Our guest today is Jay Altschuler.

Jay is the vice president of media transformation at Petco.

Previously, Jay ran global media for Samsung and Unilever.

Join us as Jay reveals how Petco had to rethink its brick-and-mortar strategy amid COVID-19, the retailer’s lean into social commerce, and Petco’s vision for transforming itself into a pet health and wellness company.

 

Episode 103 of the RETHINK Retail Podcast was recorded on September, 23. 2020

 


Hosted by Julia Raymond
Researched, written and produced by Gabriella Bock
Edited by Trenton Waller

TRANSCRIPTION

Julia Raymond:
Hi, and welcome to the RETHINK Retail Show. Our guest today is Jay Altschuler. He’s the vice president of media transformation for Petco, a well-known pet retailer in the United States. Previously Jay ran global media for Samsung and Unilever. Welcome to the show, Jay.

Jay Altschuler:
Thanks for having me. I’m really happy to be here today.

Julia Raymond:
Happy to have you on. I wanted to start just asking about your background, you were in tech, now you’re heading up some retail. What was it like on your journey and your career so far?

Jay Altschuler:
I really have enjoyed this journey. I’ve spent my career really focused on digital and data transformation. And while it may seem a little bit of a paradox kind of going from a tech company to a pet retailer, what I’ve found, is that Petco is actually the most advanced marketer that I’ve ever worked for. It’s been exciting. I could actually just take a step back. I just have to gush a little bit on Petco, it’s just such an amazing company.

Jay Altschuler:
It really all starts with the vision that I really bought off on, healthier pets, happier people, better world. I kind of joke that pets really deliver unconditional love, and who doesn’t want to be in the business of unconditional love?

Julia Raymond:
Mm-hmm (affirmative).

Jay Altschuler:
Really love working for a purpose-driven company like this. I just welcomed the culture that Petco provides, and just thinking about that, plus kind of my role there, and ultimately that the fact that we have 20 million subscribers to our Pals program, you know it’s really an amazing community, a very vocal and active folks that tell us kind of how they’re thinking about what we’re doing every day.

Jay Altschuler:
There’s amazing kind of feedback and data that we get, beyond that just having a relationship and owning that relationship with our end consumer was a prime motivator for me in kind of making the switch to retail versus some of my previous jobs, previous career, where we didn’t have that relationship with the end consumer. I honestly believe that it’s kind of impossible to be a modern marketer if you don’t own that relationship with the end consumer. Especially in the world of media, being able to have that relationship means that we have access to our POS data.

Jay Altschuler:
We have, like I said, the access to our 20 million Pals subscriber list, so we can create closed loop attribution models. Why that’s so important for somebody like me, when I’m going into the boardroom and starting to explain how that marketing and media is performing because it’s an investment. I have now closed loop attribution, I can start to understand how much I’ve spent and what it returned. I’ve never had that level of sophistication at any other company. In many ways, Petco is the most advanced company and the most advanced marketer that I’ve ever worked for.

Julia Raymond:
That’s amazing that you are able to create closed loop attribution models for 20 million people who are subscribed to your Pals program. Is that something that has been in the works, building those capabilities for many years? I mean, you don’t just become a leader right, I’m sure it wasn’t overnight.

Jay Altschuler:
Yeah. Obviously it’s something that I was brought into to transform and to elevate, but the foundation has been there, just because I think just retail by its very nature is a data-driven organization. When you have access to POS, and you understand sales down to an individual SKU level across 1500 individual stores, obviously that throws off a wealth of information about how you’re performing in a real-time basis. Really what I’ve been brought in to do is just help kind of connect up those pipes, and make it easier for us to understand all of that information in real-time and start to connect the marketing up to the store information.

Julia Raymond:
Excellent.

Jay Altschuler:
Then we started to create that closed loop attribution.

Julia Raymond:
Absolutely. You said sales down to the SKU level for 1500 stores. That’s a lot of data. Is there anything that you found insightful this year since COVID started about buying habits? Was there a lot of change in how people were buying there, because a lot of pet food, you get it every month and it’s very transactional, but what were you seeing?

