If you‘re one of the 85 million U.S. households with a pet, you‘ve likely heard of PetSmart. With over 1,600 stores and a comprehensive e-commerce site, this specialty retailer is a leading destination for all things pet. But in a competitive industry that‘s seen seismic shifts in recent years, what really sets PetSmart apart?
As a picky shopper and retail expert, I‘ve studied PetSmart‘s every move – from its product mix to its strategic pivots. In this in-depth guide, I‘ll share insider insights on PetSmart‘s strengths, challenges, and future prospects. Whether you‘re a devoted PetSmart shopper or an industry watcher, you‘ll come away with a nuanced understanding of this pet powerhouse.
Inside PetSmart‘s Product Universe
At its core, PetSmart is all about the merchandise. The retailer stocks an exhaustive array of items for dogs, cats, fish, birds, reptiles, and small pets. In fact, PetSmart claims to carry over 11,000 products in total.
While big brands like Purina, Kong, and Tetra are well-represented, PetSmart has also invested heavily in exclusive and premium brands. Its main private labels include:
- Authority: Mid-tier pet food and essentials
- Simply Nourish: Superpremium natural pet food
- Only Natural Pet: Natural food and care products
- Top Paw: Dog supplies like toys, beds, and apparel
- Grreat Choice: Value-focused pet supplies
- All Living Things: Supplies for fish, birds, reptiles, and small pets
- Doggie Dailies: Dog wellness supplements
- Whisker City: Cat toys and furniture
- Dentley‘s: Dog treats and chews
- Reddy: Premium dog apparel and gear launched in 2020
By combining national brands with a strong private label program, PetSmart aims to offer something for every pet and budget. Compared to mass merchants like Walmart and supermarkets, PetSmart boasts a wider and deeper pet product assortment. And versus pet specialty competitors like Petco, PetSmart seeks to win on breadth, convenience, and value.
However, PetSmart has faced stiff competition from online players like Chewy and Amazon in recent years. To hold its own, PetSmart has expanded its own e-commerce operations (more on that later) while pushing further into pet services.
The Pet Specialty Services Advantage
In the Amazon age, many brick-and-mortar retailers have leaned into experiential services to drive store traffic and loyalty. PetSmart is no exception. The company offers a suite of in-store pet services, a key differentiator from online competition.
Grooming
PetSmart‘s full-service grooming salons handled 13 million pets in 2019. The salons offer bathing, trimming, and styling for dogs and cats, as well as walk-in services like nail grinding and teeth brushing.
PetSmart groomers undergo 800 hours of hands-on training and safety certification. The company has also invested in grooming technology like online booking and the "Look Book" for personalized style consultations.
Training
PetSmart is the largest provider of dog training in North America, with classes available in most stores. Its accredited training curriculum was developed by leading animal behaviorists and focuses on positive reinforcement techniques.
PetSmart offers several training options, including group puppy and adult dog classes, private lessons, and a "Day Camp" program for socialization and enrichment. Virtual training sessions are also available.
PetsHotel and Doggie Day Camp
Over 200 PetSmart locations feature PetsHotel boarding facilities. These offer overnight dog and cat boarding, as well as daytime services like Doggie Day Camp, which provides play and socialization for dogs.
The PetsHotel concept aims to reduce the stress of boarding on pets, with amenities like all-day play, "Bone Booth" video calls with pet parents, and the "Pawgress Report" system for monitoring pets‘ stays. Safety is also a priority, with staff trained in pet first aid and CPR.
Veterinary Care
Around 800 PetSmart stores feature veterinary clinics through a partnership with Banfield Pet Hospital, a standalone chain acquired by PetSmart in 2007. Banfield clinics offer preventive care, vaccinations, microchipping, spaying/neutering, dental care, and more.
Banfield also powers PetSmart‘s Veterinary Services program, which provides basic walk-in care like vaccinations and deworming in stores without a full clinic. And pet insurance is available through PetSmart‘s partnership with Trupanion.
PetSmart by the Numbers
To fully understand PetSmart‘s position, it‘s essential to look at some key data:
- PetSmart‘s revenue was $7.49 billion in fiscal 2019 (pre-pandemic)
- PetSmart accounts for around 25% of the U.S. pet specialty retail market
- PetSmart‘s loyalty program has over 55 million members
- Approximately 50% of PetSmart‘s sales come from consumables like pet food
- Services account for around 10% of PetSmart‘s sales
- PetSmart‘s average ticket is about $50, with a 60-65% gross margin
- PetSmart had an estimated 43 million unique customers in 2019
- 83% of PetSmart‘s customers own dogs, 51% own cats, and 12% own other pets
- PetSmart‘s sales per square foot are around $250
These figures paint a picture of a large, mature retailer with a strong hold on the pet specialty market. However, growth has slowed in recent years as the industry has shifted online. PetSmart‘s comparable same-store sales were flat in 2019 after declines in 2017 and 2018.
