment, the number one topic for retailers is how to facilitate growth, particularly volume growth, which is the golden rule of retail.
To tackle that question, we at AlixPartners have developed a framework we call the retail growth pyramid, or the Maslow hierarchy of retail needs. It is structured around three layers. The first is getting the fundamentals right—simply getting the basics right, which sounds easy, but often is not. The second is differentiation: how to add an edge to your offer and to the way you approach the consumer. The third is making big bets: where you really want to push, whether that is through bold moves, inorganic growth, or more out-of-the-box thinking.
Today, we want to focus on that middle layer: how to differentiate and bring an edge to your offer. But knowing you, Torsten, I’m sure we’ll touch the whole pyramid.
I’m very happy to have you here, Torsten—not just because you created this amazing company and reinvented an industry, at least in Central Europe, but because despite all that success, you’ve stayed so down to earth and relaxed. So I expect the next half hour will not only be informative, but pretty funny too. I’m looking forward to it.
Niamh Stone:
What a wonderful introduction. Torsten, it’s lovely to have you on the podcast. Please tell us a little more about yourself and Fressnapf in your own words.
Torsten Toeller:
Niamh, Markus, thank you so much for having me.
I’m Torsten. I’m 60 years old, married, and I have three children, three dogs, seven cats, four horses, and 150 koi in the pond. So I’m definitely a pet lover, and if you founded Fressnapf without being a pet lover, that would be crazy.
I founded the company 36 years ago. I got the idea in the U.S., where I saw PetSmart, still the biggest brick-and-mortar company in the pet business, and thought it would be a good idea to do supermarkets for pets in Germany. At that time, I wasn’t thinking about Europe. Everyone told me it was a stupid idea, that nobody needed it, and that I would go bankrupt. That was pretty much the consensus.
But when you are 23 or 24, and you know nobody can really employ you because you always have ideas and people keep telling you they won’t work, you just go against the advice. If you believe in something, you do it.
That was the reason I opened the first Fressnapf store in January 1990 in Erkelenz in Germany. It’s a good name in German, maybe a crazy name in other languages.
And after a few months, I was almost bankrupt. To be honest, I didn’t fully know it at the time, because bookkeeping and financials were not my strength. I changed the concept and adapted it very fast. It was a kind of MVP approach, so to speak.
There was a lack of assortment, a lack of competence in the assortment range, and it was not specialized enough because all the data I got from Nielsen, GfK, and others was pretty much grocery-driven. There was also a lack of being price-attractive enough. Germany is a discount country, like many others that followed, but still, price is important—especially for German customers.
And then, once you have the right range and good pricing, you need to be loud. Marketing has to be loud and aggressive. But even that was still not good enough.
I was running the store and knew every customer by name, because there were not that many customers at the time. I relatively quickly adapted the concept, and then I saw the ramp-up—turnover doubled and tripled.
Then I had another problem: no money. There was no private equity or venture capital in Germany at that time, and I did not know what to do. At the same time, there was a small bank in Erkelenz—the first store was in Erkelenz near Cologne—and they gave me 150,000 Deutsche Marks, which is about €75,000. My parents funded me with around 50,000 Marks, about €25,000.
I opened the first store, but it took some time to ramp up, so I did not have money to open more stores. Then I got the idea to do it through franchising—expanding with franchise partners, with other people’s money.
Basically, it took me five years to open 50 stores, from 1990 to 1995, with franchisees and their money. Then from 1995 onward, we opened 50 stores a year, later 100 stores a year, and now 150 stores a year.
In 1997, we expanded into other countries and started building an international business. As a German company, the obvious first step was Austria, and a little later Switzerland. In Austria, nobody wanted to be my franchise partner. I was a young, crazy guy from Germany with no real experience, and nobody wanted to become my franchise partner there. So we learned how to run an affiliated system—our own stores—in a good way, and then expanded through the years into the different countries.
To sum up where we are today: we operate in 15 countries with almost 3,000 stores. We have 22,000 employees. We will do about €4 billion in net sales, not counting franchise partner sales, which sit in their own books. We are the clear market leader in Europe, number one in nine of those 15 countries, and we are aiming to become number one in the other six. That’s where we are today. It’s a resilient category, and I love being in the pet space.
Markus Schmid:
Pretty amazing. Torsten, is it true—or is it just a rumor—that you had to sell your first car to finance your first store?
Torsten Toeller:
Yes, it’s a rumor, and it’s true.
