Anyone with a pet has likely seen the cost of their pet's food skyrocket over the last couple of years. Why?
Chewy CEO Sumit Singh (CHWY) says the company has seen “an unprecedented amount of inflation that has passed through the system.” He says that over the last three years, prices have risen by “double-digit percentages” instead of the 2% to 4% that used to be the norm. Singh says that though there is still a floor under prices, what consumers could “expect the latter half of this year is incremental discounting as both vendors and retailers… lean into both incent demand generation and as well as conversion.”
Check out the full interview with Chewy CEO Sumit Singh here and for more expert insight and the latest market action, click here to watch this full episode of Catalysts.
This post was written by Stephanie Mikulich.
Video Transcript
I did a casual shirt.
Search your website, a couple others dry dog food, 40 bags of dry dog food.
I was looking for Blue buffalo, $65 and this stuff is pretty expensive.
What is your outlook for inflation?
Maybe you could speak to the consumer environment.
Are prices for any of these products for food for pets going to come down at any point this year?
Yeah, so, Brian, it's a great question.
You know, what we've seen the last few years is an unprecedented amount of inflation that has passed through the system.
Normally, when you look at PET over a 1015 year period, you know, it's, uh it's natural to expect pricing to be somewhere between the two and 4% range on a comp basis.
And yet the last three years has been in double digit percentages.
You know, now, I, I started this call by saying that we have started to see that come down into the low, low single digit starting this quarter.
And you know most of pet food and consumables is map compliant, which is there is actually a floor underneath.
You know, the the pricing and brands do a good job maintaining that pricing structure.
So not really expecting, you know, something structural to change in pricing moving forward.
But what we could expect the latter half of this year is incremental discounting, as both vendors and retailers sort of lean in to both incent demand generation as well as conversion.
And we're starting to see that you know, treats are seeing a little more elasticity than they were in the past, so that I think trend will continue to the back of the year.
We've incorporated that in our guidance, we expect higher profitability even as a result of that, and we'll pass that value on back to the consumer.
