How does it feel to be back, after about a five-year hiatus, as the chief executive of Phillips Pet Food & Supplies—a company your grandfather effectively founded more than 80 years ago?
It feels great to be back. Up until the time I retired, Sheryl and I worked very hard to build the company from a small, regional player into the national distributor network we are today. My grandfather opened a single store in 1938, and I spent my whole life building the business, so running Phillips is second nature to me. When the opportunity came up to return to the company, it was easy to say, “Yes, it’s the right time for me.”
Even though many things have changed, when I jumped back in, it really didn’t feel like the business changed all that much. I was able to come in and start contributing right away.
While my name happens to be Phillips, the company was built by and our success comes from the dedicated associates and leaders who drive our business. That strong organization of professionals is what makes us successful in creating value for both retail customers and vendors, which continues to be our mission today.
How has the company changed since you left your role as CEO in 2016? How has the industry changed?
Some things haven’t changed—the demand for food and pet supplies is at an all-time high, so it continues to be a really innovative and dynamic industry. Pet ownership is at an all-time high as many people—me included—have found the companionship of pets to be essential during the pandemic. Of course, because of all the growth in the pet care market, there are stronger competitors that did not exist 10-15 years ago—whether that’s e-commerce retailers or big, national chains. However, I know there’s room for everybody to be successful.
One thing Phillips has always taken pride in is our ability to recognize the change that is coming and get ahead of it, so we can create value for our customers and vendors. That was what drove our strategy going back to 2008/2009, driving both acquisitions and organic location growth to build us into a national distributor network. We had to scale our organization to provide customers with an effective supply chain to meet their needs and put them on a level playing field with larger outlets. Operational scale, efficiency and a national footprint gave us the ability to provide specialty services, like handling fresh and frozen foods.
Recognizing change and innovating to meet evolving needs has also enabled us to offer customer services like Endless Aisles, which has been really important as e-commerce has taken off over the past several years. Endless Aisles allows us to leverage our supply chain capabilities to ship a wide assortment of pet products to our retailers and their consumers. Now, retailers don’t necessarily have to stock everything in their stores, and they can meet the demands of consumers who would like products shipped directly to their home. It’s another example of how we strive to offer services that allow our retailers to provide products to their consumers any way they want to purchase.
What are your short- and long-term goals and expectations for Phillips Pet Food & Supplies moving forward?
My long-term vision is to maintain our position as the leading distributor of food and supplies to the pet industry. Of course, we want to continue to build scale as an organization—but, more importantly, we want to create value for our vendor partners and our retailers while, at the same time, making Phillips a rewarding place for our associates to work. That’s my vision and mission.
I’m confident that if we continue doing those things, we will be successful.
What adjustments has the company made in order to operate effectively during a pandemic?
With the resilient demand we have experienced in the face of COVID-19, the pet industry has been fortunate compared to other industries. However, the pandemic has caused some supply chain complexity on the vendor side. Some may not have access to products that come from overseas, or raw materials that might be in short supply. So, as a partner to our vendors and customers, we’re trying to take bigger inventory positions to make up for some of the shortfalls that have been seen on our inbound side.
Taking those inventory positions requires more capital. In addition, wages and transportation costs have continued to rise, as have other operational costs including those that come with making sure we provide our associates with the safest work environment possible. So, our overall cost to serve has increased due to the pandemic and a more challenging cost environment.
How is Phillips Pet Food & Supplies helping its retailer customers get through the pandemic?
We talked about Endless Aisles, which has given our retailers the ability to expand the depth and breadth of what they can offer consumers. We’ve significantly upped our game on that end.
In addition, knowing that we can’t have our sales associates visiting stores the way we used to in the past, we’re using the capabilities that we have on the digital side of our business to update our retailer customers about products and promotions—basically, all of the things that we are usually able to present in person we now can do digitally.
As I mentioned earlier, we are maintaining a higher inventory position to better support our customers’ needs. As we have always done, we will continue to invest in our infrastructure, team and the overall capabilities of the Phillips organization in order to provide excellent service to our customers and vendors and support their future growth.
Other than the pandemic, what are the biggest challenges facing the pet industry? What opportunities do you see ahead for the pet industry?
This is a pretty resilient industry, but it will continue to change. We all have to adapt to those changes and continue to modify our business, so we can continue to play a vital role in the pet industry. Some people might look at that as a challenge, but I look at it as an opportunity to stay ahead of our competitors and stay relevant in an ever-changing industry.
This has always been a relationship business, and I’m looking forward to seeing people again in person—our associates, customers and vendors. I’m excited about getting back to trade shows and industry events. I also can’t wait for the opportunity to stop by our customers’ stores, thank them for their business and support over the years and ask them, “What can we do to serve you better?” PB