2015 Distributor of the Year: Phillips Pet Food & Supplies
Phillips Pet Food & Supplies, Pet Business’ 2015 Distributor of the Year, has grown into a valuable partner for independent pet retailers nationwide in today’s highly competitive marketplace.
Phillips Pet Food & Supplies seems to be a company that is always in the right place at the right time.
Officials at the Easton, Pa.-based distributor have made it a point to be positioned for changing trends in the marketplace, whether it was a shift from being an agricultural/feed wholesaler to a distributor of pet products or focusing on certain types of retailers to partner with.
The result, of course, is the creation of the largest and arguably the most successful pet product distributor in the country, working with more than 500 vendors and servicing as many as 12,000 retail storefronts. The privately owned company, which employs more than 1,600 people and operates 15 distribution centers from coast to coast, has also established itself as retailers’ go-to source for affordable, integrated business solutions to help them be more successful as pet merchants.
For these reasons, Pet Business has chosen Phillips as its 2015 Distributor of the Year.
“I think when we decided to go after the pet market, we also decided to make sure that we surrounded ourselves with the best people possible,” says CEO Blaine Phillips, who represents the third generation of the family to run the 78-year-old company founded by Ralph Phillips in nearby Germansville, Pa. “We knew that if we wanted to get ahead, we had to be hungrier and faster than the competition, and we had to take a chance on brands and geography.”
Obviously, the strategy has worked out quite well. As recently as the mid-1990s, Phillips was a regional operation, confined to mainly eastern Pennsylvania and still finding its way after years as a feed distributor residing on the outer reaches of the New York metropolitan area. But the company made some canny acquisitions around that time, including the purchase of Premium Pet of Lakeland, Fla., and the New York metro-area distribution territory of Rick’s Saddle Shop, which ignited a buying spree that continues to this day.
“Our life has been about building a bigger and better company,” Phillips says. “We always realized that first we needed to invest in people before we could even afford to hire them, to make sure that we were ahead of the curve. I think the Premium Pet acquisition shows that. We were a small operation at that point, but when a customer said he wanted to exit the business, we jumped on it even though it was 1,100 miles away in Lakeland, Fla. It was a big leap for us, and I don’t think most companies would have had the courage to do it.”
The road to success has had its potholes. Phillips says that a late 1990s purchase of a company in Georgia went bad and nearly killed the company. “Instead of folding up, we learned from that and figured out how to handle a tough situation,” he notes. “We learned that you do what is right for the business even though it may be emotionally hard. We realized the importance of being honest to our employees and vendors, and not being afraid to say we made a mistake.”
The buying continued, with more than 20 businesses brought into the fold over the past two decades. Phillips purchased Efland Distribution to expand further in the southeast and Valley Pet Supply in 2008. The next year, it bought Super-Dog Pet Food Company to gain a foothold in the northeast and other northern states, a move that Phillips says catapulted the company forward.
Over the next two years, right after Phillips partnered with a private equity company that immediately gave the company more resources to grow, it purchased Chart Pet Nutrition & Supplies to expand into the Midwest. That move was followed by the acquisition of Mike’s Feed & Farm, C&K Distributors, Anjo Distributors and K&W Distributors. In the last two years, with the support of its private equity partner, Phillips purchased Royal Pet Supplies to open the door to the aquatics market, PFX to expand into the west coast, Wolverton Products, Gardner Distributing and Dizzy Dog Industries.
“Our private equity partners [AEA Investors and Thomas H Lee Partners] gave us the extra funding we needed for the next step,” Phillips says. “We knew we needed to accelerate our growth, and we knew we could not do it with our own resources. My grandfather and father—our founders—would be amazed and proud of how we transitioned from our very small beginning to who we are today.”
Getting larger by acquisition was only part of the plan. Phillips and his executive team have long realized the importance of intimately working with pet food and supply retailers—particularly the independents—on their own business plans and strategies, especially as the retail pet business becomes more competitive and standing out in a crowd becomes more difficult. That is where the expertise of his staff comes into play.
“We are passionate about the independent channel,” he says. “Those are the retailers that gave us our start, and they are still very important to us. Now we can offer them a wide range of integrated solutions to help them be better, more efficient merchants.
“In the past, many of these independent retailers didn’t have an economical supply chain, and that hurt them competitively. We knew for the independent pet retailer to be successful, we had to develop a program that passes along the synergies and savings to them.”
Phillips also works with its retail partners to develop the proper marketing support. Through the company’s iT Kit, retailers can take advantage of a number of services, including store design, loyalty programs, finding the most competitive insurance rates, payment processing and web support, to develop the right infrastructure to be as competitive as possible. The company also offers its retailers a monthly full-color promo book that contains special deals and promotional offers, email marketing, specialty catalogs and point-of-purchase materials.
“Our role is to be their partner and to help our retailers be the best merchants they can be,” Phillips adds. “The independent retailer is still healthy, and they are becoming better operators and more focused on their business. We want to provide more expertise to them.”
Phillips also stresses his company’s strong ties with vendors and the portfolio of products it can offer retailers through those relationships. The company, he says, can offer its partners—retailers and suppliers—reliable and in-depth data about the pet market, and its employees have a very strong knowledge of the various aspects of the industry. “We hope that our vendors understand how we can be their partners too,” he says. “We know what makes a brand successful and where it sits in the overall marketplace. So we encourage them to be in touch with our sales and marketing teams as well. Our pitch to them is simple: If you want to get your brand on the map, Phillips is the best choice.”
Of course, Phillips is not shy about proving these facts. The company’s four regional buying shows (West Coast, New England, southern and mid-Atlantic) have become must-attend events for many retailers and suppliers. Phillips also has a major presence at Global Pet Expo and SuperZoo, the two annual, national pet shows.
The future looks bright, according to Phillips. For one thing, he is confident that the pet industry has a lot of upsides, and independent pet operators will remain an important part of the mix. “Pets are, more than ever, a part of the family; and consumers are taking better and better care of their companion animals,” he says. “They want the best foods, accessories and treats for them, and it is very important that we help our retail partners offer these items in the right environment.”
Also, he adds, more new people are entering the pet category, and he is seeing more single-store startups than in the recent past. “I am confident that the independent pet retailer will continue to do well,” Phillips notes. “It is our job to continue to use our scale to find ways to benefit them in regards to pricing and services. We want them to be a viable source to buy products from.” With the support of Thomas H Lee Partners, its successful track record and an industry that continues to grow, Phillips is extremely confident that the company will increase in size. The next step, he says, is to fill in its reach within the U.S.