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COM Pet Stores in the USOctober 2017   1

Puppy love: Pet owners will invest in premium

products and services as the economy improves

IBISWorld Industry Report 45391

Pet Stores in the US
October 2017 Kelsey Oliver

2 About this Industry 15 International Trade 28 Industry Assistance

2 Industry Definition 16 Business Locations
2 Main Activities 29 Key Statistics
2 Similar Industries 18 Competitive Landscape 29 Industry Data
2 Additional Resources 18 Market Share Concentration 29 Annual Change
18 Key Success Factors 29 Key Ratios
3 Industry at a Glance 18 Cost Structure Benchmarks 30 Industry Financial Ratios
20 Basis of Competition
4 Industry Performance 21 Barriers to Entry 31 Jargon & Glossary
4 Executive Summary 21 Industry Globalization
4 Key External Drivers
6 Current Performance 22 Major Companies
8 Industry Outlook 22 PetSmart Inc.
10 Industry Life Cycle 23 PETCO Animal Supplies Inc.

12 Products & Markets 26 Operating Conditions

12 Supply Chain 26 Capital Intensity
12 Products & Services 27 Technology & Systems
13 Demand Determinants 27 Revenue Volatility
14 Major Markets 28 Regulation & Policy | 1-800-330-3772 | info

WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   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 and supplies
Providing pet grooming and boarding services

The major products and services in this industry are

Live animals
Pet food
Pet services
Pet supplies

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 October 2017   3

Industry at a Glance
Pet Stores in 2017

Key Statistics Revenue Annual Growth 12-17 Annual Growth 17-22

$18.4bn 2.4% 1.3%
Profit Wages Businesses

$793.3m $2.5bn 13,357

Revenue vs. employment growth Number of pets (cats and dogs)
Market Share
PetSmart Inc. 6 240
PETCO Animal
% change

Supplies Inc.

22.9% 0


-4 160
Year 09 11 13 15 17 19 21 23 Year 08 10 12 14 16 18 20 22
Revenue Employment
p. 22
Products and services segmentation (2017)

Key External Drivers 4.7%

Live animals
Number of pets 9.0%
Pet services
(cats and dogs)
Per capita disposable
Percentage of services
conducted online 45.7%Pet food
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 USOctober 2017   4

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

Executive The Pet Stores industry purred along over go beyond traditional grooming, dog
Summary the five years to 2017 as cats, dogs, fish walking and training; today, premium
and birds remained popular home services, such as pet therapy sessions, are
companions. Pet parents, or pet owners on the rise. PetSmart Inc.’s PetsHotel
who treat their four-legged friends as offers 24/7 supervision for pets and
family members, grew increasingly boosts sales due to its added convenience
common and facilitated demand for pet as a one-stop shop for pet product
stores. Accelerated by economic recovery, purchases and services. These positive
the industry expanded strongly during the trends, combined with rising disposable
five-year period, despite increased income, are expected to increase profit
competition from supermarkets, mass margins over the period. While new
merchandisers and online retailers operators are joining the industry, Petco
typically offering consumers greater Animal Supplies Inc. and PetSmart
convenience and competitive pricing. account for more than half of industry
revenue and steadily increased their
respective market shares over the past
emerging trend of pet parents has five years.
bolstered demand for premium pet products Over the five years to 2022, the Pet
Stores industry is projected to maintain
and services strong growth. As the economy continues
its upward trajectory and consumers have
Despite mounting external competition, more discretionary income, revenue from
IBISWorld expects revenue to increase at premium products and services is
an annualized rate of 2.4% to $18.4 billion projected to increase. Moreover, the
over the five years to 2017. In 2017 alone, number of pet-owning households is
industry revenue is expected to grow 1.2% expected to continue rising, yielding
due to rising disposable income. greater demand for industry products. For
The emerging trend of pet parents basic pet supplies, however, competition
bolstered demand for premium pet from supermarkets, discount department
products and services. Since pets are stores and online-only retailers is expected
treated as family members, pet owners to accelerate and limit demand. In total,
frequently lavish them with all-natural over the five years to 2022, industry
and organic pet foods and treats, as well revenue is forecast to rise at an annualized
as high-end services. These pet services rate of 1.3% to $19.6 billion.

Key External Drivers Number of pets (cats and dogs) Per capita disposable income
As households adopt more cats and dogs, Consumers increasingly perceive pets as
demand for industry goods, such as pet members of their family, meaning
foods, medicine and accessories, products for pets can be considered
increases. According to the American Pet nondiscretionary. A decrease in
Product Association’s National Pet disposable income has little effect on
Owners Survey, the average dog or cat demand because households typically
owner spends between $200.00 and reduce spending on other household and
$300.00 annually on food for their pet. leisure products before cutting down on
The number of pets is expected to pet food and toys. A rise in per capita
increase in 2017, representing a potential disposable income, however, increases
opportunity for the industry. the propensity for households to
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   5

Industry Performance

Key External Drivers purchase greater quantities of more stores, suppressing industry revenue. The
continued expensive goods and premium items. Per percentage of services conducted online is
capita disposable income is expected to expected to rise in 2017, posing a potential
increase in 2017. threat to the industry.

Percentage of services conducted online Number of households

Online shopping represents a direct threat According to the American Pet Products
to traditional industry retailers. Many Association’s most recent National Pet
online retailers are able to offer products Owners Survey, 65.0% of US households
similar to those offered by pet stores, but own a pet. Consequently, an increase in
at lower prices, with wider inventories and the number of households will likely
the ease of direct home shipping. An increase the number of pet owners in the
increase in the percentage of services United States, supporting industry
conducted online will likely decrease demand. The number of households is
demand for traditional brick-and-mortar expected to increase in 2017.

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

240 4

220 2
% change

200 0

180 -2

160 -4
Year 08 10 12 14 16 18 20 22 Year 11 13 15 17 19 21 23

WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   6

Industry Performance

Current The Pet Stores industry is anticipated to

post strong gains over the five years to Industry revenue
Performance 2017 due to the growing number of pet
owners who treat their pets like family
members. By offering a wider array of 5
innovative, specialized and premium 4
products and services, pet stores cashed in

% change
on owners’ desires to pamper their pets. 3
In addition, rising pet ownership in the 2
United States led to overall higher
demand for pet food and supplies. 1
Consequently, industry revenue is 0
expected to increase at an annualized rate Year 09 11 13 15 17 19 21 23
of 2.4% to $18.4 billion over the five years
to 2017. Moreover, industry revenue is SOURCE: WWW.IBISWORLD.COM

expected to rise 1.2% in 2017 alone, as

higher disposable incomes encourage wage hikes, translating to a drop in wages’
greater spending on pets. share of revenue. Nevertheless, overall
With strong demand and rising sales, wages are still projected to increase at an
pet store profit margins are expected to annualized rate of 2.0% over the five years
grow during the five-year period. Sales of to 2017, to total $2.5 billion. Rising
premium pet food, organic products, pet price-premium product and service sales,
supplies and services particularly drove up coupled with a slight decline in wage costs,
profitability because they typically have are expected to boost average industry
higher markups. Furthermore, revenue profit margins to account for 4.3% of total
growth outpaced rising employment and revenue in 2017.

