2018 Pet Age Distributor of the Year: Phillips Pet Food & Supplies

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The year is 1938. Seabiscuit beats War Admiral in the “Race of the Century,” WWII is a year away from breaking out and H.G. Wells is causing mass panic in the U.S. with his “The War of the Worlds” radio broadcast. Of course, 1938 is also the year Phillips Pet Food & Supplies got its start, for it was 80 years ago that Ralph Phillips founded his feed store in Germansville, Pennsylvania.

It was from that feed store that Phillips’ journey to becoming a top distributor of today began. Over 20 years later, in 1959, LaVern Phillips opened the Phillips retail store in Bath, Pennsylvania. Then, 25 years later, in 1984, Phillips entered the wholesale business. For the next three decades, Phillips acquired other distributors, expanding its reach to different territories throughout the U.S.

Today, Phillips has 13 distribution centers and multiple cross docks across the nation, servicing pet stores, aquatic stores, feed and farm stores, groomers, veterinarians and humane organizations. In all, the 13 warehouses have more than 230 trucks going on over 860 routes per week, delivering to more than 12,000 retail customers.

The pet industry has changed a lot since 1938—including in sheer size—but all the while, Phillips has stayed on top of those changes. And especially recently, Phillips has not only stayed on top of the changes, but has been the force of change.

According to the Phillips website, the company’s promise is to provide “customers with the products and services that will contribute to the growth and profitability of their business.” But the company also says it is “committed to the changes in technology and the effects it has on our industry,” offering “website ordering, scanners and barcode catalogs to help the ease and accuracy of orders.”

There’s also been several major technological additions to uphold that commitment.

Phillips purchased online retailer PetFlow in early 2017, re-directing the site’s efforts to help local pet stores, and then launched Endless Aisles, an online platform that gives retailers and their customers access to thousands of Phillips-distributed products not sold in-store. With each development Phillips has had over the past year or so, there was one thing that was top of mind: how will this help the independent pet retailer?

“What we’ve done here in the last year in particular is really focus on the vision we want to employ to our retailers and to our brands, and that’s with our industry-leading platform, making sure we can delight the consumer by supporting our brands, manufacturers and retailers,” said Jeff Poore, SVP of Operations and Supply Chain for Phillips. “We’ve made significant investments in our distribution platform… We have an industry-leading safety platform and an industry-leading food safety platform, which we’re very proud of, but more importantly, we’ve greatly improved our service dynamics to our retailers.”

Bolstering this push to stay a distribution leader is the strong value system Phillips upholds.

“I joined three and a half months ago, and what really drew me to [the company] was the value system that Todd [Shelton, Phillips CEO] and the rest of the leadership team have spent the past year, year and a half, fostering within the organization,” Phillips VP of Merchandising Elizabeth Thibodeau said. “So we really lead, live and breathe [our] core values.”

Some of those values include creating a sense of empowerment for the team, honing a passion for independent pet and acting with integrity, Thibodeau explained, and it is these core beliefs that the 1,400 Phillips employees think about day-to-day as they serve their customers and strive to make the industry a better place.

“You’ll hear Todd use the phrase, ‘We see the world as it is,’ a lot. We understand what’s out there, the issues that need to be resolved, the things that are going really well. We take actions to accelerate those that are working and we work quickly and swiftly to resolve opportunity areas,” Thibodeau said.

A True Partnership

A part of Phillips being able to see the world as it is comes from the strong relationships it develops with its vendors and retail customers. As Phillips nurtures those partnerships, a space for open discussions and idea sharing is created. This true business relationship—as opposed to just a transactional one—is what Petmate CEO Alice Tillett appreciates.

“They’ve embraced technology changes, they’ve embraced the whole idea of category management and going in as a team approach, working together—I think that has helped our business tremendously,” said Tillett, whose company has worked with Phillips for about 20 years and is distributed to nearly 12,000 storefronts by Phillips. “… One of the things they were very open to was working with us to be able to provide to the pet specialty a united front and being able to bring what we both do well together, not just this supplier-distributor relationship.”

When choosing which brands to bring on and start this relationship with, Thibodeau says Phillips looks for companies that have a clear product positioning and that understand the Phillips market as well as the trends that are leading the industry, such as the humanization of pets and the premiumization of food.