Jay Altschuler:
Yeah, that’s a great question. We really have seen it almost through three stages, and it kind of mirrored what we were seeing kind of just in the human world, right. When there was the initial outbreak I would say, kind of in mid-March, we saw that initial stock-up, people were kind of going to the store, they didn’t know what was going to happen, and we had a run on a lot of our products, and we weren’t prepared for that at first. Then as states started to enter into to lockdown and people were quarantining, obviously people were looking for options that were more kind of online-only options. That kind of played into the strategy that we had at Petco. I mean we’ve been investing into our e-comm business for quite some time, and it actually really just accelerated a lot of the work that we had in the pipeline.

Jay Altschuler:
What I will also say is that kind of being an omni-retailer, I think actually provided an amazing competitive advantage for us during that initial lockdown time. We could use the stores that weren’t getting as much foot traffic as local distribution centers. We actually could ship from the store, and it cut down our shipping times and gave us a huge competitive advantage.

Julia Raymond:
That’s huge.

Jay Altschuler:
That was amazing. I have to really credit our supply chain and the logistics arm of our team. I mean just to see us kind of move this dynamically and this quickly was amazing, all at the same time really just thinking about the health and wellbeing of our partners in the store. We remained open the entire time, we were deemed an essential service because we are that grocery store, and that pharmacy for pets, and then that was really fantastic that we were recognized, that governments recognized us as an essential service. But it’s also a great responsibility to stay open and make sure that we can really ensure the health and safety of all of our partners.

Jay Altschuler:
I will say kind of during that time, that third phase was really seeing folks start to kind of go back out as states started to safely reopen. What we realized, that people wanted to figure out how to get the best value and the best convenience while remaining safe. Something that we had in the pipeline was curbside delivery, and that was probably three, four months out, in April when we really saw the dynamics happening, of people kind of sheltering in-place and wanting that as a service, we actually stood that up in two weeks.

Julia Raymond:
Wow.

Jay Altschuler:
An amazing, logistical feat, and just to see our company kind of react in that kind of time was fantastic to watch.

Julia Raymond:
That is really impressive. Two weeks to get anything done in any business is a tight timeline at that scale. Was that something where you partnered with other companies to stand that up so quickly? Or was it all internal? Can you talk to that at all?

Jay Altschuler:
Yeah, a lot of it was internal. We have to rely on certain partners for the shipping and logistics and kind of just transferring, and kind of where that inventory sits around the country to get it into stores. It is a huge ecosystem that we’re we’re dealing with, and our team is just made of superheroes.

Julia Raymond:
That’s amazing. Earlier this year, and this I think might’ve been pre-COVID, you announced a pretty big partnership with Google to bring ads to shoppers at the local level. Was that useful during the pandemic? I mean, what did you guys scale back during advertising over this time to really focus on curbside, or what did that look like?

Jay Altschuler:
Yeah, it’s interesting. When I started at Petco, and I was just asking some, or just telling some friends that I started there, everybody knew I live in Westchester, New York, and everyone’s like, oh yeah, the Boston Post Road, of course, I love that store. What is really kind of front and center in our minds is that we really are a community-driven business, and we have to understand our business from a hyper-local lens.

Jay Altschuler:
Like I said, we have over 1500 stores, and each of those stores have different business dynamics and different offerings. We are really investing into the services side of our business, so when you go into a Petco, and obviously have kind of the food and supplies that you’re used to, but we’re really investing into vets inside of each store, and trainers, and groomers, so it’s really a holistic view of the health and wellness of pets. I think that viewing the business through that frame actually kind of helps us accept the north star for the company, and how we serve pets and pet parents.

