PetSmart, Inc. is the largest specialty retailer of services and solutions for the lifetime needs of pets. The company operates more than 1,107 pet stores in the United States and Canada and 132 in-store “Pet Hotels”, which are combination cat and dog boarding facilities. PetSmart is also a leading online provider of pet supplies and pet care information. PetSmart provides a broad range of competitively priced pet food and pet supplies. The company also offers complete pet training, pet grooming, and pet adoption services.
PetSmart leases all of its superstores, its corporate offices, and its distribution centers. The terms of the superstore leases generally range from ten to twenty years and typically allow the company to renew for three to five additional five year terms. Superstore leases, excluding renewal options, expire at various dates through 2015 (PetSmart Annual Report). Among pet supply retailers, PetSmart Inc. continues to gain traction at the expense of rival PETCO. The average PetSmart customer shopped at the store 1. 44 times in November, compared to only 1. 28 in November 2007, an increase of more than 12%.
By comparison, PETCO has suffered a 1% drop from 1. 26 visits per customer in November 2007 to 1. 25 visits per customer this year. Both pet supply businesses have seen customers’ spend per visit decline by approximately 2% since November 2007. PetSmart has seen a 10% increase in average customer spending per month from $49. 55 to $54. 43, while PETCO has seen a 3% decrease from $45. 21 to $43. 89 (PetSmart Annual Financial Information). PetSmart, Inc. boasts their major source of revenue as being the largest specialty pet retailer of services and solutions for the lifetime needs of pets.
PetSmart provides a broad range of competitively priced pet food and pet products and offers complete pet training, pet grooming, pet boarding, doggie day camp, and pet adoption services. Since 1994, PetSmart Charities, Inc. , an independent non-profit animal welfare organization, has funded more than $70 million in grants and programs benefiting animal welfare organizations (“PetSmart, Inc. ” Hoovers, A D & B Company). In 2008, PetSmart generated net sales of $4. 7 billion, making it North America’s leading specialty provider of products, services, and solutions for the lifetime needs of pets.
PetSmart opened or acquired 100 new stores in 2008 and at the end of the fiscal year operated 1,008 retail stores in North America. Square footage in 2008 increased 2. 0 million to 22. 8 million compared to 20. 8 million in 2007. They offer more than 10,500 distinct items including nationally recognized brand names, as well as an extensive selection of proprietary or private label brands across a range of product categories. PetSmart has a total workforce of 43,000 employees as of 2008 and is headquartered in Phoenix, Arizona.
The company’s NASDAQ rating indicates that they are a very stable company (“PetSmart, Inc. (PETM)” Yahoo! Finance). Among several strengths, the fact that PetSmart already has a network of stores in place across the country is a driving factor towards the company’s growing success. The locations of these stores are strategically placed in areas of high-marketability. PetSmart is on a goal and finance oriented pace by opening stores in every medium to large sized city. It is a very well-rounded and well-managed business. While every company has its specific strengths, they also have their weaknesses.
An improvement PetSmart needs to make in order to continue financial growth is to bring their prices down to the level of other mega-retailers. In order to keep customers from finding the products they desire at Wal-Mart or Target, they need to lower their prices to be competitive with these other retailers. Additionally, the size of the PetSmart stores can often times be overwhelming for customers. With the small sales force available at each store, the large size of locations can be an intimidation to customers. The market segment catered to by PetSmart offers unlimited potential.
The market is continuously growing, which in turn offers rapid growth of the PetSmart customer base. Several of the locations also provide on-site veterinarian services, grooming, and boarding which further tends to broaden marketing potential. Additionally, staple items will attract customers into the store to purchase non-staple items. A few obstacles faced by PetSmart include the current economic slowdown. Customers are not focusing as much on pet upkeep and the pet ownership ratio has been affected. Also, the flood of market with other pet store chains takes a large amount of the customer base away from PetSmart.
However, regardless of the economic slowdown, PetSmart’s clientele and growth potential are extremely positive in today’s growing business economy. The demand for pet supplies will always be a high commodity and a necessary good. In conclusion, American shoppers take the path of least resistance when shopping for specialty goods and at the moment the pet supply path leads to PetSmart. There are no signs that the pet segment of the consumer industry is going to slow down in the near or distant future. There are more dogs and cats in more homes and they are living longer.
Demographic, psychological, and socio-economic trends that are fueling the growth of the pet supply business are not likely to subside in the foreseeable future. I believe that the pet category is worthy of intense focus for private investors and corporations.
- Petsmart Annual Financial Information. 2008 25 Jan. 2009
- PetSmart Annual Report. 2008. 25 Jan. 2009 < http:/ /inst. sfcc. edu/ >
- “PetSmart, Inc. (PETM)” Yahoo! Finance. 2009 26 Jan. 2009 < http:// finance. yahoo. com/q? s=PETM >
- “PetSmart, Inc. ” Hoovers, A D & B Company. 2009 26 Jan. 2009