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Petco Rethinks Its Merchandise to Woo Pet Parents as Sales Dip

Petco

With sales continuing to slide, Petco is launching a three-pronged strategy to engage pet parents.

The pet care and pet supply retailer released earnings Wednesday (May 22) showing net revenue of $1.5 billion, a 1.7% decline since the same quarter in 2023.

While Petco’s consumables business rose 0.1% and its services/other business climbed 4.2%, this growth was offset by a 6.8 drop in the company’s supplies and companion animal business.

This follows the retailer’s fourth-quarter and full-year earnings report in March, in which a pullback by pet parents caught the company by surprise.

“We have not adapted quickly enough to recent changes in consumer preferences,” CEO Mike Mohan said at the time. “First, we did not anticipate the magnitude of the shift of value in both are consumables in discretionary business, and second, we did not expect customers to pull back as quickly as they have and for this duration when spending on discretionary items.”

Speaking to analysts Wednesday, Mohan discussed some of the ways Petco hopes to regain profitability, including a new operating model for its pet care center that “increases customer facing time,” and “educates and empowers store partners to create a world class customer experience and drive share of wallet.”

The company is also carrying out a “review and rationalization” of its pricing and assortment strategy for its merchandise mix.

“Designed to improve traffic, basket and overall quality of sales, this review is focused on better aligning our in-store and online merchandising to meet the needs of all pet parents, while driving long term profitable growth,” Mohan said.

Lastly, Petco is reworking its marketing efforts to engage “actively with pet parents to drive traffic to our stores and online channels.”

As has been noted here in the past, while retailers have been dealing for some time with customer spending pull-backs, it makes sense that the pet industry might be slower to adapt, considering their customers’ long-held reluctance to scrimp on spending for their four-legged family members.

When PYMNTS Intelligence researched the topic last year, just 19% of consumers reported spending less on pet products, compared to 47% who had switched to less expensive grocery products and 33% who were spending less on personal care.

Meanwhile, some businesses are counting on consumer desires to spoil their pets. Among them is Ollie, a company specializing in human-grade dog food, which recently teamed with premium ice cream brand Van Leeuwen to sell its first ice cream for dogs.

“A growing number of Americans think of their dog as a member of the family, and that can be seen in every single decision they make as a pet parent,” Ollie Chief Marketing Officer Hillary Benjamin told PYMNTS in an interview.

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