I simply ran out of money with the first store. I did not have much, but I had a car, and I had to sell it to put liquidity back into the business. At that point, the business was just one store.
But when you do not have a family to feed, no children, and no real responsibility in that sense, and you believe strongly in happier pets, happier people, and in our mission—to make life together for pet lovers and pets easier, better, and happier—you do everything to survive. Later on, you do everything to grow the business.
Markus Schmid:
Impressive. Looking back, what was the magic sauce of your concept when you started? What was the thing you saw that no one else in Europe understood yet?
Torsten Toeller:
That’s easy. I saw what was happening in the U.S., so I didn’t invent the category or the concept. It was already very clear by the late 1980s and early 1990s that supermarkets were strong in pet food, especially dog and cat food. But the category was clearly premiumizing. The big players were still the big players—Mars and Nestlé—but more specialty food, premium food, and super-premium food was flowing into pet specialty shops.
The problem was that those pet specialty shops were small mom-and-pop stores. They gave good advice, but they were tiny, badly located, inconvenient, and poorly merchandised. There was not enough space to present products well.
So there was a gap in the middle: a category killer. A specialty store of the right size—around 500 to 600 square meters, with 6,500 to 7,000 SKUs—located next to supermarkets, discounters, and DIY stores, where retail traffic already was.
No one in Germany or Europe was doing that. It was essentially copied and adapted from the U.S., because everything there was much bigger. At that time, PetSmart was running stores of around 2,000 square meters. We found that our sweet spot in Europe was around 600.
We adapted it to the European market. Then, luckily, the category itself kept growing through pet ownership, humanization, and premiumization. That gave us tailwinds from the market, while we also expanded and did a good job like-for-like, and later online. We have outperformed the market for 36 years. We have always grown, always taken market share, and always outperformed the market. So, we are happy with the position we have today.
Niamh Stone:
Those decisions around where you could do better and really stand out were clearly so important. But so were the decisions about where not to compete. What choices did you make about where not to compete for Fressnapf?
Torsten Toeller:
There were many mistakes and wrong decisions over the years. If we look at Fressnapf in phases, the first years were startup mentality: foundation, almost bankrupt, fixing the concept, developing something in franchising—remember, there was nothing at all—and staying alive.
Then there was strong national growth and franchising, with the phrase: nothing makes you more successful than helping others become successful.
The next phase was international expansion into different countries. At the same time, and this was a good move, we integrated the value chain and supply chain. We cut out the wholesalers. We cut out importers from the Far East. We opened businesses in Asia, including a Hong Kong office for sourcing. We built the first distribution centers and our own logistics hubs.
A little later came private label, and today private label makes up almost 50% of our turnover. Then came the next phase: IT platform, online business, and ecosystem ideas.
What could I have done better? Europe has three big pet markets: the U.K., France, and Germany. Then there are slightly smaller but important ones like Italy and Poland, and at the time Benelux, Austria, and Switzerland.
I always enjoyed entering new countries, but the smarter move would have been to focus more on the big countries, move faster there, and shut the door on competitors by building stronger market share. If you look at the map of Europe, there are three big countries in the pet business: the U.K., France, and Germany. Then there are somewhat smaller markets like Italy or Poland, which were ramping up, and at that time Benelux, Austria, and Switzerland.
It was a lot of fun to go into Ireland, Denmark, Hungary, and Romania, but in hindsight the bigger opportunity was to concentrate faster on the major markets.
The other thing I could have done better was e-commerce. I was very early online. At that time, everybody said brick-and-mortar retail would die and that online pure-plays would dominate. I was early, lost money, and then shut down the online business. At that moment, it was the right decision because it allowed us to focus on store expansion, the IT stack, loyalty, SAP transformation, and other priorities.
But I came back too late. We are catching up, and we will catch up with online pure-plays and with Amazon, but I could have come back earlier and invested more in e-commerce capability and proposition. That is part of the winning formula for us now.
Markus Schmid:
You mentioned e-commerce and that period when everyone said it would dominate the world. Now we are living through another moment where everyone says AI will dominate the world. In between, there was a phase where everyone talked about ecosystems. It would be interesting to get your view on the importance of an ecosystem in adding an edge to Fressnapf.
Torsten Toeller:
There’s a funny story there, because again it comes back to mistakes.
If you look at the pet category, you can talk about products across channels in a seamless way. But you can also talk about veterinary services, grooming, tracking, insurance, DNA tests, dog sitting, dog walking, dog hotels, and all the services around pets.
In the middle is the data lake and all the cross-selling potential you have. That is a fantastic vision for a retailer.
