Petsmart 2006 Annual Report Download - page 15

that builds on the initial reformat and emphasizes our highly differentiated training and adoption services. We began
refreshing our existing stores with this new format in fiscal 2006 and will continue the program in fiscal 2007 and
2008.
Expand our pet services business. Based on net sales, we are North America’s leading provider of pet
services, which include professional grooming, training, boarding and day camp. Pet services are an integral part of
our strategy, and we are focused on driving profitable growth in our services business. We believe services
differentiate us from our competitors, drive traffic and repeat visits to our stores, provide cross-selling opportunities,
allow us to forge a strong relationship with our customers, increase transaction size and enhance operating margins.
In fiscal 2005, we began the roll out of PetsHotel, a full-service in-store boarding facility for dogs and cats. The
PetsHotel experience includes 24-hour supervision by our safety-certified and trained caregivers as well as an on-
call veterinarian, temperature controlled rooms and suites, daily specialty treats and playtime. In addition, each
PetsHotel offers Doggie Day Camp
SM
, a day camp service for dogs in climate-controlled play rooms with other dogs
and our safety-certified, pet-loving staff trained in behavior assessment. As of January 28, 2007, we operated 62
PetsHotels, and we estimate an ultimate build out of 435 PetsHotels. Pet services net sales grew by 26%, 24% and
24% in fiscal 2006, 2005 and 2004, respectively. We are confident in our ability to continue to expand the pet
services portion of our business.
As of January 28, 2007, there were full-service veterinary hospitals in 608 of our stores. Medical Management
International, Inc., a third-party operator of veterinary hospitals, operated 596 of the hospitals under the registered
trade name of Banfield, The Pet Hospital. The remaining 12 hospitals are located in Canada and operated by other
third-parties.
Offer superior customer service. Our emphasis on the customer is designed to provide our customers with an
unparalleled shopping experience every time they visit our stores. Using a detailed associate learning curriculum
and role-playing techniques, we educate store associates to identify customer needs and provide appropriate
solutions. We measure their success in every store, and a portion of the annual incentive program for the store
management team is linked to key customer service and in-stock metrics. By providing pet parents with expertise
and solutions, we believe we are strengthening our relationships with customers, building loyalty and enhancing our
leading market position.
Differentiate ourselves through effective brand management. We are focused on developing and strength-
ening our brand identity. In August 2005, we announced a new marketing campaign that repositioned the PetSmart
brand from its reputation as a “Mart” to “Smart,” to emphasize our capabilities as a resource of information, services
and solutions. As part of the campaign, we changed our logo to highlight the “Smart” piece of the PetSmart name
and rolled out new advertising that emphasizes our unique offerings for customers.
We are creating tools to effectively communicate our unique value proposition and our ability to provide Total
Lifetime Care for pets, and we continue to build enduring relationships with our customers. We have completed the
rollout of PetPerks, our customer loyalty program. As of January 28, 2007, PetPerks was available in all PetSmart
stores. We will continue using a centralized customer database that allows us to track and analyze customer
shopping patterns. We use this information to customize direct marketing and promotional materials and to more
effectively communicate with customers across all channels.
Drive efficiency and create a consistent customer experience by focusing on operating excellence. Our
operating excellence initiative — which emphasizes retail basics like store cleanliness, short check out lines, a
strong in-stock position and the care of the pets in our stores — allows us to provide a consistently superior
shopping experience, even as we grow. It simplifies processes, makes our stores more efficient and easier to operate
and allows associates to be more productive.
We believe these strategic initiatives will continue to drive comparable store sales growth, profitability and
return on investment.
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