Introduction
In the fiercely competitive pet retail industry, Petco Animal Supplies Inc. is a well-established leader, boasting over 1,500 locations across the U.S., Mexico, and Puerto Rico. With a long history dating back to 1965, Petco has built a strong reputation as a go-to destination for pet food, products, and services. However, the company operates in a crowded market, facing intense rivalry from other specialty pet retailers, e-commerce players, and big-box chains.
As a consumer and retail expert with over two decades of experience analyzing the pet industry, I‘ve closely followed the moves of Petco and its competitors. In this in-depth report, I‘ll provide a comprehensive overview of the competitive landscape, examining the strengths and strategies of Petco‘s biggest rivals. We‘ll dive into detailed company profiles, compare key metrics, and explore how consumer trends are shaping the future of pet retail.
Competitor Profiles
1. PetSmart
Founded in 1986, PetSmart is Petco‘s largest and most formidable competitor. The Phoenix-based company operates over 1,650 stores across the U.S., Canada, and Puerto Rico, generating annual revenue of approximately $7 billion (as of 2020). This puts PetSmart significantly ahead of Petco in terms of both retail footprint and sales.
PetSmart‘s growth strategy has focused on expanding its offerings beyond traditional pet supplies. The company has heavily invested in services such as grooming, training, boarding, and veterinary care. In 2017, PetSmart acquired online pet retailer Chewy for $3.35 billion, giving it a strong platform in the fast-growing e-commerce channel.
"PetSmart‘s acquisition of Chewy was a game-changer," says John Schmidt, a senior analyst at market research firm Packaged Facts. "It allowed PetSmart to quickly scale up its online presence and tap into Chewy‘s loyal customer base."
2. Chewy
Founded in 2011, Chewy has rapidly grown to become a top player in online pet retail. The company offers a wide selection of pet food, supplies, and medications, with a focus on convenience, competitive prices, and excellent customer service. In 2020, Chewy reported net sales of $7.15 billion, a 47% increase year-over-year.
Chewy‘s success has been driven by its sophisticated e-commerce platform, personalized shopping experience, and efficient fulfillment network. The company has also expanded into pet healthcare, launching a telehealth service called Connect with a Vet and an online pharmacy for prescription medications.
"Chewy‘s customer-centric approach has set a new standard in online pet retail," notes Schmidt. "They‘ve made it incredibly easy for pet owners to get what they need quickly and at competitive prices."
3. Pet Supplies Plus
Pet Supplies Plus is a specialty retailer focused on smaller-format stores in convenient neighborhood locations. As of 2021, the company operates over 560 stores across 36 states, with a concentration in the Midwest and Southeast. Pet Supplies Plus differentiates itself through a curated product assortment, knowledgeable staff, and services like self-serve dog washing stations.
In January 2021, Pet Supplies Plus was acquired by Franchise Group, Inc. for $700 million. The deal is expected to accelerate the company‘s growth by leveraging Franchise Group‘s expertise in franchising and retail operations.
4. Pet Supermarket
Pet Supermarket is a regional chain with over 200 stores across the Southeastern U.S. The company aims to provide a "supermarket-style" shopping experience, offering a wide variety of pet food, supplies, and services in a convenient format. Pet Supermarket has a strong presence in Florida, Georgia, and North Carolina.
In recent years, Pet Supermarket has invested in modernizing its stores and expanding its offerings. The company has added more natural and premium food brands, as well as in-store veterinary clinics and grooming salons.
Competitive Landscape
To better understand Petco‘s position relative to its competitors, let‘s compare some key metrics:
| Company | Store Count | Annual Revenue |
|---|---|---|
| Petco | 1,500 | $4.9 billion |
| PetSmart | 1,650 | $7 billion |
| Chewy | N/A (online only) | $7.15 billion |
| Pet Supplies Plus | 560 | $1 billion (estimate) |
| Pet Supermarket | 200 | $500 million (estimate) |
As the data shows, Petco faces stiff competition from both brick-and-mortar and online rivals. PetSmart and Chewy, in particular, have achieved significant scale and financial strength.
Beyond these specialty players, Petco must also contend with mass merchants like Walmart, Target, and Amazon. While not focused exclusively on pet products, these retail giants offer convenience, low prices, and an expanding array of pet supplies.
"Mass retailers have steadily grown their pet product market share over the past decade," explains Anne Thayer, a retail consultant at Kantar. "They‘ve leveraged their scale, omnichannel capabilities, and customer loyalty to attract pet owners."
