Specialty twists in pet

June 01, 2012

Supermarkets could take cues from specialty pet chains to differentiate from mass sellers of pet products.

In pet care, convenience is a powerful draw for supermarkets and mass merchants. Their combined bite of the pet-care market was 57% in 2010 versus 17% held by specialty stores—and their share of the pet-food market was 61% versus 14% in specialty stores, according to Pet Business figures cited in a new IBISWorld report, Pet Stores in the U.S

By contrast, pet specialty stores such as PETCO, PetSmart, Pet Supplies Plus, Pet Supermarket and Pet Food Express tend to offer more premium assortments, expertise and a varied range of services such as veterinarian, adoption, training, grooming and boarding programs. 

The pet-store market is valued at $14.7 billion in 2012—comprised of pet food (58%), pet supplies (27.3%), pet services (10.2%) and live animals sales (4.5%), the IBISWorld report says.  By contrast, supermarkets and mass merchants concentrate on the food and supplies sectors.

The pack leaders of pet stores are PetSmart and PETCO, which control a combined 65% share.  PetSmart alone raised its share from 39.3% in 2007 to an expected 44.3% in 2012. The 1,210 PetSmart stores sell more than 10,000 pet products, including premium foods not typically found in supermarkets and mass merchants. About 1,100 PETCO stores pretty much cover the nation, and carry up to 10,000 pet items; the company has been private through 2006.

While pet-store market has grown at a 2.8% annual clip between 2007 and 2012, Petco has surpassed that rate with 6.9% annual revenue growth in those years, the report estimates.

Between now and 2017, the report anticipates a 3.8% yearly pet-store market gain. It projects that the rise of single-person households and an aging populace (empty nesters) seeking companionship will drive most of this growth.  Currently, the 45-54 age group accounts for 28% of pet-store sales, and the 35-44 age group represents 24%, the report notes.

The Lempert Report recognizes supermarkets will likely never match pet specialty stores in services—but they could emulate some of the character and heart of the leading pet chains with events, samples and education to differentiate from mass sellers of pet products.