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COM Pet Stores in the USApril 2019   1

Puppy love: Competition from online retailers

and mass merchandisers will limit growth

IBISWorld Industry Report 45391

Pet Stores in the US
April 2019 Thi Le

2 About this Industry 16 International Trade 30 Revenue Volatility

2 Industry Definition 17 Business Locations 31 Regulation and Policy
2 Main Activities 32 Industry Assistance
2 Similar Industries 20 Competitive Landscape
2 Additional Resources 20 Market Share Concentration 33 Key Statistics
20 Key Success Factors 33 Industry Data
3 Industry at a Glance 21 Cost Structure Benchmarks 33 Annual Change
23 Basis of Competition 33 Key Ratios
4 Industry Performance 24 Barriers to Entry 34 Industry Financial Ratios
4 Executive Summary 24 Industry Globalization
4 Key External Drivers 35 Jargon & Glossary
6 Current Performance 25 Major Companies
8 Industry Outlook 25 PetSmart Inc.
10 Industry Life Cycle 26 Petco Animal Supplies Inc.
27 Pet Retail Brands US Holdings LLC
12 Products and Markets 28 Pet Supplies Plus
12 Supply Chain
12 Products and Services 29 Operating Conditions
13 Demand Determinants 29 Capital Intensity
14 Major Markets 30 Technology and Systems

www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

WWW.IBISWORLD.COM Pet Stores in the USApril 2019   2

About this Industry

Industry Definition Pet stores sell a variety of pets, including shampoos, medication, toys, pet
dogs, cats, fish and birds. Stores also sell containers, dog kennels and cat furniture.
pet foods and pet supplies, such as Some stores also offer pet services, such
collars, leashes, health and beauty aids, as grooming and training.

Main Activities The primary activities of this industry are

Retailing pets
Retailing pet food
Retailing pet supplies

The major products and services in this industry are

Live animals
Pet supplies
Pet food
Pet services

Similar Industries 54194 Veterinary Services in the US

Operators in this industry provide veterinary services.

81291 Pet Grooming & Boarding in the US

Operators in this industry provide pet grooming and boarding services.

45411a E-Commerce & Online Auctions in the US

Operators in this industry retail pet foods and pet supplies via the internet.

45411b Mail Order in the US

Operators in this industry retail pet foods and pet supplies via mail order or catalogs.

Additional Resources For additional information on this industry

American Pet Products Association
Pet Age
Pet Business
The Humane Society of the United States
WWW.IBISWORLD.COM Pet Stores in the US April 2019   3

Industry at a Glance
Pet Stores in 2019

Key Statistics Revenue Annual Growth 14–19 Annual Growth 19–24

$19.4bn 2.6% 1.6%
Profit Wages Businesses

$832.1m $2.9bn 13,962

Revenue vs. employment growth Number of pets (cats and dogs)
Market Share
PetSmart Inc. 8 220
27.6% 210
Petco Animal 200
% change

Supplies Inc.

15.5% 2
0 170

-2 160
Year 11 13 15 17 19 21 23 25 Year 9 11 13 15 17 19 21 23
Revenue Employment
p. 25
Products and services segmentation (2019)

Key External Drivers 4.7% 1.3%

Live animals
Number of pets 7.7%
(cats and dogs) Pet services
Per capita disposable
Demand from online pet 45.7%Pet food
food and pet supply sales
Number of households

Pet supplies

p. 4


Industry Structure Life Cycle Stage Growth Regulation Level Medium

Revenue Volatility Low Technology Change Medium
Capital Intensity Low Barriers to Entry Medium
Industry Assistance None Industry Globalization Low
Concentration Level Medium Competition Level High

WWW.IBISWORLD.COM Pet Stores in the USApril 2019   4

Industry Performance
Executive Summary   |   Key External Drivers   |   Current Performance
Industry Outlook   |   Life Cycle Stage

Executive Summary The Pet Stores industry has prospered rising disposable income levels. Over the
over the five years to 2019 due to past five years, per capita disposable
improvements in household finances and income has improved at an annualized
rising pet ownership among millennials. rate of 2.2%, contributing to the splurge
Moreover, pet parents have increasingly on industry products by pet owners.
lavished their pets with premium food Moreover, pet owners have gradually
products, designer pet accessories and shifted preferences to higher-quality
luxury grooming services. The industry organic, gluten-free and grain-free pet
has expanded strongly during the five- foods and luxury pet therapy sessions.
year period despite mounting These positive trends, combined with
competition from supermarkets, mass demographic shifts in favor of industry
merchandisers and online retailers that growth, have translated to better profit
offer similar products at greater margins during the period. However,
convenience and competitive prices. industry growth has also induced new
entrants to enter the market, although
they only make up a negligible share of
industry has expanded strongly despite industry revenue.
mounting competition from supermarkets, Over the five years to 2024, the Pet
Stores industry’s growth is anticipated
mass merchandisers and online retailers to remain robust, albeit a slower rate.
Despite the economy expected to
Traditional brick-and-mortar continue moving in a favorable direction,
establishments have successfully competition from online retailers,
positioned themselves as pioneers and mass merchandisers and discount
exclusive providers of high-quality food department stores will be more vigorous,
and service offerings, such as grooming limiting the industry’s growth. However,
or day care. IBISWorld expects industry an aging population is expected to
revenue to rise an annualized 2.6% to contribute to a higher demand for
$19.4 billion over the five years to 2019. pets and pet-related products over the
In 2019 alone, industry revenue is next five years as older consumers
expected to grow 2.2%. adopt pets to fulfill their needs of
Since pets are viewed as family companionship. As a result, over the
members, favorable economic conditions five years to 2024, industry revenue is
have enabled pet owners to increase forecast to rise at an annualized rate of
spending on industry’s products through 1.6% to $20.9 billion.

Key External Drivers Number of pets (cats and dogs) representing a potential opportunity for
As households adopt more cats and dogs, the industry.
demand for pet-related goods, such as
foods, medicines, accessories and Per capita disposable income
services increases. According to the Consumers increasingly perceive pets as
American Pet Product Association’s members of their family, meaning
National Pet Owners Survey, an average selected products for pets can be
dog or cat owner spends between considered as nondiscretionary. A
$200.00 and $300.00 annually on food decrease in disposable income has a
for their pet. The number of pets is minor effect on demand for the industry’s
expected to increase in 2019, products because households typically
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Industry Performance

Key External Drivers reduce spending on other household and likely decrease demand for traditional
continued leisure products before cutting down on brick-and-mortar stores, suppressing
pet food. A rise in per capita disposable industry revenue. Demand from online
income, however, increases the pet food and pet supply sales is expected
propensity for households to purchase to rise in 2019, posing a potential threat
greater quantities or more premium to the industry.
items. Per capita disposable income is
expected to increase in 2019. Number of households
According to the American Pet
Demand from online pet food Products Association’s most recent
and pet supply sales National Pet Owners Survey, 65.0%
Online shopping poses a direct threat to of US households own a pet.
traditional industry retailers. Many Consequently, an increase in the
online retailers offer similar products to number of households will likely
brick-and-mortar pet stores, but at lower increase the number of pets in the
prices and the convenience of doorstep United States, supporting industry
shipping. An increase in demand from demand. The number of households
online pet food and pet supply sales will is expected to increase in 2019.

Number of pets (cats and dogs) Per capita disposable income

220 4

% change

190 0


160 -4
Year 9 11 13 15 17 19 21 23 Year 12 14 16 18 20 22 24

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Industry Performance

Current The Pet Stores industry is anticipated to

flourish over the five years to 2019, Industry revenue
Performance benefiting from the growing number of
households and an enhancement in
household finances. Operators in the Pet 6
Stores industry engage in retailing
domestic pets, pet foods, supplies and 4

% change
services. Understanding pet parents’
desire to pamper their pets, industry 2

operators in recent years have

increasingly offered a wide array of
innovative, specialized and premium -2
products and services. IBISWorld expects Year 11 13 15 17 19 21 23 25
industry revenue to increase at an
annualized rate of 2.6% to $19.4 billion SOURCE: WWW.IBISWORLD.COM

over the five years to 2019, with 2.2%

growth in 2019 alone. branded pet supplies and complementary
Strong demand for high-quality services particularly have pushed up
products from millennials pet parents profitability because they typically have
has supported industry profit margins higher markups. However, revenue
during the five-year period. Sales of growth fell behind wage hikes, translating
premium pet food, organic products, to a rise in wages’ share of revenue.