Jay Altschuler:
You were asking a little bit, kind of just about the relationship with Google, and kind of that partnership on a local level. I kind of started the conversation talking about our ability of understanding store dynamics and sales dynamics down to the SKU by store level, and kind of partnering with Google and other companies that will allow us to spend dollars in kind of located against each individual store, and each SKU in those stores are critical for us. Now I can really start to adjust the dials by SKU, by store, and change those investments in real-time. Again, this kind of speaks to the sophistication of us as a company. I’ve never had that level of sophistication at any other company before.

Julia Raymond:
Extremely sophisticated. Is that something, and I’m just riffing here, but for example in New York, in the city, I’m assuming there’s a lot of pet owners who have smaller animals because of the size of most living quarters, versus somewhere in more rural areas where they can have larger animals. These are probably different customers who need different products, and to have that level of clarity compared to 10 years ago is amazing.

Jay Altschuler:
I think that’s a great point, and again kind of just speaks to the kind of a hyper-local lens of our business. One of the trends during this kind of COVID time period, is that people are consolidating their shopping experiences and shopping a little bit less. And so that means that the SKUs kind of change. What we’ve noticed that people are actually coming in the store a little bit less, so that means that they’re looking for a larger package size of food for instance, right. That was something that we didn’t necessarily kind of predict at the beginning, but being able to kind of react in real-time and then change our SKU profile in that way, again kind of just speaks to the dynamic nature of the business, and how we are kind of constantly listening and reacting to what consumers want from us and being able to meet that demand, and then from a marketing standpoint, kind of investing into that demand.

Julia Raymond:
Certainly. You did mention just a few minutes ago, you said we’re really investing in the service side of our business, and you said that sort of sets the north. Is that something consumers are demanding in terms of full service? I want to come to a pet store, buy my pet food in bulk, buy toys for my pet, and also maybe get them groomed, maybe have them see a vet. I mean, is it all of those things?

Jay Altschuler:
Yeah, I think it is all those things. Not necessarily all in the same trip, but the idea of kind of having one-stop shopping, we kind of call it nose-to-tail coverage.

Julia Raymond:
That’s funny.

Jay Altschuler:
It actually makes a big difference when you take a step back. For us everything kind of ladders back up to value and convenience, and how do we provide the most value and the most convenience for people. Part of that is being able to provide options of shopping your way, whether that is completely online and using kind of repeat delivery, so you kind of set it and forget it, and everything gets delivered to you, or have that buy online pick-up in store, especially with curbside service, or going into the store.

Jay Altschuler:
But what we’re finding more and more is that when people go into the stores, they’re not necessarily looking for food and services only, or food and supplies only, because they’re getting that through our online offering, but what they really do need is kind of that assurance that they can go to a place that understands their pet, and has their pets best interest in mind in the same way that they do, and they have a team surrounding them. Being able to go to a Petco that you’re already going to for food and supplies, and now having a vet that works there and understands your pet, and a groomer and a trainer, and then when you start to take all of that services and put it through an app, where we can start to put all of those visits in an app and track it for you, and actually start to be a little predictive in our ability to think about the health and well-being of your pet and tell you when they need the next vet appointment or when they need a vaccination.

Jay Altschuler:
You mentioned Apple before, and it’s interesting, you could start to see the trends of what’s happening kind of in the human space with wearables, and the same thing is happening with pets, collars can start to be kind of predictive in understanding whether your pet has an allergy, or whether there’s hip dysplasia. And so we can start to be a really valuable partner in assisting you in the health and well-being of your pet and being very predictive and understanding in kind of what your pet needs at that point in time.

Julia Raymond:
That would be very cool. I’ve also seen fitness trackers for your pet to make sure they’re getting enough exercise and things of that nature. But when you spoke to your app allowing reminders like, hey it might be time for your pet to get a checkup, or to get their next grooming, that is convenient, because we have so much going on in our minds, and in our jobs, and with COVID, so to have those little reminders where you don’t have to think about it, you set it and forget it, that seems to be really helpful. Is that something that you thought of because of the consumer data? How did you find out that that’s what they wanted?

