Home improvement retailer Lowe’s (LOW) plans to open Petco (WOOF) shops inside its stores where customers can buy dog food, cat litter, and even see a veterinarian.
The two retailers announced a deal to pilot the store-in-store locations as Lowe’s looks to grow its revenue beyond the home improvement market.
The first Petco store will open near San Antonio, Texas in February, with 14 additional locations planned in Texas, North Carolina and South Carolina by the end of March.
The companies declined to share financial terms or the length of the deal.
Lowe’s and Petco have been pandemic beneficiaries, as Americans took on do-it-yourself projects and adopted pets while spending more time at home.
However, the retailers could face a more challenging environment if consumers feel squeezed by rising inflation or decide to spend money on vacations and nights out instead of pet accessories and home projects.
Lowe’s has looked to new merchandise categories to keep sales growing, along with capitalizing on the strong real estate market. It launched last year an initiative to sell and install items that allow seniors to age in their own homes.
And Lowe’s began piloting fitness equipment, such as treadmills, rowers and dumbbells, at about 20 of its stores. It already carries some pet goods, such as dog beds and pet-proof carpeting.
For Petco, the curated version of its stores is a way to get in front of more shoppers and potentially nudge them to visit its larger stores and website as it competes with online players such as Chewy (CHWY).
Each shop will feature Petco’s logo and merchandise for cats and dogs, including some of its exclusive labels, such as its food brand, WholeHearted, and fashion brand, Youly, along with national brands.
The store-in-store locations will vary in size, but the first location will be about 1,000 square feet and will be placed at the front of the store, said Lowe’s in a news release.
Lowe’s and Petco’s shares have each fallen about 12% this year. Lowe’s shares have risen by nearly 31% over the past 12 months, while Petco’s shares have fallen 37% over the past year.