Pets and products Higher pet ownership and to spend more than average on
accompanying demand for pet products pampering pets, supporting industry
supported industry growth over the past demand. Millennials were also more
five years. According to the 2017-18 likely to throw their pets parties and buy
National Pet Owners Survey published premium pet food products. Over the
by the American Pet Products five years to 2017, the number of pet cats
Association (APPA), an estimated 68.0% and dogs is projected to rise at an
of US households own a pet, with over annualized rate of 1.4%, translating to
42.0% of pet owners owning more than increased demand for pet supplies.
one. Most notably, the millennial Operators actively added pet services to
generation stands out as a driving force capture more of the consumer dollar.
for this industry. The survey highlights According to the APPA’s industry spending
that more than 10.0% of pet owners are figures and future outlook, total spending
new pet owners, the majority of which on US pets is expected to increase to $62.8
are millennials. According to the latest billion in 2016 (latest data available).
APPA survey, millennials surpassed the Continued emphasis on pet services will be
baby boomer generation, accounting for a primary driver for sales. This is
35.0% of all pet owners surveyed. Baby particularly important as pet stores opt to
boomers accounted for 32.0%. differentiate from supermarkets and other
Moreover, millennials were also found retail outlets selling pet food and supplies.
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   7

Industry Performance

Pets and products As the unemployment rate continues to fall

continued and household disposable income levels
rise, consumers will continue to increase
spending on discretionary pet services.

Competition from Pet stores are traditionally small,

independently owned operations; more Supermarkets have lured
bigger stores
than half of industry operators are customers away from
nonemployers (stores without paid
employees). Even among businesses with smaller specialty stores
employees, most employ fewer than four
workers. Due to the predominantly small price-conscious consumers, enabling
size of industry operations, external larger stores to capture higher market
competition from supermarkets and share. Moreover, many consumers
mass merchandisers pressured industry gravitated online to purchase
demand. Moreover, small operators competitively priced products;
within the industry simultaneously e-commerce stores can sell products at
experienced heightened competition lower prices while maintaining profit
from big-box specialty stores within the margins because they do not maintain a
industry; stores such as Petco Animal retail storefront and, therefore, avoid
Supplies Inc. benefit from strong buyer costly rental rates associated with
power and shared operational resources high-traffic retail space.
through economies of scale. Such High-end goods are primarily sold
competition contributed to overall through specialty pet stores and other
consolidation of the industry and placed niche retailers, providing a degree of
downward price pressures on small guaranteed sales for operators, shielding
specialty stores. As a result, the number them from direct competition. This is
of industry operators is expected to lag because manufacturers typically place
relative to industry performance, rising a restrictions on ultrapremium pet
mere annualized 0.2% to 13,357. products, selling only to specialty pet
In recent years, supermarkets lured stores. Such restrictions aided niche
customers away from smaller specialty retailers targeting high-end markets over
stores, offering the convenience of the past five years.
one-stop shopping. Grocery stores enable Big-box specialty stores, such as
consumers to shop for a wide range of PetSmart Inc. and Petco, combine the
household products, including pet best of both worlds; these stores offer
supplies, in one location. Time-poor a broad selection of pet products and
consumers turned to these types of stores operate on a scale large enough to pass
to streamline and simplify errands. cost savings down to consumers.
Meanwhile, mass merchandisers Furthermore, many large stores also
emerged as major retailers of pet provide premium products, a factor
products, offering lower prices for frugal augmenting competition for small
consumers. Due to size, stores like specialty stores. As a result, big-box
Walmart and Costco exert higher buying stores have posted healthy gains
power and can purchase in bulk from during the five-year period, increasing
wholesalers. Such cost savings lured market share.
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   8

Industry Performance

Industry The Pet Stores industry will continue

fetching a growing share of the consumer
As a result, industry revenue is projected
to increase at an annualized rate of 1.3% to
Outlook dollar over the next five years as pet $19.6 billion over the five years to 2022.
owners opt to spoil pets. In addition to Despite this growth, the Pet Stores
rising pet ownership, improving economic industry will continue combating strong
conditions will boost consumer spending competition from grocery stores, mass
and encourage customers to purchase merchandisers and a growing number of
price-premium pet products and services. online-only retailers.

Pet ownership to grow The number of pets owned by households in

the United States is the primary driver of A
rise in pet ownership will
demand for the industry. Since the industry lead to higher demand for
sells pets, including cats, dogs, birds,
hamsters and guinea pigs, an increase in pet industry products
ownership rates translates to higher revenue
for the industry. In addition, a rise in pet years. Wages are expected to increase
ownership will lead to higher demand for alongside revenue, rising at an
discretionary and nondiscretionary annualized rate of 1.3% to $2.7 billion,
products, such as food, treats and toys. To assisting the average industry profit
the industry’s benefit, demand for pets, margin. Price-based competition from
especially cats and dogs, is expected to rise online retailers and supercenters is
over the five years to 2022, driven by three expected to limit returns, but rising
demographics increasingly owning pets: demand and industry consolidation are
single-person households, millennials and projected to increase profit. Rising
the aging population. IBISWorld projects profitability and expanding pet
the number of pet cats and dogs will ownership levels will continue attracting
increase at an annualized rate of 4.1% new entrants to the industry. The number
during the five-year period, contributing to of companies will continue increasing
the industry’s growing revenue. slowly due to high competition from
Moreover, a rising trend toward Petco Animal Supplies Inc. and PetSmart
higher-margin premium pet products Inc., rising at an annualized rate of 0.6%
and services is expected to favorably to 13,791 over the five years to 2022 as
affect profit margins over the next five industry consolidation stems growth.