Pets and products The lower-than-natural unemployment According to the 2017-2018 National Pet
rate has somewhat tightened the labor Owners Survey published by the
markets as corporations demand for American Pet Products Association
more employees to keep up with (APPA), an estimated 68.0% of US
operations. However, as the number households own a pet, with more than
of job openings exceeds that of the 42.0% of pet owners owning more than
unemployed individuals in the labor one. Most notably, more than 10.0% of
market, it eventually pushes up wage pet owners are new pet owners, driven by
levels since companies are willing to millennials. According to the latest APPA
pay more to quickly fill up the empty survey, millennials accounted for 35.0%
roles. This, in turn, leads to an increase of all pet owners surveyed, followed by
in the general levels of wages and baby boomers with 32.0%.
disposable income. Rising per capita Besides, current demographic trends
disposable income at an annualized also support the growth of pet ownership.
rate of 2.2% during the period has In recent years, young couples delayed
contributed to a growing number of getting married as a result of career
millennials being able to afford to move devotion. Therefore, they are inclined to
out and live independently. The majority adopt pets to better prepare themselves
of them, in turn, adopt pets to fulfill before starting a family. Nonetheless,
companionship needs. Therefore, an owning a pet helps fulfill the sense of
uptick in the number of households at an having a family not only for couples, but
annualized rate of 0.8% during the also for individuals and elders. Over the
five-year period has driven up demand five years to 2019, the number of pets
for pets and pet-related products. (cats and dogs) is projected to rise at an
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   7

Industry Performance

Pets and products annualized rate of 2.4%, translating to consumer spending has strengthened
continued increased demand for pet products and at an annualized rate of 2.9% over the
services. Overall, steady income streams five years to 2019, contributing to the
also enable pet parents to spend more spending spree of pet owners during
confidently on their pets. In particular, the period.

Industry expansion Traditional pet stores are generally small-

scale and independently owned with Traditional
more than half of operators employing are partly shielded
fewer than 10 workers. Therefore, small
operators within the industry
from vigorous price
simultaneously experienced accumulated competition
competition both from internal big-box
retailers and external players such as services such as grooming, training and
mass merchandisers, supermarkets and boarding has encouraged industry
online retailers. However, they are still operators to employ more workers to
able to profit from catering to a specific provide these services. However, these
niche market within a regional area. services are unlikely to be automated and
Therefore, the anticipated expansion of require a greater degree of skilled labor
the Pet Stores industry has induced more to perform such tasks. Consequently,
players to enter the market. Over the five wages are expected to increase as a
years to 2019, the number of enterprises percentage of industry revenue to 14.9%
is expected to grow at an annualized rate in 2019. Fortunately, this increase is
of 1.4%, totaling 13,962 companies. partially offset by a decline in other
Wages are expected to increase at an expenses including rent, utilities and
annualized rate of 4.0%, reaching $2.9 purchases. As a result, profit, measured
billion in 2019, depicting the increase in as earnings before interest and taxes, is
operations’ expenses. Specifically, the expected to reach 4.3% of total industry
increasing demand for discretionary pet revenue in 2019, up from 4.1% in 2014.

Mounting In recent years, supermarkets, purchasing power. Moreover, many

competitions from discount department stores and mass consumers opt to online retailers to
merchandisers have lured customers reduce traveling time associated with
external players
away from specialty pet stores by shopping at physical stores. In
offering competitively priced products particular, many e-commerce retailers
at the convenience of one-stop shopping. are increasingly offering a two-day
These stores enable consumers to shop delivery option, significantly reducing
for a wide range of household products, the wait time associated with traditional
including pet supplies, in one location. online shopping.
Time-poor consumers turned to these However, traditional industry
types of stores to streamline and retailers are partly shielded from
simplify shopping errands. Meanwhile, vigorous price competitions through
mass merchandisers specialized in the sales of exclusive premium pet
offering lower prices for frugal products and complementary pet
consumers due to their large services. This protection stems from
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Industry Performance

Mounting manufacturers’ restrictions on ultra- have aided traditional retailers in

competitions from premium pet products, selling only to targeting high-end markets over the
specialty pet stores. Such restrictions past five years.
external players

Industry The Pet Stores industry will continue

to capture more consumer dollars
is projected to increase at an annualized
rate of 1.6% to $20.9 billion over the
Outlook from pet owners over the five years to five years to 2024. Despite this
2024 as pets are increasingly treated as anticipated growth, traditional brick-
family members. In addition to rising and-mortar operators, will have to
pet ownership, improving economic struggle with mounting pricing
conditions will boost consumer spending pressures from online retailers,
on premium pet-related products and mass merchandisers and discount
services. As a result, industry revenue department stores.

Pet ownership to grow The number of pets is the primary driver

of demand for the industry. In particular, A
rise in pet ownership
a rise in pet ownership will lead to will lead to higher
higher demand for both discretionary
and nondiscretionary products and
demand for industry
services, such as food, treats and toys. products
To the industry’s benefit, demand for
pets is expected to rise over the five continue outpacing revenue growth.
years to 2024, driven by nonfamily Wages are expected to rise at an
households and an aging population. annualized rate of 1.8% to $3.1 billion
IBISWorld projects the number of pets over the next five years. Moreover,
(cats and dogs) will increase at an intense price competition is also one of
annualized rate of 2.1% over the next five the contributing factors that suppresses
years, contributing to the industry’s profit margins. Furthermore, expected
growing revenue. industry expansion will likely continue
Moreover, a rising acceptance of attracting new entrants to the industry.
higher-margin premium pet products The number of enterprises will continue
and services is expected to lift average to grow despite existing high competition
profit over the next five years. However, from major players. The number of
the average profit margin is expected to enterprises is expected to rise at an
decline modestly to 4.2% in 2024 since annualized rate of 1.7% to 15,215
the growth in wages is expected to companies over the five years to 2024.

Premium products will IBISWorld expects natural and organic According to the research company
become popular foods and treats will gain more popularity Mintel Group Ltd., nutritional value is
over the next five years, as households among the top reasons owners cite for
increasingly place higher emphasis on choosing pet food. Therefore, these
pets’ diets to improve pets’ health. exclusive high-margin products are
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   9

Industry Performance

Premium products will expected to benefit industry operators pampering trend will likely boost demand
become popular during the outlook period, indirectly for this segment as per capita disposable
reducing the degree of price competition income is expected to grow an annualized
that they have endured from external 1.5% over the five years to 2024. With
market players. unemployment expected to remain low
With improving economic conditions, over the next five years, more pet parents
demand for pet services is expected to will increase their spending to pamper
continue rising. Over the past five years, pets as consumer spending is expected to
pet services accounted for a smaller share grow at an annualized rate of 2.0%
of industry revenue. However, the pet during the same period.

Changing Despite favorable economic conditions,

competition competition from supermarkets and Changing demographics
mass merchandisers is expected to
remain tough for basic and mass market
will boost industry growth
pet foods and supplies, such as dry pet
food and cat litter. Since these products Changing demographics in the
involve little or no differentiation domestic population will also boost
among brands, price-conscious industry growth over the next five
consumers will likely continue shopping years. In particular, a growing share
at large retailers due to discounted of the baby-boomer population that is
prices and added convenience. However, increasingly crossing the retiring
the increasing acceptance of exclusive threshold will increase demand for
niche pet products will help partly pets and pet-related products. As retired
diversify the existing price competition. baby boomers are not occupied by
Since almost half the industry consists full-time jobs, they tend to adopt pets
of a large number of small-scale stores, or place higher emphasis in pampering
niche product marketing will become pets if they already own them. Thus,
more vital as it assists industry this demographic will likely drive up
operators in positioning themselves industry revenue over the five years
apart from other stores. to 2024.
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Industry Performance
Life Cycle Stage The industry’s contribution to the
economy is expected to grow
Product innovation and services are improving
Pet ownership is continuing to rise steadily,
expanding the industry’s target market
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Industry Performance

Industry Life Cycle The Pet Stores industry is in the growth Over the five years to 2019, the
stage of its life cycle. Industry valued industry posted strong sales driven by
added (IVA), which measures an pet owners increasingly humanizing
This industry industry’s contribution to the US pets. Consequently, more products
is G
 rowing economy, is expected to increase at an and services emerged in this industry to
annualized rate of 2.9% over the 10 years cater to this trend. For example, more
to 2024. In comparison, GDP is projected pet stores have started offering premium
to grow at an annualized rate of 2.2% pet food and treats as well as services
during the same period. such as grooming, training, walking
The number of enterprises has and full-service boarding. As the
grown hand in hand with industry growth, industry is made up of retailers
at an annualized rate of 1.6% during the specializing in pet supplies and pet
10-year period. Prospective growth in food, the industry’s main threat comes
conjunction with low start-up costs have from large-scale supermarkets, mass
encouraged new entrants to continue merchandisers and discount retailers
joining the industry even though they are such as Walmart and Costco. Online
generally small scale and cater to a specific retailers also pose an increasing threat
geographic area. Conversely, the industry as more tech-savvy individuals opt to
is characterized with increasing new online shopping to save time and money.
product introductions such as organic, In the long run, both forces pressure
human-grade pet food and electronic pet industry prospects as many small-scale
equipment and gadgets. The continuous retailers will not be able to compete
growth of the customer base has with the economies of scale and
contributed significantly to the industry’s extensive distribution networks these
growth over the past 10 years. As retailers own. Specialty pet stores will
millennials are now living independently likely further diversify into services
and earn a steady income, they are more and exclusive pet food brands to
willing to increase their spending on pets. stay competitive.
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Products & Markets

Supply Chain   |   Products and Services   |   Demand Determinants
Major Markets   |   International Trade   |   Business Locations


99 Consumers in the US
The Pet Stores industry relies on consumers to purchase pet products and to use industry


31111 Animal Food Production in the US
This industry supplies pet stores with a vast array of pet food.
33993 Toy, Doll & Game Manufacturing in the US
This industry supplies pet toys and accessories to industry operators.
54194 Veterinary Services in the US
This industry provides veterinary care services such as vaccinations to industry operators.

