Pet & Pet Supplies Stores

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 5,000 pet retailers in the US sell products and services related to pets, including pet foods, pet supplies, pet services, and live pets. The top four companies, including large retailers like PetSmart and Petco, account for 66% of industry sales. The industry also includes pet retailing franchises, such as PetLand.

Strong Sales Drive Heavy Competition

Strong industry sales have resulted in competition for pet products from a variety of alternative channels, including warehouse clubs, grocery stores, mass merchandisers, veterinarians, and E-commerce and catalog retailers.

Proliferation Of New Products

Similar to the human food market, the pet food sector is driven by product innovation, with manufacturers constantly developing and introducing new items.

Industry size & Structure

A typical pet store operates out of a single location, employs 23 workers, and generates about $3-4 million annually.

    • The pet and pet supply retailing industry consists of about 5,000 companies that employ 117,200 workers and generate about $18 billion annually.
    • The industry is concentrated at the top and fragmented at the bottom. The top four companies, including large retailers like PetSmart and Petco, account for 66% of sales.
    • The industry also includes pet retailing franchises, such as PetLand.
                            Industry Forecast
                            Pet & Pet Supplies Stores Industry Growth
                            Source: Vertical IQ and Inforum

                            Coronavirus Update

                            Apr 17, 2022 - E-commerce Sales Remained Strong In 2021
                            • Demand for pet food and supplies via online remained consistently high throughout 2021, with dog products outranking cat products, according to retail analytics platform Pattern. COVID-19 caused an increase in online pet product demand, which has continued since, and online demand for pet food reached an all-time high in early 2022. E-commerce demand for pet supplies spiked during the summer of 2021 and hit its lowest point in December of 2021, according to Pattern, with dog and cat supplies leading demand.
                            • Pattern noticed that demand for pet supplies on Amazon soared around the same time as consumers faced lockdowns. The increase in e-commerce demand for Amazon was a reaction to supermarket and pet stores shutdowns that happened during the start of the pandemic. E-commerce demand remained high even as supermarkets and pet stores reopened, hitting a low in November and December 2021.
                            • Canned pet food shortages continue in 2022 due to continuing supply chain and manufacturing problems that plagued the pet food industry in 2021, according to the Pet Food Institute (PFI). Ingredients such as chicken by-products and vegetable oils, which are used in many canned food items for pets, are difficult to obtain, according to PFI. Can shortages also continue. "Brands like Stella and Chewy are converting into pouches of food as well as packs so they don’t have to be dependent on the cannery or aluminum situation that we have," said Dan Ryu, COO of Centinela Feed & Pet Supplies.
                            • Pet hamsters can transmit COVID-19 to humans and are the likely source of a recent outbreak of the Delta variant in Hong Kong, according to research of the outbreak conducted at the University of Hong Kong. Analysis of samples from an infected pet shop worker and infected customer suggested that their viruses were closely related to the hamster viruses.
                            • Pet owners are reporting difficulty finding pet food online and on store shelves again. Some pet food manufacturers have been unable to secure the necessary ingredients in order to meet the demand, according to the Wall Street Journal. Corporations like The JM Smucker Company, which owns brands such as Meow Mix and Milk-Bone, have notified retailers that shipments will be limited for some pet products. JM Smucker expects delays to persist through January 2023.
                            • A pet supply company that expanded into a building that was a beverage drive-thru business is capitalizing on the prior use by offering drive-thru service. "As far as we know, this is one of the first pet supply stores nationwide to offer drive-thru service," said Mark Vitt, who co-founded Mutts & Company. Customers can either place an order online in advance or pull up and tell employees what they need. The items will be brought out to the vehicle. The drive-thru "is the next logical step from the curbside and delivery service we've been offering customers," Vitt added.
                            • About 65% of pet owners who responded to an APPA Pulse Survey said that they bought products in brick-and-mortar stores pre-pandemic, but just 43% did during the pandemic.
                            • NielsenIQ suggests that retailers can entice online shoppers (and home pet groomers) to visit brick-and-mortar stores and convert additional sales by offering exclusive in-store savings, special click-and-collect promotions, in-store product education, and contactless payment and pickup methods.
                            • Pet and pet supply retailer Petco has benefited from pandemic-driven moves, particularly by young people, to suburban and rural areas from urban apartments, many of which don't allow pets. Petco CEO Ron Coughlin said that, as a result of this shift to the suburbs, Petco's 1,500 store locations across the US and Mexico have a competitive advantage over online-only retailers like Chewy. "Online competitors are shipping it from a distribution center going across multiple zones where we're taking it in the back of a DoorDasher's car for the same cost as if it was a tennis ball, delivering it the same day, and delivering it at lower cost," said Coughlin, adding that 80% of its e-commerce orders are shipped or delivered via their stores.
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