The problem is that if you have a lot of PowerPoint charts pointing toward the ecosystem, there is also a lot of distraction. And when something like the COVID boom happens, and the business is booming, you can lose focus if you are not careful enough. You can lose excellence in your operational business—what you would call brilliant basics or fixing the fundamentals.
To be open and honest, during that boom and that strategy of building an ecosystem, we lost some operational excellence. At the same time, we hired people around those services. One of my personal weaknesses is that I want to have it all, and I want to have it all at the same time.
So we had to realign and adjust our strategy.
That starts with a new team and with experienced retail leaders. Our CEO, Matt Simister from Tesco, brings 30 years of experience and international experience. He really understands the fundamentals of retail and how to build a flywheel at Fressnapf, like every good retailer should have.
At the same time, much more than 10 years ago, we are concentrating on tech, data, and AI to drive efficiency and cost efficiency so we can invest in customer proposition and price.
Our clear ambition is to be the best and fastest-growing omnichannel pet retailer in Europe, and perhaps in the world. That is exactly what we are aiming for.
Thirty years ago, I was competing mainly with mom-and-pop stores and with supermarkets and hypermarkets that were not really interested in the category because pet represented only around 1% to 1.5% of their sales. If you compare that with today, the competitive environment has completely changed. We now compete with online pure-plays, Amazon, supermarkets and hypermarkets coming back into the category because they have understood that it is a great category and has been growing for 35 years, direct-to-consumer businesses, garden centers, DIY stores, and many more pet specialty retailers.
At the same time, private equity and venture capital are coming into the space. That makes it harder to compete in some ways, but on the other hand it is fun, and we still hold the leading position.
So it is a very different competitive environment now.
Markus Schmid:
We’re listening in awe. What you’re saying reflects so much of what other retailers are also experiencing. Sometimes they move too late, and sometimes, because of that, they move too early the next time. One of the big discounters always used to say, “We are only fast followers. We come later, and then we try to do it better.”
In that competitive environment, where are the two or three capabilities where you have deliberately invested because you believe they will make the biggest difference?
Torsten Toeller:
We are still expanding our store network by 150 to 200 stores a year, and there may also be adjacent acquisitions and M&A opportunities.
But the biggest investments—in people and in technology—are in our online and omnichannel proposition. We recently opened a new pure-play online distribution center. The total investment was €160 million, and €80 million of that was automation alone.
Another major investment area is loyalty, customer insight, personalization, and our Friends loyalty program. AI will help us do this much better and much more efficiently. Today, around 60% to 65% of our sales come through Friends members, and we believe we can move that above 80%.
Another differentiator is our health proposition. The oldest dog today is 32, and the oldest cat is around 38. If you look at the average lifespan of dogs and cats, it has increased by around two to two and a half years over the last 20 to 30 years because of better nutrition, but also better veterinary services.
So longevity, health, and protection are areas we need to own as a specialist. I truly believe this cannot be copied by grocery retail, which is one part of our competition. It also cannot be copied in the same way by online players, because a big part of that differentiation comes from our 22,000 employees. They are especially important in building and delivering that health proposition.
That is a battle we need to win. There are also a lot of innovations emerging in pet tech, for example, and in fresh frozen menus and other food innovations. As a specialist pet retailer, we need to be at the forefront of those innovations.
And when I talk about ecosystem now, I mean that all channels and touchpoints need to work seamlessly together. We add the health proposition into that ecosystem, and then, if we get that right and continue driving operational excellence, we can build adjacent services into the broader ecosystem.
The big idea we had five to seven years ago was right. We just tried to do too much at once and had to refocus.
Niamh Stone:
That leads perfectly to my next question. As you touched on there, bringing in private equity minority investors has influenced your strategy and pace of growth. How does this next chapter for Fressnapf look?
Torsten Toeller:
As a German Mittelstand company, we could grow organically and through smaller acquisitions. But we also had to invest heavily in supply chain, IT, and international growth. Germany was expanded largely through franchising, which is asset-light, but in other countries we were building with owned stores, and that required a lot of investment.
We had the vision of building a pan-European champion. In Italy, Arcaplanet was for sale. At that time, Cinven was the majority shareholder of Arcaplanet, and we were the minority shareholder because we had merged our Italian business into it. At that time, we were number five in the market overall. If you counted only brick-and-mortar, we were number three, but including online players we were number five, with no real chance of improving position without a bigger move.