Products and Services Products and services segmentation (2019)

7.7% Other 4.7%
Live animals
Pet services

Pet food

Pet supplies


Pet food obese animals, specialized formulas for

Since food is a necessity, pet food makes sensitive stomachs and freshly baked
up the largest product segment for the cakes and cookies as treats. This segment
industry. This segment covers a wide endures a highest degree of competition
range of products such as dry and wet from both online retailers and mass
food for dogs and cats, bird feed, crickets merchandisers. Consequently, the
and worms for reptiles and other treats segment’s share of revenue declined
and supplements for several different slightly over the past five years,
household pets. Over the past five years, accounting for an estimated 45.7% of
retailers increasingly introduced all- total revenue in 2019.
natural and organic food products. These
premium pet foods tend to be priced Pet supplies
higher, enabling industry operators to Products in this segment include over-
earn larger markups. Examples of the-counter medicines, food bowls,
premium pet food include raw diets for collars and leashes, pet clothing, brushes
dog and cat foods, weight control food for and combs, shovels and scoopers, cat
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   13

Products & Markets

Products and Services litter, cages birds and reptiles, travel this segment. As more pet owners
continued carriers and other various accessories consider their animals as family
for pets. During the five-year period, members, demand for specialty pet
this segment’s share of revenue increased services also increased.
due to the pet parenting trend, in which
pet owners treated their pets as family Live animals
members and started supplying pets Live animals are the industry’s
with complementary products. This smallest segment, accounting for an
segment accounts for an estimated 40.6% estimated 4.7% of total industry revenue
of total industry revenue in 2019. Pet in 2019. This product segment is minor
supplies and accessories sold by industry because a pet is normally a one-off
retailers also encounter increasing purchase, while products in other
competition not only from mass segments, such as pet supplies and
merchandisers but also smaller retail pet foods are repeated purchases.
outlets because there are no regulations Furthermore, major players in the
that limit sale of pet supplies. industry only sell small animals such as
fishes, reptiles, rabbits, hamsters and
Services birds and partner with local pet
Pet services were the fastest-growing programs for cat and dog adoptions.
product segment for the industry
over the past five years, reaching an Other
estimated 7.7% of total industry revenue Operators in the Pets Stores industry
in 2019. Pet services include full-service also retail a variety of products
grooming, haircuts, baths, toenail such as books, sporting goods and
trimming and tooth brushing. This recreational equipment, and lawn
segment excludes veterinary services. and garden equipment and supplies.
Other services may include activities However, these products only account
such as training, boarding and day for a negligible share of total industry
camps. Greater interest in pet revenue, accounting for an estimated
pampering drove much of the rise of 1.3% in 2019.

Demand Demand for pets and pet supplies is are treating pets as their family members.
Determinants affected by the rate of pet ownership, Thus, they are more willing to purchase
food and supply prices, household higher quality pet food and supplies as
income and demographics. well as more complementary services for
their pets.
Pet ownership
Pet ownership is a main driver for Income
industry demand by definition. As pet Households with higher incomes are
ownership increases, it leads to higher better able to afford discretionary items
demand for the industry’s primary and services sold at pet stores, leading to
products such as food and treats because higher demand for high-quality pet foods
these goods are daily necessities for the and associated products. Over the past
well-being of pets. Pet ownership is on five years, pet-owning households with
the rise, facilitating industry growth. high disposable income were the main
Additionally, the industry growth is also customers for luxury and trendy pet
due to the fact that pet owners nowadays products, including premium pet food
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Products & Markets

Demand and designer pet toys. In addition, those fulfill the needs of young couples that
Determinants with higher incomes tend to travel are not ready to have babies but still
frequently, so they are more likely to use desire a sense of growing a family.
pet boarding services or purchase However, this trend is getting popular
products enabling pets to accompany not only for couples but also for
them while traveling. individuals who live independently but
prefer companionships.
Demographics and lifestyle
Changes in demographics and lifestyle Rising online competition
of households are important Even though demand for pets and
determinants of demand. Frequent pet-related products is expected to boom,
relocation or longer work hours may industry operators is enduring a higher
reduce a household’s willingness to own degree of competition from online
a pet. For instance, households living in competitors. Online competitors such as
apartments are less likely to have pets Amazon.com Inc. are progressively
since many apartments do not permit introducing their in-house brands at
pets. The aging population, however, competitive prices. Moreover, the
may increase demand for pets. The flexibility and popularity of online
second-largest pet owner group includes shopping is expected to hinder demand
older individuals of the baby-boomer for industry’s products as tech-savvy
generation, which is increasingly customers are lured away from
entering retiring threshold. Therefore, traditional brick-and-mortar stores.
without a full-time job, they will have Online operators generally carry a larger
more spare time and endure empty nest variety of brands, offer fast-shipping
syndrome as children have moved out, options and provide timely customer
the need for pets is high. Thus, spending services. Over the past five years, demand
on pets from baby boomers is expected from online pet food and pet supply sales
to surge accordingly over the next five has increased strongly at an annualized
years. On top of that, as US’s youth is rate of 8.6%, limiting the potential of
getting married at a slow pace, pets help industry’s growth.

Major Markets Consumers aged between 45 and 64 in households after children leave home.
The largest market for the Pet Stores As a result, this figure is forecasted to
industry includes consumers between increase over the next five years as more
the ages of 45 and 64 who account for baby boomers will enter this age range.
an estimated 35.7% of revenue in 2019.
Consumers in this age group are likely Consumers aged 65 and older
the key financial providers of the Consumers who are older than 65 years
household and, therefore, responsible old account for an estimated 30.3% of
for household pet expenditures. industry revenue in 2019. The younger
Furthermore, consumers in this product members of this customer segment just
market are typically established in their enter their retiring ages and generally
careers and have steady income streams, live individually. Therefore, they tend to
enabling them to spend generously on view pets as family members and spend
pet supplies. It has also been suggested substantially on pets since pets are
that older members of this age group look adopted to replace their children or
for pet companions to fill the empty space grandchildren who have moved out. As
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   15

Products & Markets

Major Markets Major market segmentation (2019)

Consumers under
25 years old

Consumers between 45
28.1% 64 years old
Consumers between
25 and 44 years old

Total $19.4bn Consumers aged 65 and older

they are prepared with retirement funds, 25 and 44 are estimated to account for
they will place more focus on pampering 28.1% of the market in 2019. This
pets as compared with working demographic group accounts for a
individuals. Consequently, this customer smaller, but growing share.
segment accounted for a remarkable
share of industry revenue over the past Consumers under 25 years old
five years and it is expected to continue Consumers in this age group are
to uptrend over the next five years as generally children, teenagers and young
more baby boomers will cross the retiring adults. As they commonly have restricted
threshold. The smallest share of this age or no income, they are not able to spend
group is made of consumers over the much on industry products. However,
age of 75 at 5.8%. Consumers in that they are one of the most influential
age range have limited income streams customer groups of industry operators.
which decrease their ability to own For instance, parents usually buy pets
or spend on pets. In addition, this when their kids ask for, thus demand is
demographic tends to rent apartments primarily derived from the younger
or live in retirement homes which do customers of this age group. Despite they
not permit pets, indirectly hindering do not spend directly, they still remain
their ability to own pets. highly important. Industry operators
need to cater them carefully to trigger
Consumers aged between 25 and 44 their demand for pets and pet-related
Consumers aged between 25 and 44 products. Nonetheless, demand from this
typically have families or children who age group has been stagnant over the
wish to have family pets. Given how pet past five years as the number of children
companionship can benefit health and younger than nine years old remained flat
behavioral development in children, during the same period. Moreover,
consumers in this age group often decide increasing interest in technology and
to add a pet to the family. According to electronics products have shifted away
the American Pet Products Association, a demand from adolescents for pets and
reported 38.0% of households with pets’ products. This consumer group is
children under 18 years old own at least estimated to account for 5.9% of industry
one pet. Consumers between the ages of revenue in 2019.
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Products & Markets

International Trade International trade activity is accounted and supplies is not readily available,
for at the manufacturing level by as they are categorized into broad
convention. This domestic retail industry segments containing large numbers of
does not technically have imports or non-pet related products. Trends in pet
exports. Products and supplies in the Pet food trade provide some insight into
Stores industry, however, are imported trends regarding overall pet product
and exported at the manufacturing level, trade levels and are included in the
then sold in the domestic market. Precise Animal Food Production industry
export and import data on pet products (IBISWorld report 31111).
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   17

Products & Markets

Business Locations 2019

0.2 New
Great Mid- 0.6

Lakes Atlantic 1 2
NY 3
WA MT ND 7.3
5 4
3.1 0.2 MN
0.3 1.5
OR Mountains SD
Plains 1.7 MI
1.9 ID IA OH 9 8
0.5 WY 3.7
3.8 1.7 2.9

West NV
0.4 0.3
1.0 NC
0.7 CO KS 1.6 2.7
2.7 0.8 TN
CA 1.3
0.9 0.5 AL 2.4
AZ MS 0.9
2.5 NM
0.6 Southwest 0.5

0.8 FL
6.7 8.2

West Establishments (%)

HI Less than 3%
0.3 Additional States (as marked on map) 3% to less than 10%
1 VT 2 NH 3 MA 4 RI 10% to less than 20%
0.3 0.7 2.3 0.5 20% or more

5 CT 6 NJ 7 DE 8 MD 9 DC
1.6 3.3 0.6 1.8 0.2

WWW.IBISWORLD.COM Pet Stores in the USApril 2019   18

Products & Markets

Business Locations Establishments in the Pet Stores industry

Distribution of establishments vs. population
are primarily located in the Southeast,
West, Mid-Atlantic, Great Lakes and
Southwest regions of the United States.
Industry locations are based primarily
on the number of households in each 20
region, as well as the median income
level of households.

