Petco leads the pet specialty retail

Petco Animal Supplies, Inc. with more than 660 stores in 44 states and the District of Columbia, continues to raise the bar for the pet specialty retail industry in the United States. Petco's growth is steady, adding 60 stores a year to its repertoire, while showing consistent profi t numbers unmatched in American publicly-held retail.

Setting the Standard
Petco offers a variety of animals to their customers, including fresh and saltwater fi sh, reptiles, small animals such as hamsters and ferrets, and birds. Animals in the store create excitement for children and families, and provide them with the ability to offer all of the supplies and services to the new pet parent when they take one of these animals home. Offering live animals is a tremendous responsibility that Petco takes very seriously, which led the company to develop award-winning training to ensure the store associates are providing the best in animal care and customer service.

Their core philosophy of "Animals Come First" is also at the root of their merchandising philosophy, as they constantly work with vendors to establish a "pet safe" standard of excellence. The addition of in-house veterinarian Dr. Tom Edling has helped Petco a great deal in delivering that message. He looks at products and offers opinions, and speaks directly to other experts about product enhancements, and when that information is passed on to the vendors, Petco ends up with safer products for their customers' pets and better assortments for their stores.

"In so doing, they are actually shaping the industry to our high standards, and driving innovation within the pet care and supply fi eld," said Bob Brann, Petco's Sr. VP of Merchandising. "We're dealing with living, breathing animals that are family members, and we need to be responsible in everything we do. We're redesigning habitats within the industry, to make them safer. Even if it's just perception, if it doesn't 'look' right, we want to change it."

In addition to the products their stores carry, Petco is also setting the standard for animal care for the pets they offer from before they enter the stores to after they go home with their new families. This is called the "Standards of Excellence" Program. Petco is working with vendors to ensure each one meets Petco's high standards for animal care before delivery to the stores.

The program establishes requirements for all suppliers shipping any type of animals to any Petco store. These requirements are broken down into two distinct areas:
1. covering the health and conditions of the animals themselves;
2. focusing on the supplier facilities and care protocols. Each of these areas is strictly monitored and audited annually, which includes surprise inspections to ensure all vendors are meeting Petco's high animal care standards.

Finally, in-store training and hourly animal health checks ensure the animals are happy and healthy during their temporary stay, and "Care Sheets" developed with the assistance of veterinarians and other information helps ensure customers are choosing the right pet and providing the proper care once they get that pet home.

The Customer Service Concept
Petco does not strive to be the "price leader" in the industry, but rather focuses their attention on providing customers with the best "value." Petco's philosophy centers on providing the best products and services for their customers' pets, with an emphasis on information and education to help customers be the best pet-parents they can be.

This philosophy has helped Petco build tremendous customer loyalty, as witnessed by their frequent shopper
card "Petco P.A.L.S." program. With more than 19 million members already signed up to use this in-store discount card, and a million more consumers joining every 90 days, Petco knows the needs of its customers and can speak directly to them. P.A.L.S. cardholders account for more than 75% of Petco's sales, demonstrating the depth of that customer loyalty.

Taking Petco to the Customers
The location philosophy for Petco is to put their stores where potential customers already are. Trying to make
the shopping experience as enjoyable and convenient as possible, Petco locates stores near upscale shopping centers, bookstores, coffee shops and other retailers where Petco's core customers are shopping on a daily or weekly basis.

They continually upgrade the look of the store, working to enhance the overall shopping experience. That includes not only the store layout, but the quality and look of the animal habitats as well, to continually exceed their customers' expectations. The average store size is 13,500 square feet which enables an open and well-lit presentation for the more than 10,000 products Petco offers, employing 25-30 people including those in services such as grooming and canine education.

As important as location is the reliability of product supply in Petco stores. Supply chain management is seen as a tremendous opportunity, and Petco recently created a senior vice president position to coordinate all inventory management and distribution functions to ensure continuous delivery of products to every store across the country.

Product Development
Petco tests products in their stores by offering new concepts in limited store markets to gauge customer reaction and feedback, suggesting modifi cations, working with vendors on sampling and development, and constantly sets the bar higher. With feedback gathered from their store general managers, they help their suppliers develop better products to meet the needs of their customers and their companion animals.

Each year, Petco's store managers all gather together with more than 300 vendors at their annual mana gers' trade show, to provide that valuable input from the fi eld. In addition, the managers vote on the top 25 new products they would like to see offered in their stores, which provides both new vendors and those who do not work with them to market their items directly to the store managers. This not only helps smaller vendors reach a national audience, but also helps determine regional interests in different products. Petco uses that information to test products in a variety of markets, as well as work with their vendors on product modifi cations and enhancements to better satisfy those customer needs. This input from the store level has resulted in millions of dollars in sales from vendors who had not previously worked with them, or from products selected by the managers that had not been a part of the stores' offerings.

Also, they are constantly working on its proprietary label programs with the primary focus of innovating new merchandise and improving quality, with the ultimate goal of having the highest level of pet-tested, safe products. Each new product must meet Petco's exacting standards, including scrutiny from independent test labs to ensure they achieve the highest level of safety, often times achieving higher standards than the toy safety standards for children in the United States.

Petco in the Community
Petco stores involve themselves in their local communities in a variety of ways, as part of their ongoing efforts
to be a "relationship retailer." They do not sell cats or dogs, but rather partners with animal welfare groups in its store communities to hold adoptions, fundraisers and educational efforts. Petco's non-profi t animal charity, the Petco Foundation, has raised more than $15 million since inception in 1999, offering assistance to more than 1,900 animal welfare groups across the United States. Not only do they believe this is the right thing to do, as it helps animals across the country, but it also helps create goodwill with their customers who then view Petco as the community pet supply and services store. Additionally, Petco stores work with local schools to offer educational fi eld trips and aquariums for classrooms, to help tomorrow's customers understand proper animal care as well as the value pets bring to our lives.

On the Internet
Petco's online presence, Petco.com, offers more than 7,000 products including specialty items not found in
Petco stores. The award-winning website also offers information on pets and pet care, as well as rick-andmortar store locations and employment information.

Last year, Petco.com tested and successfully implemented a policy that enables online customers to return products to any Petco store, adding another element of customer service and convenience to its offerings.

This service also helps make the connection between Petco's website and their individual store locations Returning an item to the store saves time over shipping it back to the website, and the information available online is designed to help customers better understand the products – thus decreasing the likelihood of a return.

Petco Players
Petco Executive Chairman Brian Devine and CEO Jim Myers joined the company 14 years ago, and have overseen more than a decade of successful growth in that time. They brought on COO and President Bruce Hall to oversee the store growth, and this team has developed and implemented a strategy responsible for 44 straight quarters of positive growth in same store sales of 4.6% or better.

  Source: PETS International Magazine