• by Sarah Mahoney  @mahoney_sarah, July 21, 2023

Lowe's shoppers already know it's the dog-friendliest big-box store around, enthusiastically welcoming pooches in its aisles and social media feeds. Now the home-improvement retailer is expanding its reach to all kinds of animals, rolling into 300 rural locations with a Petco shop within Lowe’s stores.

The program follows a pilot test in 15 locations. It puts the DIY chain in more direct competition with Tractor Supply Co., where dog, cat and other animal foods are a significant part of its countrified "For life out here" positioning.

In the announcement, Lowe's notes that 90.5 million families, roughly 70% of U.S. households, now own a pet.

"Our initial pilot program with Petco resonated with our existing, loyal shoppers and introduced new customers to Lowe's," says Bill Boltz, Lowe's executive vice president of merchandising, in the release. "Partnering with top brands that our customers know and trust, like Petco, allows Lowe's to continue elevating and localizing our curated assortment to ensure we have the right products in the right markets."

The Petco shops will stock food, supplies and flea and tick treatments and include Petco's private-label products and national brands.

Petco will also offer its Vetco Clinic services once a month at 75 of these locations. Vets provide vaccines, microchipping and preventative medicine.

Lowe's says the move is part of its commitment to better address farm and rural needs, which it kicked off in May. That includes adding merchandise like troughs, trailers, farm implements, livestock fencing, and Carhartt and Wrangler apparel.

It's not an easy time for DIY retailers. Lowe's reported a 4.3% decline in quarterly sales in May, with revenue slipping to $22.3 billion. The company cited lumber deflation, unfavorable weather and lower DIY discretionary sales.

And in the latest monthly figures from the U.S. Commerce Department, sales at building material and garden equipment supplies dealers dropped 1.2% in June.

Still, observers think Lowe's is well equipped to ride through the turbulence.

While Seth Basham, an analyst who follows both Lowe's and Home Depot for Wedbush Securities, is neutral on both companies, "we see these dominant home improvement players poised to continue gaining market share."

The short term looks choppy. But he writes that medium-to-long-term, the Mooresville, North Carolina-based Lowe’s is "bullish on the prospects for home improvement retail, supported by the buildup in home equity, undersupply of housing (that should support home prices), aging housing stock and structural changes in work-from-home."

Basham adds that this localization of assortment, including the rural initiative, will help drive incremental sales.