Steven Zaccone: Hi. Good afternoon, and thanks for taking my question. Stacy, congrats on the new role. Sumit, I was hoping you could elaborate a little bit more on the commentary about the consumer changing out of the summer months. Are you seeing more trade down, are you seeing smaller baskets from these customers and guess like, what makes you concerned, it’s a new trend versus just a two-month period at the end of the summer? And when you say you need to work harder with these new customers, does that mean more promotional at the start, should we assume that at some gross margin implications?
Sumit Singh: Sure, sure, sure. Yes, so it’s a great question. So, are we seeing concerning trends? Not really, not yet. So what do I mean by saying, we’re observing the consumer become a bit more discernible? For the first time in July, we’ve really noticed a shift out of kind of wet food more towards the dry food, and that generally is an indication off, more value-seeking behavior. We’re also seeing kind of treat pull back a little bit. They have gained traction in Q1 coming out of 2022 and they pulled back slightly in Q2, particularly coming out of July, but it’s not material yet to come out and actually raise any alarm bells, and we’re not because, we believe we’re fairly insulated. So let me give you kind of color on what’s happening and I think to really gain the color, we like broaden the aperture and give some context here.
So from ’20 to 2022, the storyline was all about dealing with the pandemic. So coming out of last year, right, 2022 became the year of recovery. Supply-chain stabilized, but costs rose dramatically through this period and have been passed onto the consumer by way of unprecedented high prices. And these inflationary pressures are now showing up industry-wide and also impact. Now, recall that pet household formation was already muted, but that hasn’t changed through 2022 and continues for the first half of ’23. In addition to that, this behavior that I am kind of calling out here, it indicates that the consumers being more value-conscious, at this point. And that makes sense I mean to think that in times like these, the consumer preferences towards value our convenience makes sense, but the winning combination is offering them both value and convenience.
And we believe that for a majority of the consumers, we do that. We offer both value and convenience and therefore, we believe we’re somewhat insulated from the full impact of these current times given the strength in the business model. Now for recently acquired customers, right, we were – their behavior is hard to predict, right. Their order purchase frequency might be slightly off. Usually when we see customers come back in four weeks, that might be five weeks, et cetera. So we believe that we have to be extra sharp and the CRM capabilities that we’ve deployed, that we developed kind of towards the latter half of last year into this year, right, those are going to be much more sharply deployed it towards the back half of the year. So in terms of promos, we are not going to lead the market as we never do right.
We are price followers are not price leaders in that way, but we stand ready to respond. Internally, we are going to find ways to self-fund, right creative ways to pass on the value to the customer and that doesn’t have to be kind of promo-led per se, it could be other tactics as well. We also have a series of kind of roadmap where that we are taking into account in H2 as well as next year that’ll formulate our strategy to both acquire net new customers as well as improved retention of the recently acquired cohort. I can continue, but hopefully, that provides a bit of color.
Steven Zaccone: No, that’s very helpful. I appreciate all that color. I guess, just have a brief follow-up then. Do you think the overall industry gets more promotional as we get into the back half of the year. So I’m curious as the two months of activity of what you’ve seen, has your peer set gotten more promotional?
