The CEO of the American retailer shares how they are balancing both types of products on their shelves in the current inflationary situation.
In a recent speech at Goldman Sachs’ 30th Annual Global Retailing Conference in New York, Petco’s CEO Ron Coughlin highlighted that Petco’s top priority is “winning the premiumization play.”
“Look at the top end of our fresh frozen food. We have national retail exclusive products to Petco,” he says.
He claims that these exclusive deals mean Petco is set up to win. “There’s no company better set up to win that move towards premiumization and premium products than us,” he adds.
Despite the premium trend, Coughlin acknowledges that there is also an increased demand for value products in the current inflationary environment and that Petco needs to supplement its portfolio with some of these products.
This is a process the pet retailer already has underway, as it recently expanded its portfolio with Purina’s product Fancy Feast.
“We brought in about half or two-thirds of their portfolio. We are now 3 weeks into the expansion, but a strong double-digit percent of those customers are new to Petco,” adds Coughlin.
According to the CEO, “This is not just about volume but about getting customers and their attachment.”
In terms of prices, Petco is working on altering its middle-range product price points. “We need to be more price competitive on mass products,” says Coughlin.
However, the CEO believes this will only be for a short time and that prices will slowly balance out. “Historically, it takes a few quarters to break even, then a couple of years for payback,” he points out, describing the aftermath of the price adjustment process.
“There is no need to be hyper-competitive on high-end products as we have our own exclusive partnerships,” he concludes.
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