Does Petco Own Chewy? A Deep Dive into the Pet Retail Industry


For many pet owners, Petco and Chewy have become the go-to destinations for stocking up on food, treats, toys, and health products for their furry friends. These two retailers have grown to dominate the pet supply space, with Chewy focusing on e-commerce while Petco leverages its extensive brick-and-mortar footprint. But what many consumers may not realize is that, despite occasional rumors to the contrary, Petco does not actually own Chewy.

In this comprehensive analysis, we‘ll explore the complex history and current state of play between these two pet retail giants. As a picky shopper and consumer expert in the space, I‘ll share insights on each company‘s business model, competitive advantages, growth strategies, and more. By the end, you‘ll have a nuanced understanding of how Petco and Chewy stack up in the rapidly evolving pet industry landscape.

The Pet Retail Industry at a Glance

Before diving into the specifics of Petco and Chewy, it‘s important to understand the broader context of the pet retail industry. In the U.S. alone, pet care spending reached $123.6 billion in 2021 according to the American Pet Products Association (APPA). This figure is expected to grow to $145 billion by 2023, representing a 5.5% compound annual growth rate (CAGR) since 2018.

Several key factors are driving this sustained growth:

  1. Rising pet ownership rates: The percentage of U.S. households owning a pet has increased from 56% in 1988 to 70% in 2022, with over 90 million homes now including a pet. Millenials have become the largest cohort of pet owners at 32%.

  2. Increased spending per pet: Owners are spending more on premium food, specialized health products, and services like grooming, training, and daycare. Annual spending per dog has increased from $442 in 2011 to $754 in 2021.

  3. Humanization of pets: Many owners now consider pets to be part of the family, driving demand for human-grade products and experiences. 75% of millenials view the term "fur babies" favorably when referring to pets.

  4. Shift to online shopping: The COVID-19 pandemic accelerated already strong growth in e-commerce penetration for pet supplies, reaching 36% of sales in 2021 compared to 22% in 2019.

The industry does face challenges though, including rising competition, supply chain disruptions, inflationary pressures, and concerns over the environmental impact of pet ownership. Leaders like Petco and Chewy will need to navigate these headwinds to maintain their dominance.

The Growth of Chewy

Founded in 2011 by Ryan Cohen and Michael Day, Chewy pioneered a new model of selling pet supplies entirely online, with a fanatical focus on customer service. By offering a wide selection, competitive pricing, fast shipping, and personalized touches like handwritten holiday cards, Chewy quickly developed a loyal following among digitally savvy pet owners.

The results speak for themselves – Chewy reached $7.15 billion in net sales in 2021, representing 24% year-over-year growth. The company boasts 20.7 million active customers and $419 in net sales per active customer. Autoship customer sales, a key measure of loyalty, reached $6.0 billion or 72.2% of total net sales.

Chewy‘s success caught the eye of PetSmart, which acquired the company for $3.35 billion in 2017 – the largest e-commerce acquisition in history at the time. The deal was led by private equity firm BC Partners, which had taken PetSmart private in a $8.7 billion buyout just two years prior.

While Chewy still operates as an independent subsidiary under the PetSmart/BC Partners umbrella, it did go public in 2019. PetSmart remains the majority owner with a 50.8% stake, while public shareholders hold the remaining 49.2%. Chewy‘s market capitalization sits at around $16 billion as of June 2023.

Petco‘s Evolving Strategy

Founded in 1965, Petco has long been a dominant force in pet retail with its network of over 1,500 brick-and-mortar locations offering a wide range of products and services. However, as shopping increasingly shifts online, Petco has had to adapt its strategy to stay competitive with pure-play e-commerce rivals like Chewy.

Under CEO Ron Coughlin, who took the helm in 2018, Petco has undergone a significant transformation focused on becoming a one-stop destination for pet health and wellness. This has involved doubling down on services like veterinary care, grooming, training, and pet insurance. Petco now operates over 200 in-store veterinary hospitals and plans to reach 900 by 2026.

At the same time, Petco has also invested heavily in its digital capabilities. E-commerce sales reached $1.2 billion in 2021, growing 26% year-over-year and representing 20% of total revenue. Petco has also launched an app, revamped its website, and introduced same-day delivery through partnerships with DoorDash and Shipt.

Perhaps most notably, Petco completed its own initial public offering in early 2021, raising $864 million. The company is now valued at around $4 billion, a far cry from Chewy but still substantial. In its most recent fiscal year, Petco achieved $6.1 billion in net revenue and a net income of $119.1 million.

