Debbie Erickson Ben Mack Kate Gamble TEAM 6

PETCO CASE STUDY

Company BackgroundSWOT AnalysisEthical risksProblem Areas & AllegationsPETCO’s ResponseCode of EthicsQuestions for Discussion

Company Background

Founded in 1965 as a mail order veterinary-supplies storeOpened 1st retail store in 1976 – La Mesa, CaliforniaOfficially named PETCO in 1979Products sold, Services offered– Pet food, Pet supplies, grooming products, toys, and small pets (excluding

cats/dogs)– Stores also offer grooming, training, vet services, and mixed-breed DNA

testing, as well as sponsor cat and dog adoption drives with local animal welfare organizations.

After it was made public in 1994, Petco made 12 acquisitions in a 18 month period representing 100 stores located in 16 statesThey managed to convert purchased units to a superstore format

Company Background

Sent senior vice-president of merchandising and distribution worldwide to searching for innovative ideas The result was the adoption of market-proven merchandising techniques and the elimination through assimilation of merchandising advantages held by competitors. 2005 Generated sales of $2 billion, and taken private in 2006 by 2 buyout firms.Stable company by 2010– 2nd Largest Pet food and Supply Retailer – 21,000 employees nationwide– More than 1000 stores in all 50 states, and District of Columbia– Only pet store to cover the entire US market

SWOT Analysis

StrengthsPRODUCT: Pet products and services – 10,000 products at each store

PRICE: Competitively low prices

PROMOTION: Respond well to negative publicity and clear advertising intentions

PLACE: Operate about 1,000 stores in the U.S. and fully functional e-commerce website

WeaknessesA history of neglect and mistreatment of animals

Customer Service: overcharging and negligent customer information security

Overly aggressive expansion policies - 1990’s

Minimal local appeal : Best Buy, Bed, Bath and Beyond…

Opportunities Pet population is increasing

More money being spent on pets

Online purchasing

Compliance with PETA

Threats Superstores selling pet products

Development of small high end pet stores

Poor economic times

Compliance with PETA

Discussion Question

What are the ethical risks associated with selling pets and pet products in a retail environment?

Ethical Risks

There are inherent risks in commoditizing living organisms.

Safety and well being of the animals

Problem Areas & Allegations2000-2005 Conflicts with PETA

Petco supplier caught abusing animals on videoCruelty and neglect to large birds in stores

2002 inspectors find dead & neglected animals in California Stores

2004 Lacked reasonable security measures to protect customer information from hackers

2007 Pet food recall due to contamination

2008 Petco supply warehouse declared “unsanitary”

2010 Petco fails to treat sick animals and overcharges customers

PETCO’s Response

Service Foundations

“Round Up” Program

-“Spay Today”

“Think Adoption First” Program

“Spring a Pet” Program

“Tree of Hope” Program

“Kind News” Program

Break Open Your Cold Ones Toast The Padres Enjoy This Champion Organization

Opening of PETCO Park, home of the San Diego Padres,

in 2004

Discussion Question

How do you evaluate the company’s response to PETA?

Other Efforts 2008 - Stopped sale of rabbits

Going Green

Use of animal fur in Gulf

Code of Ethics

Animal First philosophyCustomer PrivacySelling PracticesAdvertising PracticesPricing PracticesBuying Practices

Code of Ethics

Employee Policies-Harrassment, drug abuse, workplace romances

Conflicts of interestWorkplace safety, wage laws24 hour Hotline for associates

Discussion Question

What do you make of PETCO’s Code of Ethics?How might the code influence the company’s ethical culture?

Discussion Question

How has PETCO managed the various ethical concerns that have been expressed by its stakeholders?

Petco foundationCode of Ethics

Questions???