Premium products will IBISWorld expects natural and organic food manufacturers, such as Nestle’s
remain popular foods and treats will continue gaining Purina, Mars’s Pedigree and Del Monte
popularity over the five years to 2022, as Foods all now market natural products
households continue to view diets as a sold at major retailers. These high-
means of improving pets’ overall health. margin products will be lucrative sources
According to the research company of revenue and profit for pet store
Mintel, nutritional value and flavor are operators over the next five years.
two of the top reasons owners cite for With improving economic
choosing pet food, just after price and conditions, demand for specialized pet
value. Natural and organic foods were services is expected to continue rising.
once a niche segment; however, major Over the past five years, pet services
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   9

Industry Performance

Premium products will served as primary drivers of growth 2022. With unemployment expected to
remain popular within the industry, a trend likely to remain low over the next five years,
continue as per capita disposable more consumers will use extra income
continued income is expected to grow an to pamper pets with services like
annualized 2.7% over the five years to grooming and boarding.

Changing As disposable income levels increase,

competition customers, namely pet parents, are Competitionfrom
expected to loosen budgets and splurge on
higher-quality items for pets. As a result,
supermarkets and mass
consumers will seek options based on merchandisers is expected
factors other than low prices and return to to remain strong
smaller operators that offer premium
services at higher prices. Despite favorable
conditions, however, competition from stores. For example, personalized diets
supermarkets and mass merchandisers is for pets are expected to serve as a
expected to remain strong for basic pet potential niche market for industry
supplies, such as dry pet food and cat operators, including special food catered
litter. Since these products show little to obese animals. Since many pet owners
differentiation among brands, consumers are more concerned with pets’ health, the
will likely continue shopping at large creation of options to improve pet health
retailers due to discounted prices and presents a potential opportunity for
increased convenience. industry operators. Several pet food
Since much of the industry consists of manufacturers identified potential
a high number of smaller stores, niche growth in customized food options,
product marketing will become taking into consideration pet breeds, life
increasingly important as each operator stages, daily activities, amount of time
attempts to set itself apart from other indoors and specific medical conditions.
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   10

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

20 Maturity Quality Growth

% Growth in share of economy

Key Features of a Growth Industry

Company High growth in economic
consolidation; importance; weaker companies Revenue grows faster than the economy
level of economic close down; developed Many new companies enter the market
importance stable technology and markets Rapid technology & process change
Growing customer acceptance of product
15 Rapid introduction of products & brands


E-Commerce & Online Auctions

Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
5 technology change

Animal Food Production

Veterinary Services
0 Mail Order

Pet Stores

Toy, Doll & Game Manufacturing

-5 Decline
Shrinking economic

-10 -5 0 5 10 15 20
% Growth in number of establishments
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   11

Industry Performance

Industry Life Cycle The Pet Stores industry is in the growth started offering premium pet food and
stage of its life cycle. While product treats as well as services such as grooming,
introductions and new service offerings training, walking and full-service boarding.
This industry are taking place within the industry, such Expansion of premium product offerings
is G
 rowing growth is predominantly attributable to indicates the industry is still growing.
changing consumer sentiment toward pet As an industry made up of retailers
care and expenditure. Industry valued specializing in pet supplies, the industry’s
added (IVA), which measures the main threat comes from large general-
industry’s contribution to the US line retailers such as supermarkets and
economy, is expected to increase at an mass merchandisers and discount
annualized rate of 0.6% over the 10 years retailers such as Walmart stocking a wide
to 2022. In comparison, US GDP is variety of products at competitive prices.
projected to grow at an annualized 2.0% Online pet store retailers also pose an
during the same period. increasing threat as improved web
Over the five years to 2017, the industry interfaces and delivery systems make
posted strong sales driven by pet owners shopping online easier and less costly.
increasingly humanizing pets. To this Over the long term, both forces threaten
point, American Pet Products Association industry growth prospects as many
indicated a tipping point was reached in specialized retailers will not be able to
the mid-2000s, prior to the recession, compete with the economies of scale and
when people began rewarding pets in extensive distribution networks these
human terms. Consequently, new products retailers command. Specialty pet stores
and services emerged in this industry to will likely further diversify into services,
cater to this trend. For example, an away from their traditional product lines,
increasing number of pet stores have to stay competitive.
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   12

Products & Markets

Supply Chain   |   Products & 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 services.


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 & Services Products and services segmentation (2017)

9.0% Live animals
Pet services

Pet food

Pet supplies


Pet food weight control food for obese animals,

Since food is a necessity for all pets, it is specialized formulas for sensitive
not surprising pet foods make up the stomachs, and freshly baked cakes and
largest product segment for the industry. cookies as treats. This segment endures a
This segment covers a wide range of high degree of competition, however, from
products such as dry and wet food for dogs supermarkets and mass merchandisers
and cats, bird feed, crickets and worms for selling competitively priced pet food
reptiles, and other treats and supplements products. Consequently, the segment’s
for a number of different household pets. share of revenue declined slightly over the
Over the past five years, retailers past five years, accounting for 45.7% of
increasingly provided all-natural and total revenue in 2017.
organic food products. These premium pet
foods tend to be higher priced with larger Pet supplies
markups, a factor benefitting industry Products in this segment include over-
revenue. Today, a variety of premium pet the-counter medicines, food bowls,
foods are available to pets. Examples collars and leashes, pet clothing, brushes
include raw diets for dog and cat foods, and combs, shovels and scoopers, cat
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   13

Products & Markets

Products & Services litter, cages birds and reptiles, travel baths, toenail trimming and tooth
continued carriers and other various accessories brushing. This segment excludes
for pets. During the five-year period, this veterinary services. Other services may
segment’s share of revenue increased, include activities such as training,
largely due to rising consumer spending boarding and day camps. Greater interest
on over-the-counter medicine products, in pet pampering drove much of the rise
such as flea medicine. This segment of this segment. As more pet owners
accounts for 40.6% of total industry consider their animals as family
revenue. Spending on pet medicine members, demand for specialty pet
increased due to soaring costs of services also increased.
pharmaceuticals, as well as higher
standards of routine care. Other pet Live animal purchases
supplies and accessories sold by industry Live animals are the industry’s smallest
retailers also encounter competition segment at 4.7% of the total. This product
from supermarkets and grocery stores, segment is small because a pet is
namely because there are no regulations normally a one-off purchase, while
that limit their sale. To this point, pet products in other segments, such as pet
supplies are increasingly sold at a supplies and pet foods, need to be
variety of retail outlets such as home purchased throughout the life of the pet,
improvements stores. requiring repetitive spending.
Furthermore, major players in the
Services industry only sell small animals and fish,
Pet services were the fastest-growing and partner with local pet programs for
product segment for the industry over the cat and dog adoptions. Conversely,
past five years, reaching an estimated smaller operations often sell all types of
9.0% of the total in 2017. Pet services animals: cats, dogs, fish, rabbits, birds,
include full service grooming, haircuts, small animals and even reptiles.