PetSmart‘s Omnichannel Evolution
Like most retailers, PetSmart has had to adapt to the rise of e-commerce. The company launched its first website in 2001, but online remained a small part of the business for many years. That changed in 2017 with PetSmart‘s surprise acquisition of Chewy.com for $3.35 billion.
At the time, Chewy was the leading online pet retailer, known for its vast selection, competitive prices, and stellar customer service. The acquisition gave PetSmart a major stake in the fast-growing online pet market.
However, the relationship between PetSmart and Chewy has been complex. PetSmart initially allowed Chewy to operate independently, but later tried to merge the two companies‘ backend operations. This led to culture clashes and executive turnover. Chewy was spun off as a separate public company in 2019, though PetSmart remains its majority owner.
Meanwhile, PetSmart has been working to integrate e-commerce with its brick-and-mortar stores. Key initiatives include:
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Buy online, pick up in-store (BOPUS): Launched in 2019, this allows customers to order on petsmart.com and pick up their items at a local store, often within a few hours. Around 70% of online orders are now picked up in-store.
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Curbside pickup: Added in 2020 due to the pandemic, this contactless service lets customers pick up online orders without leaving their car.
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Ship-from-store: PetSmart can now fulfill some online orders directly from store inventory, reducing shipping times.
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Digital vet bookings: Customers can schedule vet appointments and access records through the PetSmart app.
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Subscription services: PetSmart offers recurring delivery for pet food and medications, as well as a monthly box called PupBox (acquired in 2017) with products tailored to a puppy‘s development stage.
While PetSmart has made strides in digital, e-commerce still accounts for a relatively small portion of its overall sales (estimated at 5-10%). The company has work to do to catch up with online rivals and meet customer expectations for seamless omnichannel shopping.
PetSmart‘s Pandemic Performance
The COVID-19 pandemic has been a mixed bag for PetSmart. On one hand, the company was deemed an essential retailer and allowed to keep stores open during lockdowns. And as people spent more time at home, many adopted new pets or increased spending on their existing pets.
Indeed, PetSmart saw a surge in demand for staples like food and litter in the early months of the pandemic. And categories like toys, training pads, and habitats got a boost as pet parents looked to occupy and pamper their furry friends.
On the other hand, PetSmart faced challenges in keeping employees and customers safe, especially in high-touch areas like grooming. Services revenue took a hit as many salons and hotels closed temporarily or operated at reduced capacity. And supply chain disruptions led to out-of-stocks on some popular items.
Overall, PetSmart fared better than many retailers during the pandemic thanks to its essential status and the overall resilience of the pet industry. However, the company also had to make significant investments in safety protocols, employee compensation, and e-commerce fulfillment to meet the moment. And it remains to be seen how much of the pandemic-fueled pet boom will stick long-term.
What‘s Next for PetSmart
Looking ahead, PetSmart faces both opportunities and challenges. On the plus side, the pet industry is poised for continued growth as Millennials and Gen Z delay parenthood in favor of "fur babies." And PetSmart‘s scale, brand recognition, and in-store services provide a solid foundation to build on.
However, competition is only getting fiercer, especially online. PetSmart will need to continue investing in e-commerce and omnichannel capabilities to meet customer expectations. This includes improving site navigation and personalization, expanding fulfillment options, and integrating services like grooming and training with digital channels.
PetSmart may also need to rethink its store footprint and format. With more shopping shifting online, the company may not need as many large-format stores in the future. Smaller, service-focused locations or "dark stores" dedicated to online fulfillment could be part of the mix. And within stores, PetSmart will need to create compelling experiences that give shoppers a reason to visit.
Finally, PetSmart must continue to innovate on product and services to stay ahead of the pack. This could include more premium and health-focused brands, subscription offerings, or new service concepts. Expect to see more partnerships with digital natives or category disruptors.
Final Thoughts
PetSmart is a fascinating case study in the rapidly evolving world of pet retail. As a long-time category leader, the company has unmatched scale and expertise. But as shopper behavior shifts online and new competitors emerge, PetSmart must be agile and customer-obsessed to maintain its top dog status.
In many ways, PetSmart is well-positioned for the future. Its extensive product assortment, strong private brands, and sticky services business provide a moat against competitors. And its initiatives in e-commerce, subscription, and omnichannel show a willingness to adapt.
But make no mistake – PetSmart faces significant headwinds. Online players like Chewy and Amazon are relentless in their pursuit of the pet parent wallet. And as the pace of change accelerates, PetSmart will need to be bolder and more nimble than ever.
As a retailer watcher, I‘ll be keeping a close eye on PetSmart‘s moves in the coming years. Will it double down on services and experiences? Reimagine its store fleet for the digital age? Acquire or partner with more upstart brands? One thing‘s for sure – with so much at stake in the $100 billion pet industry, PetSmart will need to keep pushing to stay ahead of the pack.
