How Petco plans to lead the market, plus pet industry trends for the future

Pet ownership in the United States has grown substantially over the past several decades (more than 70% of American households own a pet — up from 56% in 1988) and today, pet-related retail is a billion-dollar industry. In 2021 alone, it’s estimated that pet owners in the U.S. spent $109+ billion on their pets. And while the pandemic saw many industries taking a big hit on sales, the pet industry soared as people spent more time at home and increasingly sought pet companions.

At the same time, trends and norms around pet ownership have evolved. More than ever, pet owners are considering their pets’ needs beyond basic food and shelter — needs that include better nutrition, physical and mental enrichment, high-quality healthcare and more. Industry retailers have responded by fine-tuning their own marketing and sales strategies to align.

In this interview, a former Petco executive shares insight on pet ownership trends, the impacts of COVID-19 on pet ownership, and how the industry — and Petco specifically — are responding to new norms for pet care.

Quick Takeaways

• Petco’s from category marketing to a go-to-market strategy has been a success.
• Pet ownership grew during the pandemic, and has led to an influx of new, younger, pet owners.
• Petco aims to position their brand as exclusively selling healthy, safe, high-quality products and ingredients.
• Wearable tech, boutique D2C brands, and pet DNA testing are three of the biggest trends on the rise right now in the pet industry.

Petco shifts to go-to-market strategy

As increased focus on the customer experience has become a competitive imperative in recent years, one of Petco’s most important and intentional strategy shifts has been from category marketing to a go-to-market approach. Petco now aims to strategize from the perspective of the customer, using segmentation to provide relevant, personalized, 360-degree experience.

“I think when we had a category marketing team, we were really looking specifically at how do you market dog food, how do you market a companion animal strategy, or how do you market a supply strategy, versus when we went to a go-to-market strategy. [It’s] looking at it from a different lens to pull together something [more] targeted towards the end customer use.” 

One example of this is Petco’s Welcome to the Family initiative for new pet owners. Employees are trained to recognize new pet owners in stores and engage them, asking the right questions and making the right offers for their specific experience. 

“It was a program that started with identifying the person in the store, [which] triggered an entire communication series through emails or that person would get targeted messages specifically for them about being a new pet parent . . . It was a complete experience for them, not just one aspect but everything from the food you need to supplies you need to the services you need with grooming and veterinary care. . . . I think that’s a really great example of how you can pull all the different categories together and really look at it from the customer experience versus looking at it from the company experience.”

This is an approach that Petco has expanded across their entire customer base — looking not only at pet ownership experience but drilling down into type of pet, number of pets, type of household (i.e. single person vs. family) and more. The result has been a new ability to move beyond selling products to providing a full experience that creates connection between pet owners and the Petco brand.

“One of the things that Petco really focused on was, how do you look at those different groups differently? How do you talk to them differently? How do you serve them up a different experience? Again, someone with their first dog probably doesn’t have an established vet. They probably don’t have an established groomer. Someone who’s had three or four dogs previously probably has a pretty set routine in place and may not be open to new ideas around veterinary care and nutrition. There’s definitely a whole system in place at Petco in terms of identifying those segments and then going after them in different ways.”

The COVID pet parent

This new, more personalized approach has served Petco well during the pandemic-induced pet ownership boom. According to this expert and other studies, new pet ownership during this time skewed younger. Millennials currently hold the largest share at 32%, while rates for Gen-X and boomers both declined over the past few years.

“[Pet ownership is] generally skewing a little bit younger . . . people who are in their 20s who may not have considered getting a dog before because they worked too much, were outside the home too much, just as an opportunity to foster and then also adopt dogs, cats, any kind of animal. I think we’re seeing people enter the pet space that are coming in for the first time.”

Concerns were high for many in the pet industry that the end of the pandemic — or even just our current gradual return to normal life — could lead to an influx of pet owners returning their pets or surrendering them to shelters, no longer able to care for them without being home all the time.

The opposite, however, has happened.