Demand Demand for pets and pet supplies is Income

Determinants affected by the rate of pet ownership, Households with higher incomes are able
food and supply prices, household to spend more on discretionary items and
income and demographics. services sold at pet stores, leading to
higher demand. Over the past five years,
Pet ownership pet-owning households with high
Pet ownership is a main driver for disposable income were the main
industry demand by definition, as customers for luxury and trendy pet
industry operators are retailers of pets. products, including premium pet food
Thus, as pet ownership increases, the and designer pet toys. In addition, those
number of pets purchased also rises, with higher incomes tend to travel
leading to higher demand and sales for frequently, so they are more likely to use
the industry. In addition, a rise in this pet boarding services or purchase
number also leads to higher demand for products allowing pets to accompany
products such as food, treats and toys them while traveling.
because these goods are needed every
day for the well-being of pets. Pet Demographics and lifestyle
ownership is on the rise, facilitating Changes in demographics and lifestyle of
industry growth. households are important determinants
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   14

Products & Markets

Demand of demand. Frequent relocation or longer do not allow pets. The aging population,
Determinants work hours may reduce a household’s however, may increase demand for pets,
willingness to purchase a pet. In addition, since older demographics often purchase
households living in apartments are less pets for companionship after children
likely to have pets since many apartments and grandchildren leave home.

Major Markets Major market segmentation (2017)

Consumers aged
Consumers aged 65 to 74
75 and older
Consumers aged 45 to 54

Consumers aged 25 to 34

17.6% Consumers aged 55 to 64
Consumers aged 35 to 44


The largest market for the Pet Stores The third-largest market consists of
industry includes consumers between the consumers between the ages of 35 to 44,
ages of 45 to 54, who account for an who account for 17.6% of revenue.
estimated 26.0% of total revenue. A large Consumers in this market typically have
proportion of this segment can be families or young children who wish to
considered pet enthusiasts, who consider have family pets. Given how pet
pets family members, according to companionship can benefit health and
PetSmart. Consumers in this age group are behavioral development in young
also likely the sole financial providers of the children, consumers in this age group
household, and therefore responsible for often decide to add a pet to the family.
household pet expenditures. Furthermore, According to the American Pet Products
consumers in this product market are Association, a reported 38.0% of
typically established in their careers and households with children under 18 years
have steady income streams, enabling them old own at least one pet.
to spend freely on pet supplies. It has also Consumers between the ages of 25 and
been suggested that members of this age 34 are estimated to account for 16.6% of
group look for pet companions to fill the the market. This demographic group
empty space in households after children accounts for a lower, but growing, share.
leave home. Consumers between the ages The smallest market is made of
of 55 and 64 are expected to represent consumers over the age of 75 (4.9%).
22.8% of the market; however, this figure is Consumers in these categories have
forecast to increase over the next five years limited income, decreasing their ability to
as consumers aged 45 to 54 increasingly own or spend on pets. In addition, these
enter this age range. two demographics tend to rent
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   15

Products & Markets

Major Markets apartments or live in retirement homes,

continued and many of these dwellings do not
permit pets, hindering the ability of these
demographics to own pets.

International Trade International trade activity is accounted and supplies is not readily available, as
for at the manufacturing level by they are categorized into broad segments
convention; this domestic retail industry containing large numbers of non-pet
does not technically have imports or related products. Trends in pet food trade
exports. Products and supplies in the Pet provide some insight into trends
Stores industry, however, are imported regarding overall pet-product trade
and exported at the manufacturing level, levels, and are included in the Animal
then sold in the domestic market. Precise Food Production industry (IBISWorld
export and import data on pet products report 31111).
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   16

Products & Markets

Business Locations 2017

0.2 New
Great Mid- 0.6

Lakes Atlantic 1 2
NY 3
WA MT ND 7.7
5 4
3.2 0.2 MN
0.3 1.5
OR Mountains SD
Plains 1.8 MI
1.9 ID IA OH 9 8
0.2 WY 3.7
3.7 1.7 2.6

West NV
0.5 0.3
0.9 NC
0.7 CO KS 1.6 2.7
2.6 0.8 TN
CA 1.2
0.9 0.5 AL 2.3
AZ MS 0.8
2.6 NM
0.6 Southwest 0.4

0.9 FL
6.1 8.2

0.3 Additional States (as marked on map) Establishments (%)

1 VT 2 NH 3 MA 4 RI Less than 3%
0.3 0.8 2.4 0.4 3% to less than 10%
10% to less than 20%
5 CT 6 NJ 7 DE 8 MD 9 DC
20% or more
1.6 3.3 0.5 1.7 0.1

WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   17

Products & Markets

Business Locations Pet stores are primarily located in the

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

Southeast 10
The Southeast holds the highest number
of industry establishments; 22.4% of pet
stores are estimated to be in the region. 0
The Southeast is the most populated


Great Lakes


New England


Rocky Mountains


region of the United States with one
quarter of the nation’s population. Given
the higher proportion of households,
there is greater demand for industry Establishments
retailers. Within the Southeast, Florida Population
has the highest number of pet stores at SOURCE: WWW.IBISWORLD.COM

8.2% of the nation’s total.

some of the highest populations in the
West United States due to large metropolitan
The West has the second-highest centers. The region also has higher-than-
proportion of pet stores in the country average income levels. Given households
with an estimated 20.0% of industry within the region have a larger amount of
stores. California has the highest number disposable income, they are better able to
of pet stores in the country at 13.5%. The afford to own a pet.
primary reasons for the higher-than-
average number of pet stores in the West Great Lakes
are population density and income levels. The Great Lakes region is the fourth-most
The West has 17.2% of the nation’s total popular location for industry
population; furthermore, both California establishments. 13.9% of pet stores are
and Nevada have higher-than-average estimated to be located in the Great Lakes
median incomes by state. region. The region is also the fourth-most
populated in the nation, accounting for
Mid-Atlantic 4.6% of the total population.
The Mid-Atlantic region has an estimated Other small participating regions in the
17.8% of pet stores. The most popular industry include: the Southwest (10.2%),
states include New York and New England (6.1%), the Plains (5.6%)
Pennsylvania, which account for and the Rocky Mountains (4.0%). These
respective 7.7% and 4.4% of the regions have smaller consumer markets,
industry’s locations. These states have therefore limiting demand for pet stores.
WWW.IBISWORLD.COM Pet Stores in the US October 2017   18

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

Market Share More than half of the Pet Stores Over the five years to 2022, PetSmart
Concentration industry’s revenue comes from two and Petco are expected to grow in their
specialty supply retailers: PetSmart Inc. share of the industry because big-box
and Petco Animal Supplies Inc. The retailers are able to offer customers a
remainder consists of family-owned “best of both worlds” scenario, which
Concentration in this stores, small franchises and small includes providing broad and industry-
industry is M
 edium chains of pet stores. Despite the specific product selections while
moderate degree of concentration, operating on such a scale that they can
small operators are still able to find purchase in bulk and pass savings on to
niche markets in their geographical consumers in the form of lower prices.
locations, rarely expanding beyond Consequently, these stores are expected
those areas. to grow at the expense of smaller stores.