Of course, Thibodeau points out, trends change. And over the past 80 years, Phillips has seen many trends come and go. To ensure Phillips is partnering with brands that are aware of the changing trends, Thibodeau says the company looks at the attributes a brand possesses and the role that brand plays in the trend curve.

“Grain-free has been around in the marketplace now for a number of years. Human grade and the fresh and frozen side of the business is a relatively newer and emerging trend, and so as we look at building out our brand and product portfolio, it’s really important that we are able to deliver a relevant, compelling assortment of brands and products that deliver against those trends,” she explained. “So part of what our role as an organization is to understand those trends, understand the brands that fit those trends and identify how we deliver those to both retailers and consumers in the market.”

Right now, Phillips works with more than 275 vendors and brands. And Poore makes note that it’s important these brands work with Phillips “on how to get that market penetration with the vast diversity with how the consumer goes to market— whether it’s through e-comm, whether it’s through the normal neighborhood store, or wherever they shop. There’s great diversity as to how the consumer can get to those brands. It’s really important that both the brand and the distributor work together to be able to target how their customer is going to get the product.”

WHIMZEES, which has been a Phillips vendor since 2013, has worked with Phillips to reach new retailers the brand would not have otherwise been able to reach, according to Camelle Kent, CEO of WellPet, parent company of WHIMZEES.

This ambition to expand its reach is one of the main reasons WHIMZEES signed on with Phillips. Kent also appreciated how the companies’ ideals matched.

“WHIMZEES chose Phillips as a distributor because they are a company whose values aligned and continue to align with ours: they put their customers first, they are interested in carrying only the best product,” according to Kent, who says that Phillips carries the entire WHIMZEES assortment in almost all of its warehouses.

Supporting Independent Pet

Mud Bay, a chain of pet stores in the Pacific Northwest, is one of the retail companies that works with Phillips, and according to Mud Bay Chief Merchandising Officer Al Puntillo, the partnership—which started last September— has been “unbelievable” so far.

With the partnership came the additions of several large brands to Mud Bay stores. The first two brands were Fromm and Natural Balance; Petcurean was just launched at Mud Bay in April.

“[Our Petcurean launch] was a tremendous undertaking,” Puntillo said. “Anytime we launch a new brand at the stores, it’s a lot of volume going into the stores in a very short amount of time, and Phillips does great.”

This strong distribution service Phillips offers is one of the primary reasons Mud Bay chose to partner with the company.

“We have a lot of stores. We need a multiple-times-a-week delivery, we do nighttime delivery, so there’s a lot of customization that’s needed to service our account,” Puntillo said. “We have really small backrooms in our stores. It’s complicated. We need a certain sophistication from a distributor to be able to do it.”

And Phillips gives them that sophistication. Mud Bay has 45 locations in Oregon and Washington, and with five more locations scheduled to open, there will be 50 by year’s end. The transition to using Phillips has especially proven just how vital the stores’ distributor partners are to the chain’s wholesale operation, according to Puntillo. And right now, Phillips is Mud Bay’s fastest-growing distributor, he said.

“Their ability to turn around POs in the same day [is unmatched]. We place a PO today, it gets delivered tonight,” Puntillo said. “So yes, there’s absolutely no doubt they’re a huge part of our sales. And sales this year, because of some of the improvements in supply chain and fulfillment Phillips has brought, are higher than they were this time last year.”

Poore says the top-notch distribution service retailers like Mud Bay receive is a testament to how dedicated Phillips is to the independent pet retailer. And Phillips feels the need to focus on independent pet because of the passion those retailers have for the space and their customers, Poore explained.

“We grew up 80 years ago serving that customer, and it’s always been the core of who we are, even though there’s been a rise of larger retail chains and e-comm,” Poore said. “The core of our business continues to be the independent pet retailer, and I don’t think we’ll ever change that.”

Ahead of the Curve

In fact, the reason Phillips recently made its investment in Endless Aisles was to support the independent pet retailer, Poore said.

The platform is a way for independent retailers to enter the digital space and compete online, an ability Phillips thought was not being served in the marketplace.

