Philip Francis is more than happy to let his business go to the dogs - they are driving his business.

He is CEO of PetsMart, a Phoenix-based company that posted $3 billion in sales and $139.5 million in net income for fiscal year 2003.

"We have been able to capitalize on people's passion for their pets," Francis said in a speech at the Global Retail Conference, held this week at the Westin La Paloma Resort & Spa, 3800 E. Sunrise Dr.

He was one of 11 retail experts who gave presentations at the annual two-day conference.

All aspects of retail - including human resources, online sales and marketing in a global economy - were covered at the conference sponsored by the Center for Retailing and Consumer Sciences Education and Research at the University of Arizona.

"It has been very informative," said Elani Kanelos, manager of college relations at Macy's West, which runs Macy's stores in the West. "You can learn something from every speaker."

For Francis, it was a chance to announce a $1 million endowment for the University of Arizona's School of Family and Consumer Sciences to establish the PetsMart Endowed Professorship in Retailing and Consumer Sciences.

The fund will be used to create a new teaching position for the school, focusing on retail and consumer sciences. A search to fill it will begin in 2005.

The school will be looking for someone with a strong academic background in retail who is also a pet owner.

"It is an honor to have such a prestigious research and education focus in our program," said Soyeon Shim, director of the School of Family and Consumer Sciences.

PetsMart's story resounded with conference attendees.

The audience included more than 100 retailers from around the world.

"Its good to keep abreast of everything that is going on," said Gwen Neace, corporate college relations manager for Federated Department Stores, which includes Macy's and Bloomingdale's.

Francis credits most of PetsMart's success - the company has five stores in the Tucson area - to a market niche that has been growing dramatically.

With the humanization of pets, the company has moved away from a supply warehouse to a boutique setting that specializes in accommodating all pet needs, including grooming and training services.

"Services are three times more profitable," Francis said. Nearly all PetsMart stores feature pet styling salons, which offer full-service styling, baths, toenail trimming and teeth cleaning.

Almost 20 percent more households have pets today than 10 years ago, and as baby boomers are retiring they have more time - and money - to spend on their beloved animals, he said.

"We had to fix, strengthen and then expand the core business," Francis said.

"We had to look at the company through customers' eyes."

Services, such as training and grooming, also help build customer relationships and have a large potential for growth.

"The ongoing income stream is attractive," he said.

Having the lowest-priced dog food is not the most important thing at PetsMart - sometimes it costs 5 percent more than Wal-Mart's - but rather the company is focused on total lifetime care, Francis said.

"When being the leader in price and variety becomes inadequate, we have to look for something else we can add," Francis said.

Francis looks at Starbucks as a company that has optimized customer loyalty. "They give you a sense of place and trust in a brand," he said. "And customers give them permission to try new things."

Starbucks is not just a commodity, he said. "Its a national obsession. They have become a trusted friend that can even recommend games and music."

So far, PetsMart seems to be on the right track. The company has opened PetsHotel, an innovative, high-quality pet boarding and day camp. One has been operating in Tucson at 4001 E. Speedway for several years.

In these hotels for pets, 40 percent of the pets had never been boarded before.

"It's really about trust," Francis said.

PetSmart is also rolling out a card program - called PetPerks - much like the ones at grocery stores to figure out how their customers are shopping and to form a direct mail database.

"Pet parents aren't born," Francis said.

"They are made."