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.

Cost Structure Profit typically purchase in large quantities,

Benchmarks Industry profit, as measured by earnings enabling them to spend less per item and
before interest and taxes, is expected to improve margins. In addition, their large
account for 4.3% of revenue in 2017, scale enables them to sell in high volumes
down slightly from 6.2% in 2012. A at discounted prices. Consequently, they
growing pet population and an increasing can afford lower markups and profit from
willingness of pet owners to spend on larger sales volumes. On the contrary,
pets, particularly on premium or high- smaller players in this industry do not
margin products, stabilizes industry have such purchasing power; therefore,
profit margins. Furthermore, pet stores the cost of goods per unit tends to be
increasingly offer pet services, which higher for these players, causing lower
typically have higher margins. It is margins for smaller companies.
important to note, however, that actual
level of margins may vary considerably Purchases
between industry participants. For Purchase costs will remain the single-
instance, larger players such as Petco largest expense for the industry, accounting
Animal Supplies Inc. and PetSmart Inc. for an estimated 54.3% of revenue.
WWW.IBISWORLD.COM Pet Stores in the US October 2017   19

Competitive Landscape

Cost Structure Purchases consist of a range of pet food and focus was placed on labor over the five
Benchmarks pet supplies, including collars, leashes, years to 2017 as pet services have become
medication, shampoos, dog kennels and one of the fastest-growing sources of
pet toys, and a range of pets, including industry revenue. Nonetheless, industry
dogs, cats, birds, fish, small animals and revenue grew at a faster rate than the
reptiles. Purchase expenses increased number of employees or wages, therefore
slightly over the five years to 2017. decreasing wages’ share of revenue.
According to Pet Business, a publication for
the pet and pet supplies retailing industry, Depreciation
much of this growth was due to higher Depreciation expenses are expected to
prices from upstream industries (i.e. account for 0.8% of revenue in 2017.
manufacturing and wholesaling industries) Minimal depreciation is typical for
that were passed down the supply chain. retailing industries, which are very labor
intensive and require minimal capital
Wages costs in operations. This figure is high
Due to the labor-intensive nature of the compared with other retailing industries
retail sector, wages are estimated to make because pet stores must acquire special
up the second-highest expense item for cages and tanks for animals in addition to
pet store operators, accounting for 13.5% shelving and cash registers for stores.
of the revenue in 2017. In pet stores,
employees are needed to provide care for Other costs
pets, maintain stock levels and provide Rent and utilities costs are expected to
customer service. Furthermore, added represent 9.9% of revenue. Operators

Sector vs. Industry Costs

Average Costs of
all Industries in Industry Costs
sector (2017) (2017)
100 3.2 4.3 n Profit
9.1 n Wages
13.5 n Purchases
80 n Depreciation
n Marketing
n Rent & Utilities
n Other
Percentage of revenue

68.4 54.3


0.8 1.8
0.9 1.7 9.9
12.1 15.4
WWW.IBISWORLD.COM Pet Stores in the US October 2017   20

Competitive Landscape

Cost Structure incur other expenses including 1.8% of revenue toward marketing and
Benchmarks administrative, insurance, security and advertising to generate traffic and
advertising costs. Companies invest boost sales.

Basis of Competition Internal External

Pet stores compete with each other Historically, supermarkets were the
based on price, product variety, primary sellers of pet food products as
Level & Trend customer service, brand awareness, they stock a wide variety of pet food and
C in variety of pet services and store location. supplies and bulk purchases generally
this industry is Since product purchases make up the enable them to offer lower prices than
Highand the trend majority of sales for pet stores, their specialty retailers. In recent years,
main basis of competition is product additional competition came from mass
is I ncreasing
range, quality and price. Large players merchandisers and discount retailers
like Petco and PetSmart benefit from such as Walmart and Costco stocking a
economies of scope and are able to wide variety of products at competitive
provide broad ranges of pets, pet foods, prices. Mass merchandisers and discount
pet supplies and pet services with retailers typically do not sell ultra-
different levels of quality across a range premium pet products because they are
of prices, enabling stores to appeal to limited by manufacturers’ restrictions.
individual consumer preferences. They Further competition comes from the
are also capable of offering products E-commerce and Online Auctions industry
through private label brands at lower (IBISWorld report 45411a) and the Mail-
prices. Both players benefit from being Order industry (IBISWorld report 45411b).
able to buy products in bulk and According to the most recent National Pet
producing their own products at lower Owners Survey, there is a growing
cost, enabling them to offer products at prevalence of online and social media
a low price and still attain a profit. networks specifically for finding pets and pet
Smaller stores are then pressured to products, including companies such as
provide products at lower prices, which, through which consumers can
results in lower mark-ups and ultimately purchase products without physically
lower profit margins. Smaller stores visiting a store. However, these operators
benefit from the ability to offer are not classified as part of this industry. In
personalized customer services and addition, some competition comes from
mold themselves to the specific needs of veterinary services as they also sell
niche markets in their local areas. customized pet food and some pet products.
WWW.IBISWORLD.COM Pet Stores in the US October 2017   21

Competitive Landscape

Barriers to Entry High levels of competition and

regulations associated with entering this Barriers to Entry checklist

Level & Trend industry may deter some potential Competition High
entrants. Nevertheless, there are various Concentration Medium
 arriers to Entry
B niche markets available for new players Life Cycle Stage Growth
in this industry are to occupy, specifically those specializing Capital Intensity Low
Mediumand S  teady in premium and innovative food, Technology Change Medium
products and services. Regulation & Policy Medium
A significant factor that can hinder an Industry Assistance None
operator from entering this industry is
High levels of competition and SOURCE: WWW.IBISWORLD.COM

regulations associated with entering this

industry may deter some potential Industry concentration can be another
entrants. Nevertheless, there are various barrier to potential entrants. The only
niche markets available for new players two national retail chains in this industry
to occupy, specifically those specializing account for more than one half of
in premium and innovative food, industry revenue; smaller stores and
products and services. franchises account for the remaining
A significant factor that can hinder an portion. Although this industry is highly
operator from entering this industry is fragmented, there is intense price
government regulations. There are competition from mass merchandisers,
federal and state laws regulating pet online operators and catalog retailers,
shops and the sale of animals. For which may provide a barrier for new,
example, the Pet Animals Act 1951 independent retailers.
requires pet shops get a license in Opening a new pet store and meeting
accordance with the act before they can licensing standards is expensive. In
open. In addition, the Animal Welfare addition, a significant share of funding
Act of 1966 dictates how pets sold in pet may be directed toward marketing to
stores must be maintained. Pet shops build consumer interest and recognition.
need to address a range of issues and The initial cost of establishing or
receive licenses based on federal and purchasing a retail outlet, in addition to
state requirements before permission to purchasing and maintaining inventory
operate is granted. levels, may be a barrier for new entrants.