The Southeast region holds the
highest number of industry 0
establishments with 23.0% of total


Great Lakes


New England


Rocky Mountains


pet stores in 2019. The region itself is the
most populated region in the United
States with one-quarter of the nation’s
population. Given the higher proportion Establishments
of households, there is greater demand Population
for industry retailers. As industry SOURCE: WWW.IBISWORLD.COM

operators engage in retailing products,

the closer they are to downstream Mid-Atlantic
customers, the higher chance that they The Mid-Atlantic region houses an
can make a sale. It is because customers estimated 17.6% of total pet stores in
are not only influenced by price tags, but 2019. The two most populated states
also locations. An establishment that is are New York and Pennsylvania,
located further away from town is at a which account for a respective 7.3%
disadvantage compared with one that is and 4.4% of the industry’s locations. These
situated in the center of a town since a states have some of the most populous
longer drive will potentially deter cities in the United States due to large
customers from buying at that metropolitan centers. The region also
establishment. Within the Southeast has higher-than-average income levels.
region, Florida has the highest number Given the number of households within
of pet stores at an estimated 8.2% of the region that earn a higher level of
the nation’s total establishments. disposable income, they are better able
to afford owning and pampering a pet.
The West has the second-highest Great Lakes and the Southwest
proportion of pet stores in the country The Great Lakes region contains an
with an estimated 19.2% of industry estimated 13.7% of total pet stores,
establishments in 2019. California has followed by the Southwest region at
the highest number of pet stores in the 10.7%. The Great Lakes region is also
country at 12.9%. The primary reasons the fourth-most populated in the
for the higher-than-average number of nation with an estimated 14.5% of the
pet stores in the West are population total population, therefore making it
density and income levels. The West the fourth-most common destination
holds 17.3% of the nation’s total for industry establishments. Texas is
population. Furthermore, both California the leading state within the Southwest
and Nevada have higher-than-average region, which holds an estimated 6.7%
median incomes by state. of total industry establishments.
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   19

Products & Markets

Business Locations Other small participating regions in the (4.3%). These regions have smaller
continued industry include New England (6.0%), the consumer markets, therefore limiting
Plains (5.5%) and the Rocky Mountains demand for pet stores.
WWW.IBISWORLD.COM Pet Stores in the US April 2019   20

Competitive Landscape
Market Share Concentration   |   Key Success Factors   |   Cost Structure Benchmarks
Basis of Competition   |   Barriers to Entry   |   Industry Globalization

Market Share Nearly half the Pet Stores industry’s Consequently, these stores are expected
Concentration revenue comes from two specialty supply to grow at the expense of big-box
retailers, which are PetSmart Inc. retailers. In recent years, big-box
(PetSmart) and Petco Animal Supplies retailers are progressively putting more
Inc. (Petco). The remainder consists of effort in promoting their online presence.
Concentration in this family-owned and regional stores, small For example, the acquisition of Chewy.
industry is M
 edium franchises and smaller pet stores chains. com by Petsmart in 2017 helped the
Despite the moderate degree of company partially reduce the threat that
concentration, small operators are still it would have to experience in the
able to profit from serving niche markets absence of having its own online
in their geographical locations, rarely platform. Moreover, the merger of
expanding beyond those areas. regional pet store chains Pet
Over the five years to 2019, PetSmart Supermarket Inc. (Pet Supermarket) and
and Petco experienced a decline in their Pet Valu Inc. (Pet Valu) to form Pet Retail
respective market share due to increasing Brands US Holdings LLC in 2016 has
competition from mass merchandisers, further consolidated the industry. Prior
supermarkets and online retailers. to the event, Pet Supermarket specialized
Despite big-box retailers are able to offer in serving the Southeastern market while
customers premium and exclusive pet Pet Valu mainly catered to customers in
products, they still experience high Canada and the East Coast of United
competition from mass merchandisers States. Therefore, the strategic merger
and online retailers in the form of heavy enabled the company to successfully
discounts and promotions. Acting as a expand its presence to more areas, thus
one-stop shopping destination, mass reaching more customers. However, the
merchandisers and online retailers are pressure is left to small-scale retailers as
benefited from price-conscious and now they have to compete with both
time-strapped customers who place high larger chains and online giants such as
emphasis in prices and convenience. Amazon.com and Chewy.com.

Key Success Factors Attractive product presentation as major shopping precincts, to maximize
To appeal to customers and encourage store traffic and sales.
purchases, eye-catching promotions and
IBISWorld identifies displays are essential for pet stores. Economies of scope
250 Key Success Successful operators need a range of the
Factors for a Experienced work force most popular pets and pet supplies at
business. The most It is important to employ a highly capable different levels of price and quality.
staff with clear knowledge of the pet Offering a wider variety of products will
important for this
industry to better assist customers and attract a larger customer base.
industry are: boost sales.
Effective quality control
Proximity to key markets Operators must ensure that pet services
Operators need to be located in high- are up to standards for each specific
traffic and high-visibility locations, such animal and breed.
WWW.IBISWORLD.COM Pet Stores in the US April 2019   21

Competitive Landscape

Cost Structure Profit decreased slightly over the past five years
Benchmarks Profit (measured as income before thanks to the increase in number of
interest and tax) is expected to account imported products. As more of industry
for an estimated 4.3% of revenue in 2019, products are manufactured overseas,
up from 4.1% in 2014. A growing pet where labor and input costs are relatively
population and an increasing willingness lower, it has translated to lower prices for
of pet owners to spend on pets, industry products in the recent years.
particularly on premium or high-margin
products have boosted up industry profit Wages
margin over the past five years. Due to the labor-intensive nature of the
Furthermore, pet stores increasingly offer retail sector, wages are estimated to make
pet services, which typically have higher up the second-highest expense item for
margins and endure lower degree of price pet store operators, accounting for an
competition. It is important to note, estimated 14.9% of total industry revenue
however, that actual levels of margin may in 2019. In pet stores, employees are
vary considerably between industry crucial to provide care for pets, maintain
participants. For instance, major player stock levels and provide customer
such as PetSmart Inc. experiences a service. Furthermore, added focus was
higher-than-average profit margin placed on labor over the five years to
because of its purchasing power and 2019 as pet services have become one of
economies of scope. Large volume the fastest-growing sources of industry
purchases enable them to achieve lower revenue. In particular, pet services such
purchase costs at wholesale level, then as grooming and training require skilled
passing those savings to end-consumers labor to perform such tasks, which imply
in the form of competitive prices. higher wage levels as compared to less
Consequently, they can afford having skilled workers.
lower markups and profit from larger
sales volumes. However, smaller players Rent
in this industry do not have such Rent costs are expected to represent an
purchasing power which in turn pushing estimated 7.7% of industry revenue in
up their cost of goods sold per unit and 2019. Rent accounts for a noticeable
causing them to accept lower margins. share of industry revenue because
Over the next five years, profit margin is industry establishments generally
expected to decline to 4.2% in 2024 due operate at high traffic areas, where rent is
to increased price competitions from relatively higher. However, this cost has
both internal industry operators and slightly declined over the past five years,
external competitors. down from 8.2% in 2014. According to
CoStar Group – a commercial real estate
Purchases information provider, the slowdown in
Purchase costs have remained as the retail leasing has put a downward
single-largest expense for the industry, pressure on rent in recent years,
accounting for an estimated 55.1% of contributing to the declining rent’s share
industry revenue in 2019. Purchases of revenue over the five years to 2019.
consist of a range of pet food and pet
supplies, including collars, leashes, Utilities
medication, shampoos, dog kennels and Utilities include cost of natural gas,
pet toys, as well as a range of pets, electricity, water and sewer. Utilities is
including dogs, cats, birds, fish, small estimated to account for a minor share of
animals and reptiles. Purchase expenses industry revenue in 2019 at 1.4%. The fall
WWW.IBISWORLD.COM Pet Stores in the US April 2019   22

Competitive Landscape

Cost Structure in world crude oil prices has made the advertising activities to generate traffic
Benchmarks general utilities rates to drop slightly and boost sales. Major types of marketing
since 2014. include newspaper, magazine, radio and
television advertising. Moreover,
Depreciation increasing competition from external
Depreciation expenses are expected to players is expected to encourage industry
consume 1.0% of revenue in 2019. operators to invest more heavily in
Minimal depreciation is typical for advertising in the coming years.
retailing industries, which are very labor
intensive and require minimal capital Other
costs in operations. This figure is high Operators incur other expenses including
compared with other retailing industries general administrative, insurance,
because pet stores must acquire special security costs. Other costs for industry
cages and tanks for animals in addition to operators typically include licensing fees,
shelving and cash registers for stores. legal expenses, accounting services and
staff training costs. Overall, all other
Marketing expenses are expected to account for the
In 2019, companies invest 1.7% of remaining 13.9% of industry revenue
revenue toward marketing and in 2019.