Since Italy is the fourth-largest pet market in Europe, and we are not in the U.K., building a pan-European leader meant we needed to own the market leader in Italy. So I decided I wanted to buy Arcaplanet.
The price was about €1 billion, so it was not pocket money. It was the first really big deal we ever did. I could either increase leverage heavily and work through the banks, or I could partner with people we already knew and trusted. We had worked with the Cinven team for years, and that matters because you trust people, not institutions.
So we agreed to buy Arcaplanet, and they bought a minority stake in the Fressnapf holding company. We decided to do it that way.
That has been very helpful. We felt we could bring together the best of both worlds. Private equity is strong in financial engineering, attracting top talent, setting up strong management incentive plans, building focus, ownership, and performance. Privately owned companies are often stronger in long-term strategy, culture, motivation, innovation, and understanding the business in depth.
That combination has worked well for us.
It was tested almost immediately. After COVID-19, the pet market flattened, and in some countries it even declined slightly in volume. We had done the deal right after COVID, when everything was surging, and then the market slowed down. There was much less new pet ownership after COVID because many people had already got pets, and some of those pets had already died, especially among smaller animals.
That was a real test of the partnership, and it proved the strength of it.
So for us, the balance between private equity and a family-owned business has been very helpful. They are a minority investor. We decide things together, but I remain the majority shareholder and want to drive the business with a long-term strategy.
A good friend of mine once said, if you want to destroy a company, give it 20 years of uninterrupted success, because then it becomes lazy and complacent. That is exactly what we do not want.
Markus Schmid:
Listening to you, it sounds like you are working all the growth levers at once. You are fixing the fundamentals, you are strengthening differentiation—which clearly has always been core to your DNA—and you have also made some very big strategic bets.
As you reflect on that, what advice would you give other leaders about how to think about growth? Where should they take a longer-term view, and where should they be more disciplined?
Torsten Toeller:
There is one thing we have not yet touched on that I think is important.
Fressnapf used to be a very German organization. Three or four years ago, the full board—11 senior leaders—was entirely German, or German-speaking, with one Austrian. Decision-making and structures were highly centralized.
Seven years ago, Germany represented roughly 70% of turnover. In the last quarter, it was around 31%. Italy is now about 20% of the business. France is around 16%, and because it is a larger country, France will eventually outgrow Italy.
So one key learning has been the need to adapt our target operating model—how we work together, the accountability of country managers and country teams, and the right balance of decentralization without giving up synergy. For international retailers, finding that balance is critical. One mistake was staying too long in a model that was too German.
Another learning is around talent. We always tried to build a strong leadership team, but historically we hired based on what we felt we could afford from a profitability point of view.
Now we think differently about how much to pay top management, how to incentivize them—not just through short-term incentives, but also long-term incentives and the broader incentive mix.
What I have learned with Cinven as a partner is that if you want to become a pan-European champion, you need Champions League players. But they also need to have the right values. I care deeply about values because I am building for long-term, sustainable, profitable growth.
If I think about broader learnings, the first is that having a clear vision and mission matters enormously. Ours is simple: happier pets, happier people, and making life together easier, better, and happier for pet lovers and their pets. Having that sense of purpose is hugely important for people working in the company.
The people in the company make the difference. You need people who are proud to work for you.
Everybody talks about culture and values, but the real question is whether you truly live them. Culture eats strategy for breakfast.
Values-based leadership is essential. And what is leadership? Leadership is empowering others and helping them grow. In the end, your employees decide whether you are a leader, because if they follow you, then you are one.
Everyone talks about customer-centricity, but you really have to treat your customers as if they own your company, because in the end, they do. We need to solve our customers’ problems—and their life with pets—better than our competition does.
Another important part of our culture is learning from mistakes, staying down to earth, and never giving up. We are proud of what we have created, but we also have to keep reinventing ourselves.
And because we have franchise partners, one lesson has stayed with me throughout: nothing makes you more successful than making others successful.
On a personal level, my last key learning would be this: it is not the happy who are grateful, but the grateful who are happy. I am grateful to have built and still be part of this business. I am no longer CEO, and I am no longer chairman, because I wanted the company to become more independent from me as majority shareholder. I am now a board member, a team player, and I am grateful. Because I am grateful, I am happy.
Niamh Stone:
Torsten, it has been an absolute pleasure to have you on the podcast today. Thank you so much for joining us. And Markus, thank you too for joining me as co-host of this episode.
It has been a wonderful, wide-ranging conversation about the remarkable business you have built at Fressnapf, Torsten. Thank you again.
Markus Schmid:
Thank you both.
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