Industry This industry is composed of a large therefore, this industry has a low level of
Globalization number of small players. Many of the globalization. The industry’s largest
smaller, independent pet supply player, PetSmart has a network of stores
retailers are family-owned businesses in Canada, while Petco expanded to
Level & Trend
that operate within a local or regional Mexico and Puerto Rico; however,
G in this scope. In addition, the industry’s major international sales are still low relative
industry is L owand companies are domestically owned; to the United States.
the trend is S  teady
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   22

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

Major players
(Market share) PETCO Animal Supplies Inc. 22.9%


PetSmart Inc. 39.2%


Player Performance Since its establishment in 1986, Phoenix- cat furniture, equestrian supplies, birdcages,
based PetSmart Inc. has become the top aquariums and filters make up the hard
specialty retailer of pet food and supplies. goods category. Pets sold by the company
PetSmart Inc. PetSmart operates over 1,500 stores, include fish, birds and reptiles. Larger
Market share: 39.2% typically located in regional shopping animals, such as cats and dogs, are not sold
centers near other superstores and in PetSmart; however, they are available for
warehouse stores. The company employs adoption through the PetSmart Charities’
over 55,000 people in the United States Adopt a Pet Program, which was co-
and Canada. By offering more than 11,000 developed with humane organizations.
pet products and providing various pet In addition to selling products,
services, PetSmart aims to provide a PetSmart expanded its service offerings to
one-stop shopping experience. In March include in-store boarding facilities,
2015, the company went private through grooming services, obedience training and
an $8.7 billion buyout by BC Partners. full-service veterinary services. PetSmart
PetSmart categorizes its merchandise offers a complete pet boarding and
into three main categories: consumables, day-care service called PetsHotel with
hard goods and pets. Consumables include 24-hour supervision, an on-site
pet foods, treats and litter, as well as veterinarian, air-conditioned rooms and
premium products, many of which are not daily specialty treats. Nearly 200
found in supermarkets or mass PetSmart stores include PetsHotel
merchandisers. Pet supplies such as collars, boarding facilities and Doggie Day Camps.
leashes, health and beauty aids, shampoos, PetSmart also offers full-service veterinary
medication, toys, pet carriers, dog kennels, hospitals in over 900 of its stores. Pet

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

Revenue Operating Income
Year** ($ million) (% change) ($ million) (% change)
2012-13 6,758.2 10.5 503.1 17.4
2013-14 6,984.0 3.3 651.2 29.4
2014-15 6,916.6 -1.0 693.3 6.5
2015-16 7,112.0 2.8 708.8 2.2
2016-17 7,000.0 -1.6 294.0 -58.5
2017-18 7,227.9 3.3 307.4 4.6

*Estimates; **Year-end January 31

WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   23

Major Companies

Player Performance services are a growth segment for the operations is expected to increase at
continued company and currently account for more an annualized rate of 1.4% to $7.2
than 10.0% of revenue. In fiscal 2015, billion. Company growth was aided by
service sales as a percent of total revenue store expansions and rising sales of
grew 5.5%. In addition to expanding its premium and natural food products. In
services segment, PetSmart continues to addition, its pet services line
expand its retail presence nationwide experienced strong demand, enabling
through store expansions. In fiscal 2016, this category to consistently expand
the company opened 70 new locations. In faster than its merchandise-products
fiscal 2017, the company plans to open category. The company’s profit margin
over 70 additional new locations. also increased, passing the industry
average. This has been primarily due
Financial performance to higher profit margins from its
Over the five years to fiscal 2017, pet-service offerings and the rising
revenue from PetSmart’s US sales of premium food products.

Player Performance Established in 1965, Petco Animal through the acquisition of Drs. Foster and
Supplies Inc. is the second-largest pet Smith in 2015. The company generated
supply specialty retailer in the United $4.0 billion in total company revenue in
PETCO Animal States. The company is headquartered in fiscal 2014. In August 2015, the company
Supplies Inc. San Diego and operates over 1,470 Petco filed for an initial public offering (IPO),
Market share: 22.9% stores, more than 128 smaller-format but withdrew its offering on February
Unleashed by Petco neighborhood shops 2016 following a $4.6 billion acquisition
Industry Brand Names
and 10 Pooch Hotel locations throughout by the Canada Pension Plan Investment
Unleashed by Petco
the United States, Mexico and Puerto Board and CVC Capital Partners.
Rico. The company expanded to Puerto Petco stores carry up to 10,000
Rico and Mexico in 2012 and 2013, different pet-related items, including pet
respectively. The company also food, collars, leashes, grooming products,
significantly expanded its e-commerce toys, health and beauty aids, kennels and
offerings in recent years, most notably pet houses. Like other industry

PETCO Animal Supplies Inc. - (US industry-specific) financial

Revenue Operating Income
Year** ($ million) (% change) ($ million) (% change)
2012-13 3,528.0 13.7 158.9 56.9
2013-14 3,785.2 7.3 136.1 -14.3
2014-15 3,995.4 5.6 121.6 -10.6
2015-16 4,262.9 6.7 196.1 4.6
2016-17 4,100.0 -3.7 175.2 -10.5
2017-18 4,233.5 3.3 180.0 2.8

*Estimates; **Year-end January

WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   24

Major Companies

Player Performance participants, Petco offers a variety of considerably as consumers shift to the
continued grooming, veterinary and obedience online marketplace.
services for animals, but does not sell cats
or dogs. Instead, the Think Adoption Financial performance
First program is used in partnership with IBISWorld estimates that over the five
local animal welfare organizations. The years to fiscal 2018, the company’s US
company also operates an independent revenue generated from brick-and-
nonprofit organization, The Petco mortar stores will rise at an annualized
Foundation, which has invested more rate of 3.7% to $4.2 billion. Strong sales
than $167.0 million to support local of premium products were one of the
animal welfare groups since its inception company’s main drivers of growth. Petco
in 1999. invested heavily in this product segment
Petco has significantly expanded its amid the recession when it launched
smaller-store concept, Unleashed by Unleashed by Petco, a neighborhood
Petco. The smaller-store chain specialty store for premium, natural,
specializes in natural, organic and organic and raw pet foods. As Petco shifts
higher-end pet products and is geared focus to the smaller store model, the
toward expanding the company’s company will also concentrate on
presence into urban markets. Finally, increasing online presence through an
the company’s recent acquisition of Drs. acquisition strategy. From 2005 to 2015,
Foster and Smith in 2015, a mail order online sales reportedly increased from
and e-commerce company, is anticipated 1.2% to 8.5% of total revenue, according
to increase its online presence to the company’s 2015 IPO filing.

