Over the course of his 30 years in retail, Justin Tichy has worked at Walmart, Target and Best Buy, but his latest job as COO of Petco is “by far the coolest retail experience I’ve ever been around,” he said. The reason is simple: animals.
“When you work at Petco, it’s like watching the movie Marley and Me over and over and over again,” said Tichy in an interview with Retail TouchPoints. “You see a pet parent come in with their Labrador puppy and then you watch that puppy grow through every stage of their life; it’s amazing. I talk to [associates] all the time who have been with us long enough that they’ve seen that arc countless times — not only the pet getting older, but the pet parent getting older too.”
While being a pet owner is not a prerequisite to work at Petco, Tichy said he estimates that 90% to 95% of Petco employees, himself included, are pet parents, and it’s that shared love of animals that “entwines you and gets you so excited [about working here].” Now, as competition in the pet sector intensifies, Petco is tapping into the inherent emotion of its category to create a similar sense of shared experience and loyalty in its customers.
Transforming from Transaction- to Engagement-Focused
When former HP executive Ron Coughlin took the helm at Petco back in 2018, Tichy was his first hire as he set out to “rebuild and transform the stores into more of an engagement model,” recounted Tichy. “Historically Petco has done a lot of great things, but they were more of a transactional company — a customer would come in, the employee would sell them a bag of dog food and they’d say goodbye. All the work that we did starting in 2018 was around building a foundation of guest experience: How do you engage with them? How do you actually sell to them? And how do you weave services through it all? It was an awesome transformational experience and it stabilized us very nicely as we hit the COVID years.”
Petco’s focus on services and partnerships (with other companies and with its associates, which it calls “partners,”) helped the retailer not just survive but thrive during the troubled years of the pandemic, so much so that Petco reentered the public market in 2021 with an IPO that valued the company at $6.4 billion. (Fun fact: Petco’s new NASDAQ ticker is WOOF.)
A whopping 70% of U.S. households (equating to 90.5 million families) now own a pet, up from 56% in 1988, according to the American Pet Products Association. As one would expect, spending on pet products and services has followed a similar upward trajectory, topping $136.8 billion in 2022, and it’s expected to continue to increase in the coming years. This U.S. pet boom has prompted more than a few new competitors to enter the scene, but Petco’s transformation into “The Health + Wellness Co.” (as it officially rebranded itself in 2020) continues to help the company stand out from the crowd.
Over the years, Petco has implemented an impressive roster of service offerings and partnerships, including:
- Vetco pet hospitals in stores across the country (282 by the end of the company’s third quarter) offering a full suite of pet health services including vaccinations, microchipping and pharmacy. The program started as a joint venture with Thrive Pet Healthcare but became wholly owned by Petco in 2022;
- Vetco mobile clinics that travel the country bringing veterinary services to as many as 1,500 locations each week;
- A partnership with Marriott’s Homes & Villas home rental platform to feature pet-friendly vacation rentals and allow travelers to pre-order pet essentials to be delivered to their destination;
- A streamlined app experience that features a centralized profile of pets’ wellness needs, including nutrition, vaccinations and appointment reminders;
- Offering same-day delivery of its products in partnership with DoorDash;
- Subscription delivery of fresh dog food in partnership with Freshpet;
- Accepting ecommerce returns in its stores in partnership with Happy Returns;
- Piloting an in-store recycling initiative with NexTrex that allows customers to recycle plastics that aren’t typically accepted by curbside pickup programs; and
- An expanding partnership with Nationwide Insurance that most recently led to the launch of a co-branded pet insurance offering. As an extra bonus, customers that use their Petco-Nationwide insurance at a Vetco clinic get 10% off all services.
Services: The Tip of Petco’s Loyalty Spear
“We talk all the time about this 360-degree health and wellness experience, and the Services team is really the tip of the spear,” explained Tichy. “When a customer comes into our environment for grooming or dog training or [to visit] the vet hospitals, that’s a customer that becomes entrenched with Petco. Oftentimes, they’ll trust someone like a groomer at a faster clip [than a sales associate]. For example, a groomer taking care of a dog and who says, ‘Hey, I’ve noticed your dog consistently has reddish skin here. Have you tried this shampoo or this sort of supplement?” That customer immediately sees that groomer as a person of expertise. That’s the beauty of our services model — it’s pulling that customer in; these people become trusted advisers for taking care of your furry pet child.”
As the list above illustrates, the services that Petco now provides are incredibly varied, but the one thing they have in common is they all act as “an on ramp” into the Petco brand, said Tichy. “Every 10 years people say brick-and-mortar’s dying, but I think what’s really unique about brick-and-mortar is we are always reinventing and finding new ways to attract customers and get people excited.”
Even with partnerships that don’t have a pet-focused offering, Petco finds a way to draw the customer from the “on ramp” into the full experience. With the Happy Returns partnership, for example, Petco found that 25% to 35% of the customers coming into its stores to make ecommerce returns were brand-new to Petco, so the company now offers Happy Returns customers a voucher for $10 off a $40 purchase at Petco.
Building ‘On Ramps’ in Other Retailers’ Stores
Petco shop-in-shops are now in place in nearly every Canadian Tire location across that country (around 450) and more than 300 Lowe’s stores in the U.S. In the case of Canadian Tire, the goal was to reach an entirely new region, since Petco doesn’t have any of its own stores in Canada. With Lowe’s, the goal was also to reach new customers, as well as to engender loyalty among existing Petco customers by allowing them to consolidate shopping trips.
The shop-in-shops in both countries feature a Petco-branded experience, and at Lowe’s that experience expands beyond products and branding to the associates manning the shop. In some locations the Petco shops in Lowe’s are manned by Petco associates, although Tichy said that the companies are now working together to give Lowe’s employees training on the Petco offerings so that Lowe’s associates can serve Petco customers as well.
In speaking about the success of these shop-in-shop partnerships, Tichy refers back to the old piece of wisdom: Jack of all trades, master of none. “In retail you identify and understand your ‘lanes,’ and you do those lanes really, really well,” said Tichy. “I think that’s where retailers today can align and understand how to have partnerships where they don’t walk on top of one another. Every retailer that is trying to be bigger and better, they understand, ‘Okay, this isn’t my lane,’ and that’s where they can start to align a partnership. It’s the same thing with Sephora in Kohl’s — it’s individualized lanes that meet up well.”
The Ultimate ‘Partner’
Despite all these unique, multi-faceted partnerships, Tichy said the company’s main differentiation point is still its “partners,” that is, its store associates.
“We spend a lot of time on training, development and making sure that we’re paying people correctly because our differentiation point always starts with our employees on the floor,” he said. “Making sure you have the right talent and the right team on the floor is, to me, priority number one.
“Back in 2019 we really started to push to become more of a health and wellness retailer. Yes, we put it in our name, but it’s really about how we stand that up and talk about the products and services that we offer. We’re trying to pull that entire 360-degree health and wellness ecosystem together and differentiate ourselves through the customer experience.”
Looking to the future, Tichy said building out the company’s Vetco clinics will continue to be a major initiative for both the permanent locations in Petco stores and the Vetco mobile clinics. “Going back to the jack of all trades, master of none idea, we’re trying to stay true to what we do really well, and that’s the pet experience,” said Tichy. “We love when pets come in our stores, and we want to differentiate with our employee base, both on our core business and also in the vet space.”