Sector vs. Industry Costs

Average Costs of
all Industries in Industry Costs
sector (2019) (2019)
100 3.3 4.3 n Profit
8.9 n Wages
14.9 n Purchases
80 n Depreciation
n Marketing
n Rent & Utilities
n Other
Percentage of revenue

66.7 55.1


1.0 1.7
20 0.7 1.5 9.1
14.6 13.9
WWW.IBISWORLD.COM Pet Stores in the US April 2019   23

Competitive Landscape

Basis of Competition Internal competition Mass merchandisers and discount

Pet stores compete with each other retailers typically do not sell ultra-
based on price, product variety, premium pet products because they are
Level & Trend customer service, brand awareness, limited by manufacturers’ restrictions.
C in variety of pet services and store location. However, they are generally able to
this industry is Since product purchases make up the price mass-market pet products more
Highand the trend majority of sales for pet stores, their competitively than big-box retailers due
main basis of competition is product to their ability to bulk purchase directly
is I ncreasing
range, quality and price. Large players from manufacturers. And since not all
such as Petco Animal Supplies Inc. and consumers place high value in premium
PetSmart Inc. benefit from economies of and exclusive pet brands, less expensive
scope and are able to provide a variety of mass-market pet products have lured
pet foods, pet supplies and pet services price-conscious households away from
with diverse attributes across a range traditional big-box retailers. Therefore,
of prices, enabling them to capture a the increasing popularity of mass
larger pool of consumers with different merchandisers and discount retailers
budgets. Major players generally benefit has dampened the industry growth over
from bulk buying and producing their the past five years.
private label products at economies of Further competition comes from
scale, enabling them to sell at lower the E-commerce and Online Auctions
prices but still maintain healthy profit industry (IBISWorld report 45411a)
margins. Smaller stores are then and the Mail Order industry (45411b).
pressured to provide products at similar In recent years, there is a growing
prices, which result in lower profit prevalence of online websites specifically
margins because they are lack of such for selling pet products, including
purchasing power. However, smaller companies such as Amazon.com Inc.
industry players position themselves by (Amazon) and Chewy.com. Online
offering superior customer services and shopping enables consumers to
cater to specific needs of niche markets purchase products without physically
in their local areas. visiting a store, thus significantly reduce
their travel time. Moreover, online giant
External competition Amazon has also introduced its private
Historically, supermarkets were the label brand, Wag, directly competing
primary sellers of pet food products as with industry players in providing
they stock a wide variety of pet food and low-priced pet food. And as tech-
supplies and bulk purchases generally savvy and time-strapped individuals
enable them to offer lower prices than increasingly adopt online shopping as
specialty retailers. In recent years, an alternative to traditional shopping
mounting competitions from mass method, demand from online pet food
merchandisers and discount retailers and pet supply sales has increased at an
such as Walmart and Costco have put annualized rate of 8.6% over the past
additional pressure on industry players. five years.
WWW.IBISWORLD.COM Pet Stores in the US April 2019   24

Competitive Landscape

Barriers to Entry Significant factors that can hinder a

potential entrant from entering the Pet
Barriers to Entry checklist
Level & Trend Stores industry are a high level of
competition and regulations associated Competition High
 arriers to Entry
B Concentration Medium
with this industry. Nevertheless, there
in this industry are are various niche markets available for Life Cycle Stage Growth
Mediumand S  teady new players to occupy, specifically those Capital Intensity Low
specializing in premium and innovative Technology Change Medium
food, products and services. Regulation and Policy Medium
Industry Assistance None
Government regulations, including
federal and state laws regulate pet shops SOURCE: WWW.IBISWORLD.COM
and the sale of animals. For example, the
Pet Animals Act 1951 requires pet shops barrier for new, independent retailers. In
to obtain a license in accordance with the particular, established prices set by
act before opening. In addition, the existing industry players pressure new
Animal Welfare Act of 1966 dictates how market entrants to either obtain
pets sold in pet stores must be acceptable economies of scale levels or
maintained. Pet shops need to address a accept lower margins. Overall, opening a
range of issues and receive licenses based new pet store that meeting licensing
on federal and state requirements before standards is costly. Additionally, a
permission to operate is granted. significant share of funding may be
Industry concentration can be another directed toward marketing to build
barrier to potential entrants. Two consumer interest and recognition. The
national retail chains in this industry initial cost of establishing a retail outlet,
account for almost half of industry in addition to purchasing inventory
revenue, leaving smaller players with the levels, may be a barrier for new entrants.
remaining portion. Although this Specifically, high-visibility locations are
industry is highly fragmented, there is relatively expensive and harder to rent,
intense price competition from mass forcing new small-scale players to incur a
merchandisers, online operators and higher start-up cost to gain foothold in
catalog retailers, which may provide a those locations.

Industry The Pet Stores industry is composed of industry has a low level of globalization.
Globalization several small players. Many of the The industry’s largest player, PetSmart
smaller, independent pet supply retailers Inc. has a network of stores in Canada,
Level & Trend are family-owned businesses that operate while Petco Animal Supplies Inc.
within a local or regional scope. In expanded to Mexico and Puerto Rico.
G in this addition, the industry’s major companies However, international sales are still low
industry is L owand are domestically owned. Therefore, this relative to the United States.
the trend is S  teady
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   25

Major Companies
PetSmart Inc. | Petco Animal Supplies Inc. | Other Companies

Major Players
(Market Share)
Petco Animal Supplies Inc. 15.5%



Player Performance Since its establishment in 1986, many of which are not found in
Phoenix-based PetSmart Inc. (PetSmart) supermarkets or mass merchandisers.
has become the top specialty retailer of Pet supplies such as collars, leashes,
PetSmart Inc. pet food and supplies. PetSmart health and beauty aids, shampoos,
Market Share: 27.6% operates more than 1,650 stores, medication, toys, pet carriers, dog
typically located in regional shopping kennels, cat furniture, equestrian
centers near other superstores and supplies, bird cages, aquariums and
warehouse stores. The company employs filters make up the hard goods category.
more than 56,000 people in the United Pets sold by the company include fish,
States, Puerto Rico and Canada. By birds and reptiles. Larger animals, such
offering more than 11,000 pet products as cats and dogs, are not sold in
and providing various pet services, PetSmart stores. However, they are
PetSmart aims to provide a one-stop available for adoption through the
shopping experience. In March 2015, the PetSmart Charities’ Adopt a Pet
company went private through an $8.7 Program, which was co-developed with
billion buyout by BC Partners. humane organizations. In 2016,
PetSmart generates revenue through PetSmart acquired AllPaws, one of the
the sale of merchandises and services. largest online and mobile platforms for
Services include grooming and boarding adopting pets.
while merchandises are categorized into In addition to selling merchandises,
consumables, hard goods and pets. PetSmart expanded its service offerings
Consumables include pet foods, treats to include in-store boarding facilities,
and litter, as well as premium products, grooming services, obedience training

PetSmart Inc. (US industry-specific segment) - financial performance*

Revenue Operating Income
Year** ($ million) (% change) ($ million) (% change)
2014-15 4,900.8 N/C 491.3 N/C
2015-16 5,039.7 2.8 502.4 2.3
2016-17 4,959.7 -1.6 324.8 -35.4
2017-18 4,905.8 -1.1 308.1 -5.1
2018-19 5,025.4 2.4 269.0 -12.7
2019-20 5,331.2 6.1 269.4 0.1

*Estimates; **Fiscal year-end January 31

WWW.IBISWORLD.COM Pet Stores in the USApril 2019   26

Major Companies

Player Performance and full-service veterinary services. locations and position the company to
continued PetSmart offers a complete pet boarding compete with other online retail giants
and day-care service through PetsHotel such as Amazon.com Inc.
with 24-hour supervision, an on-site
veterinarian, air-conditioned rooms and Financial performance
daily specialty treats. Nearly 200 Over the five years to 2019, revenue
PetSmart stores include PetsHotel from PetSmart’s industry-specific US
boarding facilities and Doggie Day operations is expected to grow at an
Camps. PetSmart also offers full-service annualized rate of 1.7% to $5.3 billion.
veterinary hospitals in more than 900 of Total brick-and-mortar sales in the
its stores through a partnership with United States declined due to decreased
Banfield Pet Hospital. In May 2017, in-store traffic and increased external
PetSmart acquired Chewy.com, the competition from online retailers.
largest online retailer for pet food, to However, the decline was partially
expand its retail omnichannel. This offset by rising sales of premium and
acquisition is expected to offset natural food products and increased
declining traffic at brick-and-mortar sales from pet services.