Other Companies PetSmart and Petco are the top dogs in the also to area developers that own all stores
Pet Stores industry, accounting for more in a designated market region. Pet Supplies
than half of the industry’s revenue. While Plus differentiates itself by providing
the industry is concentrated at the top, the all-natural food products. In addition, it
rest of the industry is composed of several offers a range of different services, such as
small and privately owned pet stores. In grooming, self-service pet wash stations
fact, more than half of companies are and adoptions.
nonemployers. Furthermore, more than Pet Supplies Plus stores are generally
80.0% of all companies employ fewer than located in high-traffic areas and are limited
five workers, and at the other end of the to about 5,000 to 6,000 square feet in size
spectrum, less than 10.0% have more than for smaller markets and 7,000 to 9,000
10 workers. Due to the fragmented nature square feet in larger metropolitan areas.
of the industry, most players do not The smaller store concept is designed to
individually account for a considerable keep operating costs to a minimum to offer
share of the industry’s revenue. pet food and supplies at competitive prices.
IBISWorld estimates that Pet Supplies Plus
Pet Supplies Plus will generate $741.9 million of industry-
Estimated market share: 4.0% relevant revenue in 2017.
Founded in 1988 in Livonia, MI, Pet
Supplies Plus is a franchise business with Pet Retail Brands
over 315 stores across more than 25 states. Estimated market share: 2.9%
Pet Supplies Plus offers franchises in select Pet Retail Brands is a chain retailer of
states to single store owner-operators and pets, pet supplies and wellness products.
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   25

Major Companies

Other Companies The company was formerly known as Pet Coast. The company employs nearly
continued Supermarket, Inc. and was founded in 2,200 associates and sells more than
1973 in Fort Lauderdale, FL. In July 8,000 pet care products, including food,
2016, Pet Supermarket merged with Pet toys, medicine and clothing, as well as
Valu, Inc. to form Pet Retail Brands. Pet small animals, such as hamsters, guinea
Valu was founded in 1976 and is based in pigs, rabbits and tropical fish. The
Markham, ON. Pet Retail Brands now company offers a range of high-value pet
operates as a subsidiary of Pet products and luxury pet items.
Supermarket. The combined business IBISWorld estimates Pet Retail Brands
operates 930 stores in North America, will generate $526.6 million of industry-
with 185 stores primarily on the East relevant revenue in 2017.
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   26

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 other 0.3

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

replacement. Conversely, 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 remained

steady over the past five years, reflecting within this industry is relatively high
the labor-intensive nature of the retail compared with competitors such as
industry. To this point, the cost of labor supermarkets, mass merchandisers and

Tools of the Trade: Growth Strategies for Success

New Age Economy Investment Economy

Recreation, Personal Services, Information, Communications,
Health and Education. Firms Mining, Finance and Real
benefit from personal wealth so Estate. To increase revenue
stable macroeconomic conditions firms need superior debt
are imperative. Brand awareness management, a stable
and niche labor skills are key to macroeconomic environment
product differentiation. and a sound investment plan.

Capital Intensive
Labor Intensive

E-Commerce & Online Auctions

Veterinary Services Animal Food Production
Pet Stores
Mail Order
Traditional Service Economy Old Economy
Toy, Doll & Game Manufacturing
Wholesale and Retail. Reliant Agriculture and Manufacturing.
on labor rather than capital to Traded goods can be produced
sell goods. Functions cannot using cheap labor abroad.
be outsourced therefore firms To expand firms must merge
must use new technology or acquire others to exploit
or improve staff training to economies of scale, or specialize
increase revenue growth. in niche, high-value products.

Change in Share of the Economy SOURCE: WWW.IBISWORLD.COM

WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   27

Operating Conditions

Capital Intensity online pet supply retailers. This is do not require industry-specific
continued because the other stores do not retail pets knowledge. For online retailers, labor
directly, inherently requiring a smaller costs are exceptionally low as they are not
staff. In addition, these stores do not required to outlay expenditure on
incur costs associated with employee customer service, nor are they required to
training, since workers at these retailers have shelving, displays or cash registers.

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

Revenue Volatility Pet stores sell discretionary (e.g. pets, discretionary, a large proportion of
toys and accessories) and expenditure on a pet is typically
nondiscretionary products (e.g. pet food). nondiscretionary; these include staples
While purchasing a pet is generally such as food and medicine. Pet stores can
The level of
Volatility is L ow
A higher level of revenue Volatility vs Growth
volatility implies greater
industry risk. Volatility can 1000 Hazardous Rollercoaster
negatively affect long-term
Revenue volatility* (%)

strategic decisions, such as 100

the time frame for capital
When a firm makes poor
investment decisions it Pet Stores
may face underutilized 1
capacity if demand
suddenly falls, or capacity 0.1 Stagnant Blue Chip
constraints if it rises –30 –10 10 30 50 70
quickly. Five-year annualized revenue growth (%)
* Axis is in logarithmic scale
WWW.IBISWORLD.COM Pet Stores in the USOctober 2017   28

Operating Conditions

Revenue Volatility offer discretionary services such as day however, accounts for the majority of
continued camp and training courses to boost industry revenue. This high level of
revenue. The nondiscretionary nondiscretionary demand keeps the
component of industry merchandise, volatility of this industry low.