Jay Altschuler:
Yeah. Again, we have a really strong community of consumers that like to share their insights with us on kind of what they want from us as a company, and how they care for their pets. We really believe that we have to be consumer-driven and consumer-centric, and just having that strong relationship with the consumer really helps us understand how best to think about our product offerings and services and what our consumers need.

Julia Raymond:
Mm-hmm (affirmative).

Jay Altschuler:
And it really helped us think about where to invest, and during this time period really investing in our online options, really investing in our apps, and thinking about ways to give consumers the most convenience with the most value.

Julia Raymond:
Now I have a question Jay for you just off the cuff here, because I’ve heard that there’s about two different camps people tend to fall in, in my conversations with them, especially marketers. One camp is, you have to ask the customer what you want, you have to be consumer obsessed and let them tell you, and the other camp is no, consumers don’t know what they want, you have to tell them. People didn’t know that they wanted phones without buttons until iPhones and smartphones started coming out. What camp would you say you fall more into if you had to choose one?

Jay Altschuler:
Yeah. It is a really good question. I do kind of remember that old quote from Steve Jobs that you kind of ask people, kind of in the horse and buggy what they want. And they would say a faster horse and buggy instead of a car.

Julia Raymond:
Mm-hmm (affirmative).

Jay Altschuler:
I think that there is kind of this right mix of understanding when you need to evolve in your current offering, and when you need to completely rethink it. We honestly are driven by what is best for pets, and we know that when we’re on the right side of pets, it’s on the right side of pet parents and it’s best for Petco. Again we didn’t necessarily ask consumers last year when we got rid of all of our artificial ingredients in the store, it’s just something that, because of our vision and our mission of just healthier pets, we felt that it was something that we had to do because it was best for pets. I think that’s a really great example of us not necessarily taking direction from consumers, but really leading, based on that strong vision and mission that we have as a company.

Julia Raymond:
Mm-hmm (affirmative), because right at the opening of our conversation you said healthier pets, happier people, and a better world. That aligns directly.

Jay Altschuler:
Exactly.

Julia Raymond:
Now I wanted to move a little bit more into the role of the store because I’ve had a few other guests on the show, Jacob Pat from Champion Petfoods. I had Brock Weatherup, and we dabbled a little bit into what are the TeleVet services offered today? What are the challenges? Is that something that your team or Petco is investing in? Is that something you’re exploring? What are some of the challenges there?

Jay Altschuler:
Yeah. Again, we talked about our focus on services as a core part of our offering, we actually just opened our 100th in-store vet yesterday, so it’s kind of big news for us.

Julia Raymond:
Congrats.

Jay Altschuler:
Yeah. We’re really excited, and vets in particular, of all the services, we think is really just that the centerpiece of our vision of transforming into a pet health and wellness company. In the same way that we are thinking about omni-solutions for food or supplies, that the same has to be thought of in services, and so tele-training, tele-health, obviously it makes a ton of sense. We’re definitely thinking about all of those options of what consumers want in terms of the way that they are managing the health and wellness of their pets. We definitely want to figure out how to create that depth and breadth of offering.

Julia Raymond:
When you say tele-training, that’s actually new to me, but it makes a lot of sense. Is that where you might have someone available on-demand, and consumers can pay to access a trainer and talk to them about some of the challenges they’re having? Or how would you describe that?

Jay Altschuler:
Yeah, it’s still something that we’re thinking about, and we’re still working through, but you could definitely see kind of something that is a little bit more on-demand or even a tune-in where we have some amazing trainers on staff that are just part of our Petco team, and being able to have certain times where you tune in, or being able to have certain things that are on-demand is definitely part of our thinking.

Julia Raymond:
Mm-hmm (affirmative). From your perspective, we’ve talked so much about health and wellness, it’s not just a pet store, it’s not a pet food store, supply store, it’s health and wellness for pets. What do you think caused that shift? Because I know, for humans there’s been definitely a shift over the years for, we want to know what the ingredients are, where they’re sourced from, and a big push on that. When did it sort of come into the pet sector so heavily?