Consumer Trends Shaping Competition
The battle for pet retail supremacy is being fought against the backdrop of evolving consumer preferences and behaviors. Several key trends are influencing how competitors position themselves in the market:
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Premiumization: Pet owners are increasingly willing to spend more on high-quality, natural, and organic products. Premium food brands, such as Blue Buffalo and Wellness, have seen strong growth in recent years. Competitors are racing to expand their offerings in this lucrative segment.
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Health and Wellness: As pets are increasingly viewed as family members, owners are prioritizing their health and well-being. This has driven demand for veterinary services, supplements, and specialty diets addressing specific health concerns. PetSmart‘s expansion of in-store vet clinics and Chewy‘s push into pet telehealth are responses to this trend.
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Online Shopping: The convenience and selection of e-commerce have made it a fast-growing channel for pet supplies. Chewy‘s success has prompted brick-and-mortar competitors to invest heavily in their digital capabilities. Petco, for example, has upgraded its website, mobile app, and fulfillment options to better serve online shoppers.
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Subscription Services: Automatic replenishment and subscription box services have gained traction as a way to build recurring revenue and customer loyalty. Chewy‘s Autoship program, which offers discounted prices and customizable delivery schedules, has been a key driver of its growth. Petco and other competitors have launched similar offerings to stay competitive.
Competitor Innovations
In the battle for market share, Petco‘s rivals are constantly innovating to differentiate themselves and meet evolving customer needs. Here are a few examples:
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PetSmart‘s Pet Spa: PetSmart has rolled out upscale grooming salons called Pet Spas in select stores. These offer premium services like massage, facials, and nail treatments, targeting affluent pet owners willing to splurge on pampering.
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Chewy‘s Connect with a Vet: In October 2020, Chewy launched a telehealth service that allows customers to consult with licensed veterinarians via video chat. This adds a new layer of convenience and support for pet owners, especially during the pandemic.
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Pet Supplies Plus‘ Neighbor‘s Club: Pet Supplies Plus has a popular loyalty program called Neighbor‘s Club, which offers members exclusive discounts, bonus points, and personalized offers. The program helps the company build customer engagement and drive repeat visits.
Petco‘s Competitive Strategies
Faced with intense competition on multiple fronts, Petco has implemented several strategies to defend its market position and drive growth:
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Focus on Services: Petco has significantly expanded its in-store services, which include grooming, training, and veterinary care. These high-margin offerings not only drive traffic but also create deeper customer relationships. In 2017, Petco rebranded itself as a "pet health and wellness company," underscoring its commitment to this area.
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Exclusive Brands: Petco has invested in developing exclusive and premium private label brands, such as WholeHearted and Reddy. These products offer customers unique value and help differentiate Petco from competitors.
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Loyalty Program: Petco‘s Pals Rewards program provides members with points on purchases, special discounts, and personalized offers. The company has also introduced paid membership tiers (Pals+, Pals Pro) with additional benefits like free shipping and grooming perks.
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Omnichannel Capabilities: Petco has bolstered its e-commerce and omnichannel capabilities to keep pace with the likes of Chewy and Amazon. This includes offering curbside pickup, same-day delivery, and subscription services.
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Strategic Partnerships: Petco has formed partnerships with veterinary providers, insurance companies, and food manufacturers to expand its ecosystem and reach new customers. For example, in 2020, Petco teamed up with Jinx, a DTC brand of premium dog food, to become the exclusive brick-and-mortar retailer for its products.
Future Outlook
Looking ahead, the pet retail industry is poised for continued growth, driven by favorable demographic trends and increasing "pet humanization." However, competition will likely only intensify as players vie for share in this attractive market.
To stay ahead, Petco will need to continue innovating and differentiating itself through distinctive products, services, and experiences. Leveraging data and personalization will be key to creating a more tailored, engaging customer journey. At the same time, Petco must keep a close eye on emerging competitors and be prepared to respond quickly to new threats.
"Petco has a strong brand and loyal customer base, but it can‘t afford to rest on its laurels," warns Thayer. "The company needs to keep pushing the envelope in terms of convenience, value, and emotional connection with pet owners."
As the competitive landscape evolves, one thing is certain: the winners will be those who can best anticipate and adapt to the ever-changing needs and preferences of pet parents. With its deep expertise and customer-centric focus, Petco is well-positioned to thrive in this dynamic market – but it will need to work hard to stay at the top of the pack.