How Petco Is Catering to Pet Owners’ Changing Buying Habits
The future is now for Petco. The big-box retailer's aggressive omnichannel strategy is not only drawing customers to its products and services in droves, it's also demonstrating how some industry observers predict pet owners' buying habits will change by mid-decade.
Petco's hard work integrating its products and services together, ultimately making it a one-stop shop for pet owners, has paid off. The retailer counted 1 million new customer acquisitions during its fourth quarter, ended Jan. 30, and officials reported the company's digital sales grew 90 percent in Q4.
"While we compete with peers across each of our channels, from our perspective, no one has the end-to-end integrated multi-channel experience with the ecosystem that Petco provides pet parents, from nutrition to vet clinics, to training and grooming to our differentiated fulfillment options and more," Ron Coughlin, chairman and CEO of San Diego-based Petco Health and Wellness Co., said during the company's Q4 earnings conference call on March 18.
Petco's approach encapsulates what market research firm Packaged Facts refers to as the 'omnimarket,' which 'simultaneously and somewhat chaotically crosses former borders between medical versus non-medical, products versus services, food versus non-food products and pet owner demographics,' according to Packaged Facts officials.
"Omnispending, from the consumer behavior point of view, similarly recognizes that consumers now routinely spend in-store and digitally-such that by mid-decade only half of pet product spending will take place in a store,'" said David Sprinkle, research director for Packaged Facts, who will address the 'new breed' of pet owners, e-commerce/channel share shifts and digital pet health care trends during a presentation at Global Pet Expo Digital Access on March 24.
Petco officials are already seeing a change in pet owners' spending behavior.
"Particularly in older consumers we're seeing, all of a sudden, they are comfortable buying, purchasing online and their digital savviness has gone up, forced by the stay-at-home orders,'" Coughlin said. 'At the same time, increasingly, we're not thinking about our customers as either/or; 39 percent of customers, according to our studies, are omnichannel customers.'
In 2020, Petco's digital business surged 100 percent, Coughlin reported. But business didn't just stay online; the surge helped drive traffic and growth to Petco's in-store pet services, including grooming, training and veterinary care.
The link between digital offerings and in-store services has been 'very, very powerful' for Petco, said Mike Nuzzo, Petco's COO and CFO, adding that 25 percent of grooming appointments are now booked online.
Petco's success in syncing its in-store and online experiences is exactly the type of 'remix of physical and digital shopping behaviors' that Packaged Facts has predicted will play out in the U.S. Pet Industry in the future.
Petco is clearly a big fish in the sea, so what do these trends indicate for the independent pet specialty retailer?
Adaptability and creativity are key. A year after COVID-19 changed the way people live and shop, pet retailers know firsthand that brick-and-mortars can survive, but not without meeting customers where they need retailers the most—in-store and online.
By: Pet Products News