Jay Altschuler:
Yeah. I really credit the vision of our CEO, who’s been in the role for almost two years. I think we really had that vision with our CEO from the outset, and it does follow the same trends in the human world, and it makes a ton of sense. As we start to really think about how pets are transforming our lives, we also like to say that pets actually make us more human. We see that that migration from pets living outdoors, and to really living at the foot of our bed and being part of our family. I think it just kind of follows that same sort of migration path as we start to think about what we’re putting in our own bodies, the same care and thought goes into what we put into our pets bodies.

Julia Raymond:
Mm-hmm (affirmative). Jay, I have to ask, because you are with Petco, do you have pets of your own?

Jay Altschuler:
We have a Havapoo, which is a Havanese and poodle mix that is coming in about two weeks, we’re excited.

Julia Raymond:
Oh my gosh that’s so exciting.

Jay Altschuler:
A real cutie.

Julia Raymond:
That’s amazing. Have you had a Havapoo before, or is this your first?

Jay Altschuler:
This is our first Havapoo. I had Yellow Labs growing up, but I have two girls, eight and ten-year-old, and they chose this one.

Julia Raymond:
So cute.

Jay Altschuler:
More of my girls’ choice, but we couldn’t be happier.

Julia Raymond:
Well, I mean it is nice, they are probably a little bit hypoallergenic, and then it’s also they look like teddy bears, right. Win-win.

Jay Altschuler:
Exactly.

Julia Raymond:
Great. Well, I would like to round out our conversation today. I did know we did a little research before we hopped on this podcast, and it’s really interesting for our listeners if you haven’t heard this before, that Gen Z’ers and millennials are likely to spend more money on pet products than any other generation ever. Jay in your perspective, when you look at the marketing sophistication that you’re dealing with at Petco, and it’s a high level of sophistication, is there a generational aspect to that or how do you segment?

Jay Altschuler:
Yeah. It’s a really great question because we call our current users, we did some segmentation work in really understanding the psychographic demographics of our current user base, and we refer to them as adoring nurturers, which really kind of just talks about the way that they care for their pets, and our current user base tends to SKU a little bit older, but we are seeing this new generation of pet parents that are especially actually during this pandemic there’s a lot of new pet parents, and a lot of them tend to be younger gen Zs and millennials. You’re right in that they’re thinking about the health and well-being of their pets, maybe a little bit differently than the generation before them. Again, really speaking to that migration from pets living outdoor to the base of their bed and becoming parts of their family.

Jay Altschuler:
Because of that, that kind of speaks to the fact that we really are a health and wellness company in thinking solely about what is best for the pets will be the best for those pet parents.

Jay Altschuler:
But what we notice there, I’ll just speak from a media standpoint, when we noticed their media consumption habits, it definitely skews a little bit more in digital, and social plays a big part in that. We have a brand of clothing, pet clothing called Reddy, definitely encourage you to go check out that, that brand is a really fun brand. I think just the way that we have marketed Reddy probably speaks to the way that we’re thinking about that next generation. We actually did a really fun partnership, and tie up with TikTok, And we worked with some awesome influencers, Jason Derulo, and Hannah Stocking, and Dixie D’Amelio, some really amazing-

Julia Raymond:
Wow, some big names.

Jay Altschuler:
– and just had a really great time working with those influencers, who all have amazing pets. I encourage you guys to go on TikTok and check it out. We were just really thinking about our marketing much differently today, knowing that sight-sound emotion doesn’t have to be just limited to the TV, and really thinking about video and experience, and social commerce much differently. I think you’ll start to really see that as part of our go-to-market strategy moving forward, really leaning into social commerce, and really thinking about OTT and online video as some of our core storytelling channels.

Julia Raymond:
Absolutely. Well Jay Altschuler president of media transformation for Petco, it was great having you on the show today. It does sound like you guys are really transforming media keeping ahead of the curve on TikTok, on video, all these things that you’re offering. It was really interesting to chat with you today.

Jay Altschuler:
Yeah, thanks for having me. I really enjoyed it, and I really appreciate it. Thank you so much.