Choice Pet felt the same way. The retailer, which has 17 locations throughout Connecticut, New York and New Jersey and has been partners with Phillips for at least 10 years, had been looking for a system to bring into its stores that would help it compete with e-commerce retailers, but Choice Pet buyer Billy Dellipoali said nothing was available until Endless Aisles came along. As soon as Choice Pet heard about Endless Aisles, they jumped at it, becoming one of the first retailers to join the program.

So far, Choice Pet has had success with Endless Aisles. It’s helped cut down on both special orders and lost customers, with Dellipoali saying the ability to order something for your customer right then and there is invaluable.

“I don’t lose the sale anymore. I place the order right at the point of sale, so we don’t lose the customer, which is the big thing,” he explained. “The second thing with the Endless Aisles program is you do not have to inventory all the product. For you to go to anywhere from 5,000 to 15,000 items, depending on how big your operation is, now you can go from 5,000 to 15,000 and 20,000 items overnight with the right e-commerce setup because [Phillips] inventories. You’re pulling from their inventory, so you don’t have to pay for all this inventory, you just pay for it when the customer wants it.”

Choice Pet has even had customers who shopped elsewhere—maybe at a supermarket or online—switch over to its online store because it offers the convenience of any online retailer with the knowing that you are helping a local, independent business.

The results Choice Pet is experiencing were the exact results Phillips wanted to reach through Endless Aisles.

“These brick and mortar stores spend a ton of time, talent, money, resources attracting footsteps in their door, and so it’s incredibly important to extend the lifetime value of a customer—Endless Aisles is a critical opportunity for retailers to do just that,” Thibodeau said. “If you don’t carry the red plaid dog bed that you’re looking for in the store but the consumer is dead set on a red plaid dog bed, it’s easy to go online and say, ‘Let me get that to you in 24 to 48 hours,’ and maintain that sale.”

Dellipoali says that in no way is Choice Pet trying to compete with big box stores or e-retailers with Endless Aisles. In fact, the chain is thinking of ways to draw customers in-store with the help of Endless Aisles, creating an omnichannel approach. True, some customers have opted for autoship via the online store and skip the brick and mortar, but as Choice Pet looks at it, that customer was going to switch to online sooner or later—now, instead of switching to another company, the consumer can stay with Choice Pet.

Endless Aisles can also help retailers in knowing exactly what their customers want, for users are notified when someone makes a purchase.

“It allows me to individualize my stores, yes by sales, but also by customer requests I wasn’t aware of,” Dellipoali said.

There are 220 retailers using the program, Phillips reports, and that number continues to grow. And of course, the program not only benefits retailers, but also manufacturers. Kent says Phillips’ investment in technology has had an impact on the number of retailers who are now buying WHIMZEES, and Tillett points out that by appearing on the Endless Aisles platform, more of Petmate’s products can be seen and learned about.

“I think one of the things everybody understands is that as the world is evolving and retail is changing, there’s huge amounts of technology advances, and Phillips embraced that,” Tillett said.

According to Thibodeau, the program has sparked great dialogue from the retailers and brands with whom Phillips works.

Continuing to Innovate

And for Poore, winning the Distributor of the Year Award tells him that retailers and brands aren’t just talking about Phillips initiatives like Endless Aisles but accepting and enjoying it— the marketplace is understanding what Phillips is trying to accomplish and seeing that vision take hold, he said.

“I can tell you, as someone who helped develop that vision, it feels good to see. We’re starting to see a reality there, that the vision has become the reality,” Poore said. “By no means are we done. We’ve got a long way to go and we’ve got a lot of fun things planned for our company and marketplace. But it’s good to see that it’s resonating with the pet specialty world.”

For Thibodeau, the award emphasizes the total team effort it takes to develop and deliver that vision.

“It is an objective affirmation that this company is seeking to make a difference and it’s being rewarded for some of the foundational work that’s taking place over the past couple of years,” she said. “It’s been great to see, and I’m excited to be a part of the team to help accelerate that forward.”

And, Poore promises, there will be more to come from Phillips to further realize its vision and support independent pet. However, he said he’ll let Shelton and other leaders make those announcements. For now, he can say this: “We’ll certainly continue to invest in Phillips to expand our services, expand our market reach.”