Comparing the Competitors

While Petco and Chewy operate in the same industry, they have quite different business models and strategies. Let‘s take a closer look at how they stack up across key dimensions:

Metric Chewy Petco
2021 Revenue $7.15 billion $6.1 billion
Revenue Growth (YoY) 24% 18%
E-Commerce % of Sales 100% 20%
Active Customers 20.7 million 10.8 million
Net Sales Per Customer $419 $228
Gross Margin 25.7% 41.6%

Data sources: Chewy 2021 Annual Report, Petco 2021 Annual Report

As the data shows, Chewy maintains an edge in overall revenue, growth, and customer metrics, reflecting the strength of its online model. However, Petco‘s focus on services and private label brands allows it to achieve significantly higher margins.

According to Moody‘s analyst Nischay Mishra in a 2022 investor note, "Petco‘s revenue has been rising by only about low single digits for the past few years, while Chewy‘s has been growing by over 25% per year. However, Petco‘s profitability is stronger, with a Moody‘s adjusted EBITDA margin in the mid-teens, compared to Chewy‘s margins of only about 3%."

Burt Flickinger, managing director at consulting firm Strategic Resource Group, told CNN Business that "Chewy is growing faster, but Petco is much more profitable." He estimates that Chewy loses $2-3 million per day from its intensive investing, compared to around $1 million in daily profit for Petco.

Industry Headwinds and Tailwinds

Both Petco and Chewy will need to navigate a complex set of challenges and opportunities in the years ahead. On the positive side, many of the pet industry trends fueling past growth appear likely to persist. The APPA projects spending to keep increasing across categories like food, supplies, vet care, and services.

Chewy and Petco are both well-positioned to benefit from the continued humanization of pets and premiumization of products. Chewy‘s Autoship subscriptions and Petco‘s Vital Care membership program create recurring revenue streams and foster loyalty. Private label offerings are another avenue to boost margins while providing a differentiated assortment vs. Amazon or mass retailers.

However, risks and obstacles remain. Inflationary pressures are pushing up costs, forcing difficult choices between passing on price increases or sacrificing profitability. Supply chain disruptions, particularly in categories like wet pet food, have led to shortages and substitutions. An uncertain economic environment could pressure consumer spending on discretionary pet supplies.

Perhaps the biggest question mark is whether the pandemic-driven surge in pet adoption and e-commerce spending will fully sustain. Petco CFO Brian Devine highlighted this concern in a 2021 earnings call, noting that 2020‘s spike in pet care category growth to 9% over the historical trend of 3-5% was likely a short-term anomaly. Evercore analyst Jonathan Markov expressed similar caution about Chewy‘s active customer growth recently falling to the lowest level since the company went public.

The Potential for Consolidation

As the competition between Chewy and Petco heats up, there‘s naturally speculation about whether the two could eventually join forces. The strategic rationale is clear – combining Chewy‘s e-commerce dominance with Petco‘s brick-and-mortar footprint and services would create an omnichannel powerhouse with unmatched scale and reach.

Morningstar analyst Sean Dunlop sees a potential merger as a logical move, writing in 2021: "We surmise a combination would marry each entity‘s strengths, plugging gaps in their respective business models and sharpening their competitive edge, particularly as mass players like Walmart and Target claw at share."

However, there would be significant hurdles to overcome in any deal. One is the sheer financial scale required – with Petco valued at $4 billion and Chewy at $16 billion, an all-stock merger would be massively dilutive to Chewy shareholders. Regulatory scrutiny could also pose a challenge given antitrust concerns around market concentration.

Perhaps the most likely path to a combination would involve their shared private equity backer, BC Partners. The firm already owns around two-thirds of Chewy and previously explored buying Petco in 2015. If growth begins to sputter for either company, BC Partners could look to orchestrate a merger to extract synergies and jumpstart a new chapter of expansion.


In the dynamic and rapidly evolving pet industry, Petco and Chewy have emerged as leaders through a combination of strategic focus, customer-centric positioning, and omnichannel growth. While Petco is the elder statesman pivoting to a health and wellness focus, Chewy is the digital upstart betting on the continued shift to e-commerce.

As a shopper and industry observer, my view is that both retailers are likely to remain successful by leaning into their respective strengths – Petco with its differentiated services and Chewy with its unrivaled convenience and service. A merger could make sense down the line, but for now, pet owners can enjoy the benefits of their stiff competition.

The next few years will be critical in determining the long-term trajectory of the industry and its key players. Will the trends around pet humanization, premium offerings, and online shopping persist? Can Petco‘s bet on health services change the game? Will Chewy‘s hyper-growth stay ahead of the pack? One thing is certain – it will be a dogfight to the finish.