PETCO & PETsMART: Animal Welfare Advocates — Or Antagonists?
by Denise Kelly, Founder and Director, Avian Welfare Coalition (AWC)
Over the years, two giant retail chains, PETCO and PETsMART, have made some genuine contributions to the cause of animal welfare. By refraining from the sale of dogs and cats, these chains have helped curb pet overpopulation. What's more, PETCO and PETsMART have extended an open door policy to rescue groups by allocating space in their stores for pet adoption programs and providing funding from their charitable arms to support spay/neuter programs. Of course, the two chains have capitalized on these positions, reaping goodwill and publicity among the animal welfare community and the public at large — publicity that has undoubtedly contributed to the growth and financial success of both companies.
Unfortunately, PETCO and PETsMART's policy regarding animals other than cats and dogs is less humane. These chains have made the situation worse for exotic birds, reptiles, rabbits, and other small mammals by mass marketing them in increasing numbers. For those who are dealing with abandoned or relinquished animals of this sort, many of them originally sold through PETCO or PETsMART, the picture isn't as rosy.
Is it time for animal advocates to step back and consider the bigger picture as to what impact PETCO and PETsMART's policy of selling live animals will have down the road?
The Issues: A Question of Ethics and Responsibility
How Many Animals Do PETCO and PETsMART Sell?
The answer is we don't know. Despite the fact that Both PETCO and PETsMART are publicly traded companies, they have yet to disclose any information as to the actual numbers of animals sold annually. In addition, both companies have failed to provide figures such as animal death rates, animal illnesses, store closures as a result of illnesses, numbers of unsold and "surplus" animals, or any specific statistics on veterinary expenses or the total cost of maintaining animal sales operations.
What we do know is that even PETCO and PETsMART investors are given no details about animal sales. Upon close examination of the annual reports of both companies, statistics related to animal sales are buried under categories such as "Pet Supplies and Small Animals" (PETCO) or "Non-Pet Food Sales" (PETsMART).
PETsMART proudly promotes the fact that since 1994 more than 1,700,000 pets' lives have been saved through their in-store adoption programs. In stark contrast, they have yet to disclose any information whatsoever regarding the number of animals they have sold.
In 2002, PETA sought to get some answers. The organization filed an SEC complaint in which it cited two key items from PETCO's annual report, and subsequently filed a shareholder resolution in order to obtain important information related to the sale of live animals. To date, neither PETCO nor PETsMART has been forthcoming with statistics or information regarding the disposition of animals in their stores — important facts that the animal welfare community should know and are entitled to know. PETCO responded that exact figures were "proprietary information."
However, PETCO CEO Brian Devine did admit in official public statements that less than 5 percent of the company's revenue comes from animal sales. Based on total sales of $1.5 billion generated in fiscal year 2002, and assuming that 5 percent is a close approximation, that would put the annual revenue generated from animal sales at approximately $75 million — 37 times the amount the PETCO Foundation donated to animal charities during the same year.
Even considering that the figure may be less than 5 percent, clearly the revenue derived from animals sales in PETCO and PETsMART far exceeds funding by their charitable arms of spay/neuter and adoption programs for dogs and cats. It is also evident that the total number of animals adopted through PETCO and PETsMART to date is a fraction of the combined number of birds, rabbits, reptiles, and other small animals they sell annually.
The Price of Charity:
Since its inception in 1999, the PETCO Foundation has raised approximately $17 million for pet adoption and spay/neuter programs. During this period, the company's net sales exceeded $5 billion.
PETsMART Charities, founded in 1994, contributed a total of $31 million to animal welfare organizations through 2003. During the same 10-year period, PETsMART had net sales of approximately $18 billion.
The fact that PETCO and PETsMART are associated by name with their charitable foundations may lead one to assume that the corporations are providing all the funds. That is not the case; a large percentage of the monies are raised through in-store promotions and fund-raising drives and are contributed by PETCO and PETsMART customers and employees. Nonetheless, both companies gain much in the way of goodwill and free publicity from humane societies, rescue groups, and animal welfare organizations.
What portion of PETCO and PETsMART's total sales can be attributed to their connection with the events, publications, and web sites of humane organizations — mediums that reach the millions of people who contribute to these groups and who are likely to patronize their stores as a result?
