Petco CEO isn’t losing sleep over inflation

Americans may be concerned about rising food and fuel prices, but Petco Health + Wellness Company CEO Ron Coughlin isn’t expecting that worry to have a negative effect on his company’s business.

Mr. Coughlin, speaking yesterday at the company’s first investor day since returning to the public market last year, said the market for pet products and services is “resilient” in the face of inflation and economic downturns.

Petco’s CEO, CNBC reports, pointed to a number of factors that will likely serve to cushion the impact should changes in consumer purchasing behavior take place in other categories. Americans in large numbers during the pandemic went out and got themselves pets, and care for these furry and feathered family members with product purchases and veterinary care.

Spending on pets is expected to grow by seven percent over the next three years, and companies such as Petco are benefiting from double-digit gains in premium product sales.

Jungle Scout’s Q1 2022 Consumer Trends Report shows pet supplies topping the list of categories experiencing sales gains. Eighteen percent of those surveyed said they are spending more on the category this quarter versus last. Eleven percent are spending less.

To put the numbers in context, the survey found 38 percent of consumers are spending less overall this quarter as a result of rising prices.

Petco believes that it has a number of competitive strengths that will help it differentiate from a long list of rivals that includes Amazon.com, Chewy, PetSmart and Walmart. The chain relies heavily on its micro distribution network (aka stores) that provide it with more than 1,400 fulfillment points.

Stores fill over 83 percent of all online orders placed on petco.com using ship-from-store, in-store/curbside pickup and same-day delivery.

Petco is also testing new formats including a “Small Town Rural” store, a Reddy boutique featuring the chain’s popular private label and store-within-a-store sections at Lowe’s.

The retailer is also expanding its veterinary services with plans to have pet hospitals on-premises in 900 stores.

Further, Petco is looking to bundle its pet products, grooming services and veterinary care into subscription revenues with Vital Care, a program that offers unlimited vet visits plus discounts on food and grooming for $19.99 a month.

• Petco Health + Wellness Company, Inc. Announces Long-Term Strategic Priorities as it Shapes the Future of Pet Health and Wellness – Petco Health + Wellness Company, Inc.
• Petco CEO says company’s growth is inflation-proof, as Americans splurge on pets and bigger homes – CNBC
• Consumer Trends Report Q1 2022 – Jungle Scout
• Do micro distribution points (AKA stores) give Petco an edge over Chewy and Amazon? – RetailWire
• Will Americans go to Lowe’s to buy dog food? – RetailWire
• Petco’s new boutique concept is a private label experience – RetailWire
• Is Petco really a health and wellness retailer? – RetailWire