“We were all very concerned that as COVID waxes and wanes that people would go back to work and then say, ‘Now I can’t take care of a dog. I’m going to return it back to a shelter.’ [What] people are doing instead is . . . looking at it as ‘I made this commitment. How do I keep this dog? How do I keep this cat in a way that they’re happy and healthy with me being outside of the house more?’ Yeah, I think it’s been exciting to see how many people have entered the pet space in the last year. It’s definitely been a boom for the industry.”

This expert’s commentary is backed up by the data. One recent study conducted in November 2021 found that 90% of dog owners and 87% of cat owners who acquired their pets during the pandemic still had their animal.

Petco positions as healthy option

Happening along with this sudden growth in new pet ownership is an increasing concern with pet needs like nutrition, comfort, enrichment, and overall health. In the words of this expert, there has been increased “humanization” of pets, and more and more owners today consider their pets to be a true member of the family.

Petco has taken great strides to align their brand with this new trend. Rather than aiming to be a one-stop-shop for any pet product people might look for, they’re working to instill customer confidence that every product found in their stores is high-quality and safe.

“I think when you look at Petco and what they are differentiating themselves as, I think it’s been year over year, they keep circling back to it. I think they finally have landed in a really good way about being the place where the healthy pets go . . . If you go to a Petco, if it’s on the shelf at Petco, you know it’s going to be the right product for your pet.”

According to this expert, this is not the same as other top pet brands like Chewy and PetSmart, who may offer more variety but also have more lenient quality standards. And it seems like Petco is putting their money where their mouth is, as demonstrated by this recent interaction between Petco and popular cat food manufacturer Fancy Feast.

“Fancy Feast, all cats love it. Petco doesn’t carry a lot of the flavors of Fancy Feast that you’ll find on the shelves at Chewy or a PetSmart. The reason why is because Petco went to Fancy Feast and said, “These are the ingredients in your food that we will no longer put on our shelves.” Fancy Feast had to come up with some different ways to formulate to make sure that they were meeting Petco’s standards.”

Pet industry innovations and future trends

The interview rounded out with a discussion of what the future will look like for the pet industry. More specifically, what disruptions are happening right now within the industry that point to what’s next? This expert had some interesting insights, naming a few specific trends they see currently on the rise.

Direct-to-consumer pet brands have become more popular than ever as younger pet owners are willing to spend more money on boutique pet products. Lucy & Co., for example, sells the likes of raincoats, pajamas, and reversible vests for pets to wear. Fable Pets sells enrichment toys and specially-designed leashes.

“They are coming out with a very specific design aesthetic, and they’re reaching out direct-to-consumer, bypassing some of the bigger companies and saying, “We’re not going to sell this wholesale. We’re only going to sell this direct-to-consumer. This is who we are, and this is what we do.” They’re getting a lot of traction. Super interesting to see what’s happening there and how that’s going to disrupt the market.”

But this expert also sees a future where these boutique brands must either make their exit by selling to bigger brands or turn to selling wholesale in order to scale.

“Some of those D2C brands are absolutely going to turn around in a year or two and either become a brand that is selling through wholesale or they’re going to sell their entire brand. They’re just going to say Fable is now brought to you by this other company over here.”

On the tech side, demand for pet wearables is growing just as it is for humans:

“There [have] been a lot of things happening in the pet wearable space over the last couple of years, whether you’re looking at GPS trackers or you’re looking at health trackers. It’s something that’s big on the human side, and I think it’s only going to get bigger on the pet side.”

And finally, as companies like 23 and Me and AncestryDNA are telling humans about their genetic histories at increasingly high demand, pet owners are looking to do the same with their pets:

“. . . people are using DNA testing to not only look at heritage but also health, I think we’re going to see some different things happen on the pet side of DNA testing . . . I think that as you look at DNA testing right now, people are using it on the dog side more as a heritage testing, but I think as we go, it’s going to be interesting to see how people use that connected to health issues. I think there’s some really interesting data points that are happening there.”

Access the full transcript for even more insights

Want to dive deeper into pet industry trends and Petco’s future plans? Access the full transcript for this interview to learn more about:

• Generational pet ownership trends
• Petco’s plans for a more omnichannel strategy
• The lifecycle of different types of pet owners 

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