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Although PetSmart has been performing well in the market since its inception way back in 1986, the animal retail store operates under myriads of challenges. For instance, some of its top executives have stepped down and sold their shares. A case in point was the resignation of Kullman. He was a long serving Chief Executive Officer and Chairman of PetSmart. Although he appreciated his tenure at the company, his departure left a mark that could not be filled easily. The CEO developed a viable financial business plan for the company.
The search for an able chief financial officer was not an easy task for PetSmart due to the demanding nature of the business. The pets business required someone who could effectively manage the daily operations of the company and offer the right guidelines for the future (‘PetSmart announces an 18% increase’ par. 5). The company suffered for some time due to poor financial reporting and control. As a renowned specialty pet retailer in the United States, PetSmart went through a difficult management period when most of its senior officers sold their shares and left the company.
In 2013, David Lenhardt, the CEO of PetSmart proposed some changes that would drive the growth of the company. PetSmart was already one of the most potential market leaders in the pet industry. Lenhardt observed that the company was not yet at the peak of its performance.
Therefore, there was urgent need to evolve the operations and expand the target market of PetSmart. For a long time, the company has served the high end of the market and perhaps ignored the ordinary pet enthusiasts. In the next three years, the company expects to expand its market base. Plans are also underway to launch a program that can train and accredit dogs as therapy pets.
After the departure of some shareholders, the management of the company is currently instituting radical changes that will retain the remaining shareholders (‘PetSmart Ups Shareholders Value’ par. 2). Lenhardt asserts that PetSmart is a seven billion dollars company. Besides, the company runs over 1,300 retail outlets in North America. Hence, the strong cash generation being enjoyed by the company should be replicated to shareholders.
The CEO emphasizes that the organization is mandated to employ consistent and sustainable ways of reverting cash to the PetSmart’s shareholders. In other words, there are plans to reward shareholders of the company based on the impressive performance. Such a strategic line of action will retain and enhance the trust of shareholders towards PetSmart.
Inventory management is yet another challenge at PetSmart. The frequency of inventory turnover over a given period is a critical factor that should be considered particularly in the pet business portfolio. It appears that average inventory and the overall cost of goods sold at the company have failed to produce the best market outcomes. As much as the company is a market leader in the pets business in Canada and the US, there is a growing competition each day. A turn over of 1.67 was recorded by the close of January 2014. This implies that the average inventory is still high. Alternatively, PetSmart should work out modalities to increase the cost of its products so long as the expectation of the targeted market is met.
Since there is need for the company to reduce its inventories and plough back the accrued benefits to shareholders, less finances should be spend on materials used to run the pet stores. As a matter of fact, the company is bound to reap the benefits of reduced shipping expenses because a low inventory will free up funds. In addition, reduced exposure to loss will lower the insurance premiums. The management at PetSmart can target fresh markets and open up additional retail stores to serve local customers (‘Company History’ par. 3).
Effective market competition should be a key driving force for PetSmart. Needless to say, it may not be adequate for the company to be listed in the stock market. Publicity and rigorous marketing strategies are urgently required at PetSmart. Due to the high rate of growth in the pet industry, the company can only remain viable if it adopts other effective marketing platforms. For example, the retailer can transform itself into a fully-fledged online shop. This does not imply that it should halt the operations of its physical stores in Canada and the United States. In fact, the physical stores can be expanded but also streamlined according to the growth prospects of the company.
An online store coupled with an e-Commerce platform will enhance the global visibility and product sales of the company. A global audience can be easily reached through a customer friendly online store. In other words, marketing opportunities and improved sales are core benefits of an online business. This type of business platform also enhances greater flexibility. For example, instant updates can be made depending on the emerging needs. Costly printed display materials are not required in an online store. Generally, PetSmart will significantly benefit in the presence of an online store due to an extra buying channel especially if an e-Commerce website is put in place within the next three years.
Works Cited
Company History. 2010. Web.
PetSmart announces an 18% increase. 2012. Web.
PetSmart Ups Shareholders Value. 2012. Web.
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