Many grassroots rescue groups have come to depend on PETCO and PETsMART because they receive donations from these merchants, because they have developed good relationships with local managers and staff, and because PETCO and PETsMART locations provide much-needed exposure for their homeless animals. It is understandable that these groups may not be willing to sever ties with these retailers since their first priority is to find as many homes as possible for the animals already in their care.
Large national animal welfare organizations also rely on PETCO and PETsMART to sponsor events, conferences, and adoption and spay/neuter programs and to provide funding for public education campaigns. In turn, this relationship enhances PETCO and PETsMART's image with these groups and with the animal-loving public.
But what is the price of that support? By working hand in hand with marketers of live animals, aren't humane organizations contradicting their own principles with regard to live animal sales? Wouldn't adherence to one of our most basic humane values — that living creatures should not be treated as 'merchandise' — foster the kind of respect for all animals that might help put an end to the cycle of animal homelessness?
One solution might be to encourage dog and cat rescue groups at least to avoid hosting special events and promotion at stores that trade in live animals. Special events in coordination with pet supply stores and other pet-related businesses that do not sell live animals will give much needed exposure to truly responsible and compassionate retailers and may also serve to increase adoption rates, since these groups would not be competing with live animal sales in the same location. At the very least, humane organizations should seriously consider the possibility that, rather than solving a problem by allying themselves with PETCO and PETsMART, they are merely trading one problem for another.
The Financial Picture: Through the Looking Glass
An article that appeared in the July 14, 2003, edition of the business weekly Barron's stated: "PETCO'S chief financial officer, James Myers, adds that plans to convert up to 50 of its existing stores into a new format that will place live animals store center, which should further sales of companion pets, could help those stores see mid-single-digit sales increases, (increases some converted stores already have registered)."
This is a clear indication that PETCO is moving away from being just a pet-supply store to also being a pet store. Placing live animals "store center to further increase sales" is an aggressive strategy that will encourage impulse sales.
The article went on to state that Mr. Myers sees the biggest growth catalyst as the "increasing humanization of the way we view pets." It is unfortunate that Mr. Myers fails to recognize that treating intelligent and active animals as merchandise and shuffling them through a mass distribution system is anything but "humanizing."
Another example of the foray into marketing live animals is PETsMART's Preferred Birds, originally founded as a partnership between PETsMART and Kaytee, a leading bird food manufacturer, and now solely owned and operated by PETsMART. This program involves the shipment of unweaned birds from breeders to PETsMART's holding facilities, where they are prophylactically treated with antibiotics, "hand-raised" — a term which can be misleading as birds are fed by tube or "gavage" methods — and then shipped to PETsMART stores. The program has been denounced by respected avian behaviorists, veterinarians, breeders, and trainers, because it significantly reduces the time necessary for the normal social, physical, and emotional development of parrot chicks.
The Association of Avian Veterinarians' (AAV) Position Statement Regarding the Sale of Unweaned Birds states, "The AAV opposes the sale or transfer of unweaned birds to individuals KNOWN not to possess the necessary level of experience in accordance with accepted avicultural industry practices." Further, "The AAV STRONGLY RECOMMENDS that birds be of sufficient age and condition before undergoing the rigors of transport, and that said birds be capable of withstanding the complications associated with such transport."
Again, PETsMART has not divulged the actual number of birds produced annually through this program. However, when the Preferred Bird Program first gained public notoriety through the Pet Bird Report in the spring of 2000, PETsMART veterinarian and Director of Quality Assurance for Pet Care, Dr. Nick St. Erne, proudly claimed that each production facility would be capable of holding 3,000 chicks at a time thereby delivering 180,000 a year to PETsMART stores. At that time five such facilities were planned. Considering the potential longevity of species commonly sold, simple arithmetic illustrates a looming crisis.
Both PETCO and PETsMART are pursuing a marketing strategy that aggressively promotes live animal sales as a means to maximize profits and generate more product sales. And the two companies are expanding to new locations (both indicated goals of 900–1,000 stores nationwide), creating an even bigger distribution system that will bring more animals to market than ever before. More stores will result in more animals being sold and, inevitably, the potential for more to become displaced.
