Chuck And Don's Pet Food Outlet: Case Study

With a mission to provide the best products, service and education to create a healthier pet community, Chuck and Don’s Pet Food Outlet commits their employees to “do the right thing” for their customer base (ChuckandDons, n.d.). Can one company build success on this strategy alone after starting out training and boarding pets? An evaluation of the market and completion and the pricing and retail strategy implemented by this company offers insight into the potential for Chuck and Don’s success.
Market Situation
How smart is it for a specialty company limiting itself mostly to pet food for dogs and cats to expand from a mom and pop shop to a growing national outlet chain? The company seems to be doing its research. Euromonitor International revealed increasing dog and cat food sales of 5% between 2011 and 2013 equal to $1 billion in sales revenue for the “more than half of all American households with at least one cat or dog” (PFI, 2014). The key to success becomes focused on how to contend with the competition using pricing and retail strategies.
Competition and Pricing Strategy
As dog and cat ownership increases, the pet-care industry is expected to continue to grow with both large chain and small independent retailers attempting to latch on to their piece of the market (Pet Business, 2012).
The centralization of communities around the local grocery store is becoming more prominent as old areas receive face-lifts. Independent pet supply stores offering premium products and services are attempting to find a niche in these communities but the ability to compete with the large PetSmart and Petco chains within a 10 mile radius may not be realistic. This space is where Chuck and Don’s has managed to make its
home.
Although the company must be conscious of competitor pricing, it utilizes a customer orientation pricing strategy (Grewal & Levy, 2014). This customer-based strategy allows the selling of a higher-priced product for the pet food to ensure the company meets the demands of the cost of goods sold and their profitability goals. That value proposition offered is multi-fold and based on their retail strategy: a neighborhood based location delivering convenience, higher quality product and loyalty programs. The two types of loyalty programs offered as pricing tactics include a quarterly savings rebates and frequent buyer program.
The frequent buyer program lends itself to a strategy enticing the consumer to buy at the local outlet to benefit from a cost of ownership method (Grewal & Levy, 2014). The outlets track through their retail system the number of packages of pet food purchased; then depending on the brand, the 11th or 13th bag is typically free. This program actually leverages the relationship with the food manufacturers who sponsor the frequent buyer programs through their distributors.
Conclusion
Tapping into their portion of a $20 billion plus market in the U.S. (PFI, 2014), Chuck and Don’s seem to have mastered picking the best location to introduce their outlets. It is a true threat to the smaller mom and pop stores with a single location as they grow to a retail specialty store, while offering a better quality product to strategically compete with the largest in their industry – PetSmart. The model must be working for the company as they have expanded from one store to three states while increasing employee wages and benefits, and continuing to donate annually to animal-related causes (ChuckandDons, 2014).