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Petco barks up the IPO tree

August 17, 2015 05:28 PM
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One of the nation’s leading pet supplies retailers is going public.

Petco Animal Supplies Inc., No. 275 in the Internet Retailer 2015 Top 500 Guide, filed for an IPO today, offering up to $100 million in stock for sale. In its filing, Petco reports that e-commerce accounted for 8.5% of its sales of $2.169 billion, or roughly $184 million, through the first two quarters of fiscal 2015.

The company writes in its filing that it has made significant investments over the past few years to better reach the growing number of consumers buying pet products online. Petco’s data reveals that “nearly 31% of pet parents reported buying pet products online more frequently than they used to, up from only 14% in 2011.” The retailer offers 18,000 products online and has 2.5 million active customers shopping its four e-commerce sites.

In its filing, the company says it expects social media to be a key driver when it comes to customer retention and loyalty.

“Social media engagement enables us to effectively reach our customers, particularly millennial customers who on average significantly outpace baby boomers in omnichannel shopping habits and pet accessory ’splurge’ tendencies,” the company writes. “We seek to be at the forefront of the shift to more individualized marketing and customer engagement, creating a loyalty-based, lifetime value proposition for pet parents that increases visit frequency and per trip expenditure levels.”

Earlier this year, the retailer completed its acquisition of pet supplies e-retailer Drs. Foster & Smith for an undisclosed price, a move that helped boost its web sales through the first half of 2015.

E-commerce is growing, but the company says its future is still in stores.

“As the e-commerce segment grows, we believe the ability to provide an integrated, omnichannel experience by providing customers with the ability to shop for, and manage the needs of, their pets anytime and anywhere will be a competitive advantage over both e-commerce-only retailers and smaller independent retailers,” the company states. “As part of the omnichannel retail experience, we expect channel boundaries to blur, but physical stores will continue to support the vast majority of the market, especially key offerings such as pet services.”

But in order to be profitable, e-commerce and bricks-and-mortar locations have to sync up, Petco said. To that end, it will start giving store associates tablets so they can place online orders for in-store customers, such as when an item is out of stock in the store. The company says it’s also planning on increasing its investment in its PetcoNow partnership with delivery service Instacart, making it easier for customers to get their online orders faster. Instacart employees buy items in participating stores and deliver them to the consumer, often within a few hours.

“We believe that aligning incentives, training and communication programs to support omnichannel is as important as digital asset implementation to driving significant net sales growth,” the company says in its filing. “If our employees have an equal incentive to foster a strong customer relationship any time through any channel, we can drive an overall higher total company net sales growth rate.”

Petco is the second retailer in the 2015 Top 500 to file for an IPO this month. Two weeks ago, luxury retail chain Neiman Marcus filed for an IPO, claiming online sales of $1.014 billion through the first three quarters of fiscal 2015, a figure that accounts for 25.8% of its overall sales.

 

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