Player Performance Established in 1965, Petco Animal significantly expanded its online presence
Supplies Inc. (Petco) is the second-largest through the acquisition of Drs. Foster
pet supply specialty retailer in the United and Smith Inc., a mail order and
Petco Animal States. The company is headquartered e-commerce pet supply corporation in
Supplies Inc. in San Diego and operates an estimated 2014. The company then acquired
Market Share: 15.5% 1,810 Petco stores, including the smaller- another two companies in 2017 including
format Unleashed by Petco neighborhood Pupbox Inc., an online monthly
Industry Brand Names
shops and Pooch Hotel locations across subscription service, and PetCoach Inc., a
Unleashed By Petco
the United States, Mexico and Puerto digital service that connects users to
Rico. The company expanded to Puerto veterinarians. The company generated
Rico and Mexico in 2012 and 2013, $4.2 billion in total company revenue in
respectively. The company also fiscal 2017. In August 2015, the company

Petco Animal Supplies Inc. (US industry-specific segment) - financial

Revenue Operating Income
Year** ($ million) (% change) ($ million) (% change)
2014-15 2,682.6 N/C 188.3 N/C
2015-16 2,718.5 1.3 158.0 -16.1
2016-17 2,786.5 2.5 132.6 -16.1
2017-18 2,819.9 1.2 135.1 1.9
2018-19 2,902.4 2.9 131.6 -2.6
2019-20 2,999.8 3.4 134.3 2.1

*Estimates; **Year-end January 31

WWW.IBISWORLD.COM Pet Stores in the USApril 2019   27

Major Companies

Player Performance filed for an initial public offering (IPO), expanded its smaller store chain,
continued but withdrew its offering on February Unleashed by Petco, which specializes in
2016 following a $4.6 billion acquisition catering natural, organic and higher-end
by the Canada Pension Plan Investment pet products to urban markets.
Board and CVC Capital Partners.
Petco stores carry up to 10,000 Financial performance
different pet-related items, including pet IBISWorld estimates that Petco’s US
food, collars, leashes, grooming products, revenue generated from brick-and-
toys, health and beauty aids, kennels and mortar stores has increased at an
pet houses. Similar to other industry annualized rate of 2.3% to $3.0 billion
participants, Petco offers a variety of over the five years to 2019. Similar to
grooming, veterinary and obedience PetSmart, strong sales of pet services
services for animals, but does not sell cats were one of the company’s main drivers
or dogs. Instead, the Think Adoption of growth. As Petco shifts focus to the
First program is used in partnership with smaller store model, the company also
local animal welfare organizations. The concentrates on increasing online
company also operates an independent presence through an acquisition strategy.
nonprofit organization, the Petco Between 2005 and 2015, online sales
Foundation, which has invested more reportedly increased from 1.2% to
than $175.0 million to support local 8.5% of total revenue, according to
animal welfare groups since its inception the company’s 2015 IPO filing (latest
in 1999. Moreover, Petco has significantly data available).

Other Companies PetSmart Inc. and Petco Animal comprises several smaller-scale and
Supplies Inc. are the top players in the privately owned pet stores. In fact,
Pet Stores industry, accounting for more than half of all companies employ
nearly half of total industry revenue fewer than nine workers. Due to the
in 2019. Overall, the industry is fragmented nature of the industry,
characterized by a moderate degree of most players do not individually
concentration controlled by these two account for a considerable share of
retailers. The remainder of the industry industry revenue.

Other Company Pet Retail Brands US Holdings LLC (Pet 1,054 stores in North America, with stores
Performance Retail Brands) is a retailer chain of pets, primarily along the East Coast. The
pet supplies and wellness products. The company employs nearly 2,200 associates
company was formerly known as Pet and sells more than 7,000 pet care
Pet Retail Brands Supermarket Inc. (Pet Supermarket), products, including food, toys, medicine
US Holdings LLC founded in 1973 in Fort Lauderdale, FL. In and clothing, as well as small animals,
Market Share: 3.1% July 2016, Pet Supermarket merged with such as hamsters, guinea pigs, rabbits and
Ontario-based Pet Valu Inc. (Pet Valu) to tropical fish. The company also offers a
form Pet Retail Brands. Pet Retail Brands range of high-value pet products and
now operates as a parent organization of luxury pet items. IBISWorld estimates Pet
Pet Supermarket and Pet Valu. The Retail Brands will generate $654.9 million
combined business operates more than in industry-relevant revenue in 2019.
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   28

Major Companies

Other Company Founded in 1988 and based in Livonia, and are limited to about 5,000 to
Performance MI, Pet Supplies Plus is a franchise 6,000 square feet in size for smaller
business with more than 442 stores across markets and 7,000 to 9,000 square
more than 33 states in 2018. Pet Supplies feet in larger metropolitan areas. The
Pet Supplies Plus Plus offers franchises to both single store smaller store concept is designed to
Market Share: 2.6% owner-operators and area developers that keep operating costs at minimum
own several stores in a designated market levels. As of 2018, the company had
region. Pet Supplies Plus differentiates 227 franchised locations, and according
itself by providing all-natural food to its report, a franchise store on average
products. In addition, it offers a range of earned $2.2 million annually in fiscal
pet services, such as grooming, self-service 2017. Overall, IBISWorld estimates
pet wash stations and adoptions. that Pet Supplies Plus will generate
Pet Supplies Plus stores are $506.5 million in industry-relevant
generally located in high-traffic areas revenue in 2019.
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   29

Operating Conditions
Capital Intensity   |   Technology & Systems   |   Revenue Volatility
Regulation & Policy   |   Industry Assistance

Capital Intensity The Pet Stores industry, similar to most

other retail industries, has a low level of Capital Intensity
Capital units per labor unit
capital intensity. For every dollar spent
on wages, an estimated $0.06 is invested 0.5
The levelof capital in the store and equipment. Most capital
intensity is L ow costs are related to shelving, store, 0.4

computers, cashier equipment and 0.3

other equipment such as caging for
animals, which do not need frequent 0.2

replacement. Therefore, this industry is 0.1

labor intensive because employees are
needed to operate and manage stores, 0.0
Economy Retail Trade Pet Stores
provide customer service and support,
restock merchandise and provide care Dotted line shows a high level of capital intensity

The level of capital intensity has

increased over the past five years, fulfilment software. For instance, Pet
reflecting increasing adoption of Supplies Plus incurred $20.0 million on
technology such as POS system and IT upgrading of their IT systems and POS
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   30

Operating Conditions

Capital Intensity infrastructures in 2015. However, the products are always readily available
continued Pet Stores industry’s operations are still and will be auto replenished when the
relatively labor intensive, as labor is inventory runs low.
required to operate and manage all the To this point, the cost of labor within
equipment and computer systems. this industry is relatively high compared
Moving forward, IBISWorld anticipates with competitors such as supermarkets,
that capital intensity in the industry will mass merchandisers and online pet
increase, albeit a slow rate. As more supply retailers. This is because the
customers are working individuals who other stores do not retail pets directly
prefer to save time travelling to the and provide pet services, inherently
shops, self-checkout counters or faster requiring fewer and less skilled staffs. In
POS systems are essential in the future addition, these stores do not incur costs
to help improve customer experience. associated with employee training, since
Moreover, industry operators want to workers at these retailers do not require
avoid situations where customers make industry-specific knowledge. For online
a trip to their store then realize the retailers, labor costs are exceptionally
product that they want is out of stock. low as they are not required to outlay
Thus, it is crucial to invest in product expenditure on shelving, displays or
fulfilment software to ensure that cash registers.

Technology and Over the five years to 2019, there have productivity because it increases the
Systems been few technological advances relevant speed at which information is passed,
to the Pet Stores industry. Technological enables greater control over the
advances in this industry are generally distribution of goods and reduces
limited to those occurring in similar retail errors along the supply chain. New
The level
of industries, such as computer scanning improvements will boost revenue for
technology change cash registers and automated inventory larger stores that can afford to invest in
is M
 edium equipment. The introduction of this the technologies. For example, larger
technology has enabled retailers to better retailers benefit from radio-frequency
manage efficiency of operations and identification (RFID), which provides
inventory. Technology at checkout leads real-time information on inventory
to computerized point-of-sale equipment, and helps to reduce shrinkage
which controls and records problems as well as improves efficiency.
merchandising, distribution, sales and Many operators are small in size and
stock markdowns. do not have necessary financial
Furthermore, barcode scanning resources to purchase expensive
offers the advantages of higher labor electronic equipment.