As publicly traded companies, both PETCO and PETsMART are focused on bottom-line profitability and enhancing shareholder value for their investors.
Should profits decline, how will this affect policies and operating expenses related to key areas of animal care, including qualified staffing and veterinary services?
Wall Street: The Tail Wagging the Dog
The growth and profitability of PETCO and PETsMART, along with the expansion of the companion animal industry, is leading other players onto the field and sparking the interest of Wall Street investors.
Woof & Co, a new chain of upscale pet lifestyle stores, recently announced it will also be expanding to more locations. The company's plans to sell puppies supplied by a Missouri-based puppy broker, the Hunte Corporation, immediately drew sharp opposition from animal welfare organizations and activists.
The March 2004 issue of Pet Product News featured an interview with the representative of a Chicago-based investment bank who stated, "The pet industry will remain an attractive target for investors for the foreseeable future." He went on to explain that his firm is "positioning itself as a leading advisor for both pet industry companies and outside investors seeking to break into the sector, with an emphasis on middle-market companies with annual sales between $15 and $500 million."
Pet Supplies Plus, a chain of 200 stores is following in PETsMART and PETCO's footsteps. While President and CEO Harvey Solway stated, "We never carry dogs or cats. Dogs or cats that you would see in a Pet Supplies Plus store are there for adoption events we sponsor with various animal rescue organizations," most of their stores carry freshwater fish, small animals, birds, and reptiles. Pet Supplies Plus also plans to carry more livestock in the future.
Keep in mind that there is no federal regulation governing the treatment of animals in retail pet facilities. While each of the fifty states has enacted its own unique animal anti-cruelty statutes, only twenty-four states have enacted laws that establish some form of humane care standards for animals kept at pet shops. Most pet shop laws barely cover minimum standards of care for cats and dogs, let alone provide for the complex care of exotic species.
According to the American Pet Products Manufacturers Association (APPMA), the amount Americans spend on pets and pet care has doubled in the last ten years, from $17 billion in 1994 to $34.3 in 2004.
The fact that people are spending more on products and services to improve the lives of their animals is certainly good news, especially for the animals.
However, of that figure, more than $1.6 billion is now spent annually on live animal purchases…a sad fact considering that humane societies and animal control organizations are still struggling with the difficult issues of "surplus" animals. An estimated 5 million dogs and cats are still being put to death each year, and this figure does not take into account birds, small mammals, and other exotics.
Is the success of the pet industry sector leading to a situation in which the bottom line will end up taking priority over what best serves the welfare of animals? And what will the consequences be for animal welfare, protection, and rescue groups already working with limited funding and resources? Will they ultimately be dealt the job of caring for the casualties of the pet industry's prosperity and lack of restraint?
Consistency and Credibility: That Is the Question.
Unfortunately, those dedicated to working for the welfare and protection of animals know all too well the tragic results of having too many animals and not enough good, qualified placement options.
In summary, now is precisely the time that PETCO and PETsMART's practices and policies regarding the sale of live animals take center stage among animal welfare advocates.
True, both companies have supported humane societies and rescue groups by providing funds and by sponsoring the adoption of homeless dogs and cats as opposed to selling them — policies that raised PETCO and PETsMART's status in the animal welfare community. They should be commended for their efforts to curb pet overpopulation and provide assistance to animals in need.
But we are sending mixed messages when we tell the public not to support mass breeding and to reduce pet overpopulation by not shopping at stores that sell puppies and kittens, yet continue to advocate for two companies that are building a mass merchandising operation for birds, reptiles, rabbits, and other animals based on the very same conditions we've been opposing for years. Despite the sterling example that PETCO and PETsMART have set for dog and cat welfare, the bottom line is that they are in essence engaged in the very same distasteful retail practices that treat live animals as merchandise and encourage the very conditions that lead to pet overpopulation.
Where do we draw the line?
 Source: CNBC Morning Call, December 20, 2002, Interview with PETCO CEO Brian Devine. Quote: "Live animal sales actually are less than 5% of our business."
Copyright © 2004 Denise Kelly, Avian Welfare Coalition (AWC).
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All material Copyright © 2002–2010 Avian Welfare Coalition, unless otherwise noted. Contact us to request reprint permission.
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