Pet Stores
Buy This Industry Report
Get more in-depth industry information with a First Research industry report containing business challenges, trends, executive insight, call prep questions, and so much more!
Get Information Now
Rest assured, your information will not be shared with anyone else (see our privacy policy for details).
Industry Overview
The US pet and pet supply store industry includes about 7,500 stores with combined annual revenue of almost $8 billion. Major companies include PetSmart, PETCO Animal Supplies Stores, Pet Supplies "Plus," and Petland. The industry is concentrated at the top, but otherwise highly fragmented: the 50 largest companies hold 60 percent of sales.
Competitive Landscape
Pet ownership drives demand, and spending generally resists economic cycles. Profitability for individual companies depends on the ability to generate store traffic and effective merchandising. Large companies offer low prices and wide selections of both products and services. Small companies compete effectively by serving a local market, selling unique products, offering specialized services, or providing pet expertise. The industry is labor-intensive, with annual revenue per employee of about $100,000. Revenue per employee for small, independent pet stores is significantly lower than for major chains. Competitors include grocery stores, warehouse clubs, mass merchandisers, Internet retailers, and some veterinary clinics.
Products, Operations & Technology
Major product segments include pet food, pet supplies, aquarium products and fish, and pets. Pet food accounts for 40 percent of sales, pet supplies for 40 percent, aquarium products and fish for 10 percent, and pets for 5 percent. The pet food segment primarily consists of dog and cat food. Pet supplies include pet toys, collars and leashes, cages and habitats, and vitamins and supplements. Types of pets sold include dogs, cats, fresh and saltwater fish, birds, reptiles, and small animals (mostly hamsters and gerbils).
Pet stores include national chains, franchises, and independent retailers. National chains operate a “superstore” format, which can exceed 20,000 square feet. Pet superstores are located in high traffic areas, usually in large strip malls, co-anchored by other strong superstores. Pet store franchises vary in size, but generally have smaller stores of about 8,000 square feet. Smaller stores allow franchises to locate in smaller shopping centers, closer to neighborhoods. Independent pet stores serve small markets, and average 3,000 square feet.
Pet superstores generate about $3 million of revenue annually, with sales per square foot about $200. A typical pet store franchise has $2 million of annual revenue, or $250 per square foot. Smaller independent pet stores generally have revenue under $1 million, with sales per square foot under $200.
Pet superstores carry large inventories, and can offer almost 13,000 different products. Superstores may offer veterinary services, grooming, and obedience classes. Pet store franchises let independent owners customize inventory for a local market, with large franchises capable of offering 10,000 different products. Both chains and franchises offer private label products. Independent pet stores may carry unique inventory, like exotic animals (pythons, chinchillas, bearded dragons) or organic pet food. Most pet stores are known for selling premium pet foods, which are generally not available through grocery stores and mass merchandisers due to manufacturer restrictions.
Chains and franchises buy large quantities of key products like dog and cat food directly from manufacturers at deep discounts. Independent pet stores purchase directly from smaller manufacturers or distributors. Pet stores typically mark up dog and cat food between 20 and 30 percent; other pet foods and supplies are marked up between 80 and 90 percent. Trade shows are an extremely important source of information, since the pet supply industry is highly fragmented.
Many pet stores must provide care and maintenance for live animals. Some pets are highly perishable or require special care and feeding. In general, independent pet stores generate a higher percentage of sales from live pets than do pet superstores.
Chains and franchises employ computerized inventory management systems to track tens of thousands of items from thousands of different suppliers. Independent pet stores also use computers to track how fast items move. Chains may also use electronic data interchange (EDI) to automate the purchasing process. Radio frequency identification (RFID) improves the efficiency of PetSmart’s distribution system.