Revenue Volatility Pet stores sell both discretionary (e.g. staples such as food and medicine. Pet
pets, toys and accessories) and stores also offer discretionary services
nondiscretionary products (e.g. pet such as day camp and training courses
food). While purchasing a pet is to boost revenue. Thus, discretionary pet
The level of generally discretionary, a large products and services tend to fluctuate
volatility is L ow proportion of expenditure on a pet is with income levels and economic
typically nondiscretionary; these include conditions. For instance, pet owners
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   31

Operating Conditions

Revenue Volatility

generally reduce purchases of toys, while nondiscretionary components

accessories and grooming services in make up for the majority. Therefore,
economic downturn. Fortunately, this high level of nondiscretionary
discretionary offerings only account for demand keeps the volatility of this
a smaller share of industry revenue industry low.

Regulation and Policy There are industry-specific and general certain animals from inhumane
regulations that apply to the Pet Stores treatment and neglect. The AWA requires
industry. The transportation, handling that minimum standards of care and
Level & Trend and sale of small pets are governed by treatment to be provided for certain
 he level of
T various federal, state and local animals that are bred for commercial
Regulation is authorities. In addition, industry sale, used in research, transported
Mediumand the participants are subject to environmental commercially or exhibited to the public.
regulations imposed by federal, state and Retail pet shops are not covered under
trend is S
 teady local authorities in relation to the the Act unless the shop sells exotic or zoo
generation, handling, storage, animals or sells animals to regulated
transportation and disposal of waste and businesses. Pets owned by private
biohazardous materials, as well as the citizens are not regulated. Regulated
sale and distribution of products. businesses are required to keep accurate
The Pet Animals Act 1951 deems it an records of acquisition and disposition
offense to open a pet shop unless it is and a description of animals that come
granted a license in accordance with the into their possession.
Act. When deciding to grant a license, Many state and local governments
district councils need to consider whether have passed additional animal welfare
there is suitable accommodation and legislation. More than 20 states have
enough food and water, whether the regulations governing the sale of dogs
animals are sold at too young age and and 15 states govern the sale of cats.
whether reasonable precautions have These regulations stipulate the
been taken to curb the spread of disease. information that sellers must provide at
The Animal Welfare Act (AWA) protects the time of purchase and various options
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   32

Operating Conditions

Regulation and Policy that buyers have if the purchased pet purchased from a pet store. This is
continued is sick. These states have regulations known as a lemon law that is designed to
that enable consumers to obtain a protect consumers that buy animals from
reimbursement when a sick animal is pet shops.

Industry Assistance The Pet Stores industry does not receive which promotes pet ownership and
any specific government support, in disseminates industry-related
the form of subsidies, tax breaks or information to members. Another
Level & Trend otherwise. In lieu of government notable trade association is the
 he level of
T assistance, the industry relies on trade American Pet Products Association
Industry Assistance associations to represent the industry (APPA). Many veterinary associations
is N
 oneand the as well as the latest products and trends also support the industry by reporting
for pet owners. The most notable among on best practices and products
trend is S
 teady them is the American Pet Association, recommended for various pets.
WWW.IBISWORLD.COM Pet Stores in the US April 2019   33

Key Statistics
Industry Data Industry Number of pets
Revenue Value Added Establish- Wages Domestic - cats and dogs
($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand (Mil)
2010 15,505.1 2,900.6 16,502 13,305 105,327 -- -- 2,156.5 N/A 165.0
2011 15,954.0 3,022.9 16,345 13,064 106,581 -- -- 2,209.2 N/A 164.0
2012 17,113.3 3,574.6 16,810 13,212 109,478 -- -- 2,359.5 N/A 172.0
2013 17,089.9 3,211.1 16,715 12,938 111,847 -- -- 2,356.6 N/A 179.0
2014 16,994.1 3,165.2 17,067 13,025 116,598 -- -- 2,366.5 N/A 171.0
2015 17,477.4 3,471.5 17,240 12,948 118,462 -- -- 2,527.7 N/A 164.0
2016 18,115.8 3,367.4 17,395 13,037 124,859 -- -- 2,624.7 N/A 174.0
2017 18,594.5 3,760.6 18,113 13,513 129,794 -- -- 2,756.4 N/A 184.0
2018 18,934.0 3,805.1 18,410 13,716 132,430 -- -- 2,811.3 N/A 187.0
2019 19,350.8 3,890.5 18,762 13,962 135,524 -- -- 2,876.2 N/A 193.0
2020 19,682.5 3,960.9 19,070 14,179 138,204 -- -- 2,931.5 N/A 198.0
2021 20,009.5 4,032.5 19,414 14,428 140,932 -- -- 2,987.6 N/A 203.0
2022 20,319.2 4,097.8 19,752 14,675 143,506 -- -- 3,040.5 N/A 207.0
2023 20,620.3 4,164.7 20,102 14,936 146,090 -- -- 3,093.3 N/A 211.0
2024 20,932.5 4,232.2 20,476 15,215 148,624 -- -- 3,145.6 N/A 214.0
Sector Rank 41/63 39/63 42/63 42/63 38/63 N/A N/A 36/63 N/A N/A
Economy Rank 381/694 457/694 236/694 249/694 244/694 N/A N/A 410/694 N/A N/A

Annual Change Industry Establish- Domestic Number of pets

Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand - cats and dogs
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2011 2.9 4.2 -1.0 -1.8 1.2 N/A N/A 2.4 N/A -0.6
2012 7.3 18.3 2.8 1.1 2.7 N/A N/A 6.8 N/A 4.9
2013 -0.1 -10.2 -0.6 -2.1 2.2 N/A N/A -0.1 N/A 4.1
2014 -0.6 -1.4 2.1 0.7 4.2 N/A N/A 0.4 N/A -4.5
2015 2.8 9.7 1.0 -0.6 1.6 N/A N/A 6.8 N/A -4.1
2016 3.7 -3.0 0.9 0.7 5.4 N/A N/A 3.8 N/A 6.1
2017 2.6 11.7 4.1 3.7 4.0 N/A N/A 5.0 N/A 5.7
2018 1.8 1.2 1.6 1.5 2.0 N/A N/A 2.0 N/A 1.6
2019 2.2 2.2 1.9 1.8 2.3 N/A N/A 2.3 N/A 3.2
2020 1.7 1.8 1.6 1.6 2.0 N/A N/A 1.9 N/A 2.6
2021 1.7 1.8 1.8 1.8 2.0 N/A N/A 1.9 N/A 2.5
2022 1.5 1.6 1.7 1.7 1.8 N/A N/A 1.8 N/A 2.0
2023 1.5 1.6 1.8 1.8 1.8 N/A N/A 1.7 N/A 1.9
2024 1.5 1.6 1.9 1.9 1.7 N/A N/A 1.7 N/A 1.4
Sector Rank 9/63 15/63 16/63 16/63 7/63 N/A N/A 8/63 N/A N/A
Economy Rank 259/694 281/694 209/694 214/694 183/694 N/A N/A 219/694 N/A N/A

Key Ratios Imports/ Exports/ Revenue per Share of the

IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2010 18.71 N/A N/A 147.21 13.91 6.38 20,474.33 0.02
2011 18.95 N/A N/A 149.69 13.85 6.52 20,727.90 0.02
2012 20.89 N/A N/A 156.32 13.79 6.51 21,552.28 0.02
2013 18.79 N/A N/A 152.80 13.79 6.69 21,069.85 0.02
2014 18.63 N/A N/A 145.75 13.93 6.83 20,296.23 0.02
2015 19.86 N/A N/A 147.54 14.46 6.87 21,337.64 0.02
2016 18.59 N/A N/A 145.09 14.49 7.18 21,021.31 0.02
2017 20.22 N/A N/A 143.26 14.82 7.17 21,236.73 0.02
2018 20.10 N/A N/A 142.97 14.85 7.19 21,228.57 0.02
2019 20.11 N/A N/A 142.79 14.86 7.22 21,222.81 0.02
2020 20.12 N/A N/A 142.42 14.89 7.25 21,211.40 0.02
2021 20.15 N/A N/A 141.98 14.93 7.26 21,198.88 0.02
2022 20.17 N/A N/A 141.59 14.96 7.27 21,187.27 0.02
2023 20.20 N/A N/A 141.15 15.00 7.27 21,173.93 0.02
2024 20.22 N/A N/A 140.84 15.03 7.26 21,164.82 0.02
Sector Rank 19/63 N/A N/A 44/63 17/63 15/63 37/63 39/63
Economy Rank 506/694 N/A N/A 510/694 400/694 407/694 611/694 457/694

Figures are in inflation-adjusted 2019 dollars. Rank refers to 2019 data. SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Pet Stores in the US April 2019   34

