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Today Petco announces it will stop selling pet food and treats containing artificial colors, flavors and preservatives. After May 2019 customers will no longer find brands containing such ingredients on their shelves. More than 40 artificial ingredients are on its banned list.
The San Diego-based company is the 100th-largest private company in the U.S., according to Forbes, with $4.2 billion in annual sales and operates 1,500 store locations in the U.S., Mexico and Puerto Rico.
Explaining the decision, which the company says could impact more than $100 million in annual sales, Petco said in a statement: “The move makes Petco the first national pet specialty retailer to take a stand against such ingredients, reaffirming the company’s commitment to being the lifelong, trusted partner – for pets and pet parents alike.”
Petco’s decision to stop selling pet food with artificial ingredients is similar to the corporate-consciousness move made by CVS back in 2014 to stop selling tobacco products in its stores. While Petco expects to take a hit to the bottom line in the short term, its decision to stop carrying and selling such products is critical to the company’s broader mission.
“Throughout our 50-year history, what is best for the pet has been best for our business,” Ron Coughlin, Petco’s CEO shared with me. “We believe that by being a trusted advisor we can help our customers and lead them to healthier choices. We believe we can and should do it. Job number one is doing right by the pets and we believe the business will follow.”
This is not the first time in Petco’s history that it shut the door to products considered inconsistent with its pet-first mission. In 2014 it stopped selling China-made treats over concern about their safety. But it also opens the door to other pet-food brands that share its mission.
This is also the first industry-leading move for Petco since Coughlin took the helm in June, after a successful career at Pepsico and running a $10 billion consumer product business at HP. “I spent several decades as a consumer marketer. I was born and bred as a marketer starting with a customer-first lens,” he notes.
Coughlin believes this experience makes him uniquely qualified to take Petco into the future, but more importantly is that he is a pet-parent himself to Yummy.
“I have been CEO since the middle of June,” Coughlin says. “One of the things that has become obvious is how special the bond between pets and people are. Personally, I’d do anything to keep Yummy healthy. For pet parents the number one thing is to keep your pet by your side as long as possible.”
Coughlin and his team of 25,000 employee-partners have other plans in the works as it builds on its leadership in the rapidly-growing pet market. “ Over time you will see Petco evolve from more of a big-box pet player to a nutrition and services powerhouse that is the pet parent’s trusted partner ,” he says.
Amazon-proofing Petco’s business
Petco sees its holistic, services-led retail approach as the key to beating its competition, most notably Amazon. “We are going to play our game and it starts with caring for pets,” Coughlin explains.
“Amazon is a powerful competitor but they don’t have the care and the heart of the pet in mind. Amazon is driving an aggressive price/merchandising strategy, whereas we are focused on the care of the pet and the power of our in-store partners to help parents take care of their pets,” he continues, noting that Walmart, and Target can’t do that either.
As for Petco’s other pet specialty retail competitors, Coughlin says his research finds they are not “sufficiently providing for that in a wonderful experience for the customers.”
“It is our mix of brick-and-mortar and online that gives us an advantage. When you go to Petco, you can get food, treats and leashes, but also self-groom your pet or have them groomed by one of our stylists. You can get a vet checkup. You can do it all,” Coughlin says.
“That is our unique differentiation. We take the high ground in terms of products. We have expertise in nutrition. We lead in services with things like grooming and veterinary care. We can be that holistic pet-parent partner,” he continues.
Petco’s future vision
Today Petco’s transformation from big-box specialty pet retailer to a 360 degree holistic provider of products and services to pets and pet parents is well underway. It can be seen in PetCoach, an experiential pilot project recently opened in San Marcos, California that combines online veterinary-driven guidance and a retail store concept heavy on pet-health services.
PetCoach is a 21st century omni-channel shopping experience that the company describes as an “Apple Store” for pets . It grew out of an online app to provide veterinary advice on pet health, nutrition, behavior and other issues. The company brought the concept to life in a brick-and-mortar location.
“We are testing pet-retail concepts of the future with this services-first offering,” Coughlin explains. “PetCoach is symbolic of how we see ourselves – helping coach pet parents on the well-being of their pets.”
At the PetCoach store pet parents can buy vet-approved products and take advantage of grooming, training, veterinary care, nutrition consultations, day care, self-wash, mobile vet house calls and dog walking services. PetCoach also offers a membership option that includes free vet visits and discounts on products and services.
Online, pet parents can access information and professional pet advice from licensed veterinarians, book appointments, buy food and supplies and maintain their pet’s profile including health and vaccinations records and services history.
Rounding out the mix
Adding to the mix of other pet-first initiatives for the company are some 80 smaller-format neighborhood shops called Unleashed by Petco, with a curated selection of products and services like dog training seminars, vaccination clinics and self-serve dog grooming.
The Petco.com online platform is rapidly enhancing its customers’ experience with BOPIS options and automatic repeat delivery.
PupBox takes automated delivery to a new level with a subscription model that delivers custom-product assortments based on the pet’s stage of development and physical characteristics. And the company-owned Drs. Foster & Smith brand provides veterinary-operated prescription services and pet supplies.
With pet health and wellness Petco’s on-going commitment, it is uniquely positioned to give pet parents peace of mind with pet insurance.
PetInsuranceQuotes.com is Petco’s answer for a market that is virtually wide open. Some 85 million U.S. households own a pet, according to the latest National Pet Owners Survey, conducted by the American Pet Products Association, but only 2.1 million pets are insured, according to the North American Pet Health Insurance Association.
“We see pet insurance as a growth area,” Coughlin explains. “We see it not just as a way to offset vet bills, but to provide preventative wellness visits. We believe we can uniquely provide that, as compared with historic Hartford, CT insurance companies. We can provide a more holistic solution to pet parents and come from a more informed view of what pets need.”
Inviting the pet food industry to step it up
In Petco’s announcement today banning artificial ingredients from the pet foods it carries, Petco is laying the gauntlet down to the rest of the pet food industry to commit to better health for pets.
It points to company research that finds 87% of pet parents want pet food that support their pet’s health and wellbeing and that 59% of veterinarians say pet owners should actively see out foods without artificial ingredients. To help some of Petco’s existing product partners, it will work with them to make ingredient changes to meet its new elevated standards.
Petco sees its partnership with JustFoodForDogs as an example of a pet food company that puts pets-first in meeting each dog’s specific dietary and nutritional needs with food fit for human consumption.
“We believe that human-grade food is a major trend happening now and we intend to lead that way,” Coughlin says, noting that JustFoodForDogs is prepared in kitchens and delivered fresh to pet-parent’s doors.
“My dog Yummy is on their fish and salmon diet. When we are eating salmon and sweet potatoes for dinner, Yummy has the same type of human-grade food,” Coughlin says and goes further. “We will be having kitchens inside Petcos to provide human-grade food whether beef, lamb, or fish that is similar to food that people buy at Whole Foods.”
“We believe our role is to do the right thing for pets,” Coughlin concludes. “We are taking a leadership stake with this nutritional announcement. Being a holistic partner to pet parents is a unique position for us.”
