Chain retailers face a big decision when expanding into new markets: do they implement standard pricing or local pricing? Standard pricing is just that: a $58 shirt at Banana Republic is $58 whether it’s in New York, St. Louis or online. Local pricing allows for variances in market conditions, such as rent, traffic, competition, cost of living, etc.
Petco has chosen local pricing for its Manhattan stores. The result? Amy and I go out of our way to not shop there. And by “out of the way” I mean “drive to a pet store deep in New Jersey where poop bags are 55% less expensive than they are in Union Square.”
A basic pricing comparison:
Natural Balance Pet Food, 5 lb. bag
– At Whiskers in the East Village: $8.99
– Online at petco.com: $6.99
– At Petco Union Square: $9.99
Van Ness Grab Bags, 40 count
– At Petco (formerly NJ Pets), East Hanover, NJ: $2.99
– Online at petfooddirect.com: $3.08
– Online at petco.com: $5.99
– At Petco Union Square: $6.49
Frontline Plus, 3-month supply, small dogs
– From our veterinarian: $40.00
– Online at petco.com: $40.99
– At Petco Union Square: $62.99
Now, I live in a hot neighborhood in an expensive city, and I understand that Petco needs to pay the bills. I also know that my local Petco is constantly busy, which means the pet owners in my neighborhood are either less price sensitive than me or don’t comparison shop as much (probably both).
But what I really know is that Petco Union Square has product markup that exceeds 100% on some items. That’s just outrageous. Even my Food Emporium’s cereal, a notoriously expensive item in Manhattan, doesn’t cost twice as much as the Kellogg’s in my parents’ supermarkets (although it comes close).
End result? I don’t go to Petco much anymore. And long lines or no, that sort of reaction is something Petco’s new owners might want to consider.