Industry Financial Ratios

Apr 2017 - Mar 2018 by company revenue
Apr 2014 - Apr 2015 - Apr 2016 - Apr 2017 - Small Medium Large
Mar 2015 Mar 2016 Mar 2017 Mar 2018 (<$10m) ($10-50m) (>$50m)

Liquidity Ratios
Current Ratio 2.0 1.6 1.5 2.4 2.5 n/a n/a
Quick Ratio 0.5 0.4 0.4 0.6 0.8 n/a n/a
Sales / Receivables (Trade Receivables
Turnover) 141.0 269.1 172.4 141.9 n/c n/a n/a
Days’ Receivables 2.6 1.4 2.1 2.6 0.4 n/a n/a
Cost of Sales / Inventory (Inventory Turnover) 6.3 5.5 6.0 6.2 6.2 n/a n/a
Days’ Inventory 57.9 66.4 60.8 58.9 58.9 n/a n/a
Cost of Sales / Payables (Payables Turnover) 16.0 17.0 17.1 23.5 35.8 n/a n/a
Days’ Payables 22.8 21.5 21.3 15.5 10.2 n/a n/a
Sales / Working Capital 15.5 17.3 17.5 12.4 11.5 n/a n/a

Coverage Ratios
Earnings Before Interest & Taxes (EBIT) /
Interest 5.9 9.7 7.0 4.5 4.2 n/a n/a
Net Profit + Dep., Depletion, Amort. / Current
Maturities LT Debt n/a n/a n/a n/a n/a n/a n/a

Leverage Ratios
Fixed Assets / Net Worth 0.5 0.6 0.6 0.3 0.3 n/a n/a
Debt / Net Worth 1.7 1.7 1.9 1.4 1.9 n/a n/a
Tangible Net Worth 25.9 24.5 32.4 23.7 11.9 n/a n/a

Operating Ratios
Profit before Taxes / Net Worth, % 34.0 33.8 28.3 26.0 28.6 n/a n/a
Profit before Taxes / Total Assets, % 8.5 11.4 8.6 7.7 7.0 n/a n/a
Sales / Net Fixed Assets 43.5 24.7 27.8 28.4 29.8 n/a n/a
Sales / Total Assets (Asset Turnover) 4.3 4.1 3.7 3.7 4.1 n/a n/a

Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading 39.4 37.2 36.8 40.9 45.1 n/a n/a
Cash after Operations 4.9 3.6 4.1 4.1 3.4 n/a n/a
Net Cash after Operations 5.1 4.1 4.2 4.2 4.1 n/a n/a
Cash after Debt Amortization 1.8 1.8 1.0 0.5 -0.9 n/a n/a
Debt Service P&I Coverage 5.8 8.7 6.7 4.0 1.6 n/a n/a
Interest Coverage (Operating Cash) 15.5 15.1 7.1 9.7 4.0 n/a n/a

Assets, %
Cash & Equivalents 12.0 14.2 11.9 17.8 18.3 n/a n/a
Trade Receivables (net) 9.2 7.4 6.5 7.3 5.4 n/a n/a
Inventory 47.9 43.1 47.1 39.8 40.0 n/a n/a
All Other Current Assets 4.6 2.9 2.2 2.6 2.5 n/a n/a
Total Current Assets 73.7 67.6 67.7 67.5 66.3 n/a n/a
Fixed Assets (net) 16.3 20.8 22.8 21.1 20.7 n/a n/a
Intangibles (net) 4.1 5.0 4.9 5.1 5.8 n/a n/a
All Other Non-Current Assets 5.9 6.6 4.5 6.3 7.3 n/a n/a
Total Assets 100.0 100.0 100.0 100.0 100.0 n/a n/a
Total Assets ($m) 936.1 729.3 574.6 331.5 48.4 87.4 195.7

Liabilities, %
Notes Payable-Short Term 12.5 14.9 9.5 9.2 8.3 n/a n/a
Current Maturities L/T/D 1.3 4.4 3.6 4.2 5.5 n/a n/a
Trade Payables 24.5 19.6 17.3 12.8 11.5 n/a n/a
Income Taxes Payable 0.2 0.1 0.4 0.2 0.2 n/a n/a
All Other Current Liabilities 9.6 8.4 9.7 8.0 7.7 n/a n/a
Total Current Liabilities 48.2 47.4 40.5 34.4 33.3 n/a n/a
Long Term Debt 14.3 16.2 12.2 23.2 31.1 n/a n/a
Deferred Taxes 0.2 0.1 0.2 0.1 n/a n/a n/a
All Other Non-Current Liabilities 7.4 6.8 9.8 13.4 17.8 n/a n/a
Net Worth 30.0 29.5 37.3 28.8 17.7 n/a n/a
Total Liabilities & Net Worth ($m) 936.1 729.3 574.6 331.5 48.4 87.4 195.7

Maximum Number of Statements Used 85 80 55 50 35 9 6

Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more
than 260,000 statements of member financial institutions’ borrowers and prospects.
Note: For a full description of the ratios refer to the Key Statistics chapter online.
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   35

Jargon & Glossary

Industry Jargon INITIAL PUBLIC OFFERINGA type of public offering PET PARENTSPet owners who are enthusiastic about
in which shares of a company are usually sold to their pets and treat them as members of their family.
institutional investors who, in turn, sell to the general
public on a securities exchange for the first time.
PET BOARDING AND DAY-CARELong- and short-term
options for owners who need assistance looking after
their pets. Services include feeding, walking, grooming
and lodging.

IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY CONCENTRATIONAn indicator of the
new companies struggle to enter an industry, while low dominance of the top four players in an industry.
barriers mean it is easy for new companies to enter an Concentration is considered high if the top players
industry. account for more than 70% of industry revenue.
CAPITAL INTENSITYCompares the amount of money Medium is 40% to 70% of industry revenue. Low is less
spent on capital (plant, machinery and equipment) with than 40%.
that spent on labor. IBISWorld uses the ratio of INDUSTRY REVENUEThe total sales of industry goods
depreciation to wages as a proxy for capital intensity. and services (exclusive of excise and sales tax); subsidies
High capital intensity is more than $0.333 of capital to on production; all other operating income from outside
$1 of labor; medium is $0.125 to $0.333 of capital to $1 the firm (such as commission income, repair and service
of labor; low is less than $0.125 of capital for every $1 of income, and rent, leasing and hiring income); and
labor. capital work done by rental or lease. Receipts from
CONSTANT PRICESThe dollar figures in the Key interest royalties, dividends and the sale of fixed
Statistics table, including forecasts, are adjusted for tangible assets are excluded.
inflation using the current year (i.e. year published) as INDUSTRY VALUE ADDED (IVA)The market value of
the base year. This removes the impact of changes in goods and services produced by the industry minus the
the purchasing power of the dollar, leaving only the cost of goods and services used in production. IVA is
“real” growth or decline in industry metrics. The inflation also described as the industry’s contribution to GDP, or
adjustments in IBISWorld’s reports are made using the profit plus wages and depreciation.
US Bureau of Economic Analysis’ implicit GDP price INTERNATIONAL TRADEThe level of international
deflator. trade is determined by ratios of exports to revenue and
DOMESTIC DEMANDSpending on industry goods and imports to domestic demand. For exports/revenue: low is
services within the United States, regardless of their less than 5%, medium is 5% to 20%, and high is more
country of origin. It is derived by adding imports to than 20%. Imports/domestic demand: low is less than
industry revenue, and then subtracting exports. 5%, medium is 5% to 35%, and high is more than
EMPLOYMENTThe number of permanent, part-time, 35%.
temporary and seasonal employees, working proprietors, LIFE CYCLEAll industries go through periods of growth,
partners, managers and executives within the industry. maturity and decline. IBISWorld determines an
ENTERPRISEA division that is separately managed and industry’s life cycle by considering its growth rate
keeps management accounts. Each enterprise consists (measured by IVA) compared with GDP; the growth rate
of one or more establishments that are under common of the number of establishments; the amount of change
ownership or control. the industry’s products are undergoing; the rate of
technological change; and the level of customer
ESTABLISHMENTThe smallest type of accounting unit
acceptance of industry products and services.
within an enterprise, an establishment is a single
physical location where business is conducted or where NONEMPLOYING ESTABLISHMENTBusinesses with
services or industrial operations are performed. Multiple no paid employment or payroll, also known as
establishments under common control make up an nonemployers. These are mostly set up by self-employed
enterprise. individuals.
EXPORTSTotal value of industry goods and services sold PROFITIBISWorld uses earnings before interest and tax
by US companies to customers abroad. (EBIT) as an indicator of a company’s profitability. It is
calculated as revenue minus expenses, excluding
IMPORTSTotal value of industry goods and services
interest and tax.
brought in from foreign countries to be sold in the
United States.
WWW.IBISWORLD.COM Pet Stores in the USApril 2019   36

Jargon & Glossary

IBISWorld Glossary VOLATILITYThe level of volatility is determined by WAGESThe gross total wages and salaries of all
averaging the absolute change in revenue in each of the employees in the industry. The cost of benefits is also
continued past five years. Volatility levels: very high is more than included in this figure.
±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
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