Our latest whitepaper looks at five legacy retailers that have succeeded in staying relevant over decades by consistently adapting their strategy to shifting consumer preferences. Below we share our findings on one of the brands, Petco, that is meeting customers where they are – literally – to build one of the fastest-growing petcare brands in the country today. To learn about the other legacy retailers charting a new course, read the full whitepaper here.
Petco’s Pandemic Growth Spurt
As pet adoption surged over COVID, foot traffic to Petco took off, with 2021 visits higher than 2019 visits in every state. But Petco’s current success is not just due to external factors. The company’s rebrand as a pet health and wellness one-stop-shop ecosystem rather than its former position as a mere pet product supplier has allowed the company to fully capitalize on the current pet ownership surge.
Despite the movement restrictions, the company's brick and mortar channels performed particularly well over the pandemic. So, while PetSmart is still the category visit leader – Petco’s visit share has been encroaching on PetSmart since Q3 2020, and Petco’s weekly foot traffic continues to exceed pre-pandemic levels by double-digits.
Petco is also one of the few truly omnichannel retailers, with its online and offline channels working hand in hand to improve customer experience and company efficiency. Customers can book grooming appointments online and customize care reminders. Should customers decide to shop digitally, Petco can leverage its distributed store fleet to speed up delivery while cutting costs; this has helped the brand make inroads into online-only retailers.
Thanks to the brand’s partnership with DoorDash and the company’s large and widespread store fleet, Petco has been able to offer same-day delivery from any of its 1,500 stores. This helps Petco fulfill digital orders for a fraction of the delivery costs incurred by online–only retailers who need to ship their products across multiple zones. As of 2021, 80% of Petco’s digital orders are shipped directly from stores rather than from a dedicated distribution center.
Petco’s Move Beyond Cities
Internal migration trends are likely also propelling the pet health and wellness provider forward: Petco CEO Ron Coughlin has attributed the company’s current growth spurt to the pandemic-induced movement into suburbs and more rural areas. As people moved out of small city apartments, many adopted pets and looked for petcare retailers near their new homes to support their pet-parent journey. The company recently began testing their “small town rural” store concepts to further serve the new residents.
Zooming into Houston
Already, suburban locations are outperforming Petco stores located in cities. The graph below zooms into Houson, Texas and compares urban Petco locations (in purple) to suburban ones (in yellow). Although foot traffic relative to three years ago increased for both categories, the suburban locations significantly outperformed the urban ones almost every quarter since Q1 2021. In Q1 2022, the latest full quarter for which data is available, suburban Petco locations in Houston saw a 10.8% increase in visits relative to Q1 2019, compared to just a 3.3% increase in Yo3Y foot traffic for urban locations.
Since the overwhelming majority of new owners have decided to keep their pets, the pet care category will likely continue seeing a boost for years. Petco’s investment in its suburban locations and move towards pet health and wellness has positioned the brand to continue increasing its share of this growing market.
For more insights into legacy brands charting a new course, read the full whitepaper.