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

Industry Assistance The Pet Stores industry does not receive which promotes pet ownership and
any specific government support, in the disseminates industry-related
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 as Many veterinary associations also
is N
 oneand the well as the latest products and trends for support the industry by reporting on
pet owners. The most notable among best practices and products
trend is S
them is the American Pet Association, recommended for various pets.
WWW.IBISWORLD.COM Pet Stores in the US October 2017   29

Key Statistics
Industry Data Industry No. of pets -
Revenue Value Added Establish- Wages Domestic cats & dogs
($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand (Mil)
2008 14,262.4 2,796.5 17,110 14,115 106,460 -- -- 2,040.6 N/A 165.0
2009 14,813.8 2,550.2 16,650 13,632 109,167 -- -- 2,031.8 N/A 171.0
2010 15,370.3 2,795.4 16,502 13,305 105,327 -- -- 2,057.6 N/A 164.6
2011 15,833.0 2,915.8 16,345 13,064 106,581 -- -- 2,108.3 N/A 164.4
2012 16,362.6 3,417.7 16,810 13,212 109,478 -- -- 2,256.0 N/A 171.7
2013 16,640.2 3,087.2 16,715 12,938 111,847 -- -- 2,255.2 N/A 178.9
2014 17,072.1 3,069.9 17,067 13,025 116,598 -- -- 2,267.5 N/A 171.3
2015 17,975.9 3,388.1 17,240 13,137 118,462 -- -- 2,417.5 N/A 163.6
2016 18,223.1 3,382.9 17,462 13,286 119,976 -- -- 2,452.1 N/A 173.8
2017 18,449.7 3,429.2 17,574 13,357 121,994 -- -- 2,494.3 N/A 183.9
2018 18,729.6 3,473.0 17,755 13,472 123,539 -- -- 2,530.9 N/A 195.1
2019 18,997.7 3,525.4 17,865 13,538 125,482 -- -- 2,573.6 N/A 206.8
2020 19,223.2 3,558.9 18,009 13,629 126,700 -- -- 2,602.8 N/A 212.5
2021 19,430.9 3,590.1 18,052 13,646 128,036 -- -- 2,633.2 N/A 218.5
2022 19,638.3 3,624.4 18,259 13,791 129,446 -- -- 2,664.8 N/A 224.9
Sector Rank 50/148 52/148 62/148 61/148 48/148 N/A N/A 50/148 N/A N/A
Economy Rank 558/1918 651/1587 397/1918 414/1918 375/1918 N/A N/A 675/1918 N/A N/A

Annual Change Industry Establish- Domestic No. of pets -

Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand cats & dogs
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2009 3.9 -8.8 -2.7 -3.4 2.5 N/A N/A -0.4 N/A 3.6
2010 3.8 9.6 -0.9 -2.4 -3.5 N/A N/A 1.3 N/A -3.7
2011 3.0 4.3 -1.0 -1.8 1.2 N/A N/A 2.5 N/A -0.1
2012 3.3 17.2 2.8 1.1 2.7 N/A N/A 7.0 N/A 4.4
2013 1.7 -9.7 -0.6 -2.1 2.2 N/A N/A 0.0 N/A 4.2
2014 2.6 -0.6 2.1 0.7 4.2 N/A N/A 0.5 N/A -4.3
2015 5.3 10.4 1.0 0.9 1.6 N/A N/A 6.6 N/A -4.5
2016 1.4 -0.2 1.3 1.1 1.3 N/A N/A 1.4 N/A 6.2
2017 1.2 1.4 0.6 0.5 1.7 N/A N/A 1.7 N/A 5.8
2018 1.5 1.3 1.0 0.9 1.3 N/A N/A 1.5 N/A 6.1
2019 1.4 1.5 0.6 0.5 1.6 N/A N/A 1.7 N/A 6.0
2020 1.2 1.0 0.8 0.7 1.0 N/A N/A 1.1 N/A 2.8
2021 1.1 0.9 0.2 0.1 1.1 N/A N/A 1.2 N/A 2.8
2022 1.1 1.0 1.1 1.1 1.1 N/A N/A 1.2 N/A 2.9
Sector Rank 91/148 86/148 93/148 91/148 66/148 N/A N/A 70/148 N/A N/A
Economy Rank 1307/1918 1022/1587 1214/1918 1187/1918 953/1918 N/A N/A 1067/1918 N/A N/A

Key Ratios Imports/ Exports/ Revenue per Share of the

IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2008 19.61 N/A N/A 133.97 14.31 6.22 19,167.76 0.02
2009 17.22 N/A N/A 135.70 13.72 6.56 18,611.85 0.02
2010 18.19 N/A N/A 145.93 13.39 6.38 19,535.35 0.02
2011 18.42 N/A N/A 148.55 13.32 6.52 19,781.20 0.02
2012 20.89 N/A N/A 149.46 13.79 6.51 20,606.88 0.02
2013 18.55 N/A N/A 148.78 13.55 6.69 20,163.26 0.02
2014 17.98 N/A N/A 146.42 13.28 6.83 19,447.16 0.02
2015 18.85 N/A N/A 151.74 13.45 6.87 20,407.39 0.02
2016 18.56 N/A N/A 151.89 13.46 6.87 20,438.25 0.02
2017 18.59 N/A N/A 151.23 13.52 6.94 20,446.09 0.02
2018 18.54 N/A N/A 151.61 13.51 6.96 20,486.65 0.02
2019 18.56 N/A N/A 151.40 13.55 7.02 20,509.71 0.02
2020 18.51 N/A N/A 151.72 13.54 7.04 20,543.01 0.02
2021 18.48 N/A N/A 151.76 13.55 7.09 20,566.09 0.02
2022 18.46 N/A N/A 151.71 13.57 7.09 20,586.19 0.02
Sector Rank 75/148 N/A N/A 99/148 62/148 42/148 94/148 52/148
Economy Rank 1287/1587 N/A N/A 1384/1918 1248/1918 1231/1918 1696/1918 651/1587

Figures are in inflation-adjusted 2017 dollars. Rank refers to 2017 data. SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Pet Stores in the US October 2017   30

Industry Financial Ratios

Apr 2015 - Mar 2016 by company revenue
Apr 2012 - Apr 2013 - Apr 2014 - Apr 2015 - Small Medium Large
Mar 2013 Mar 2014 Mar 2015 Mar 2016 (<$10m) ($10-50m) (>$50m)

Liquidity Ratios
Current Ratio 1.7 1.7 2.0 1.6 1.7 1.8 1.3
Quick Ratio 0.5 0.4 0.5 0.4 0.5 0.4 0.3
Sales / Receivables (Trade Receivables
Turnover) 217.9 277.2 141.0 269.1 311.5 n/c 87.0
Days’ Receivables 1.7 1.3 2.6 1.4 1.2 n/a 4.2
Cost of Sales / Inventory (Inventory Turnover) 5.9 5.9 6.3 5.5 5.9 5.4 6.4
Days’ Inventory 61.9 61.9 57.9 66.4 61.9 67.6 57.0
Cost of Sales / Payables (Payables Turnover) 21.2 19.5 16.0 17.0 18.1 18.4 11.0
Days’ Payables 17.2 18.7 22.8 21.5 20.2 19.8 33.2
Sales / Working Capital 15.2 17.3 15.5 17.3 17.8 14.3 32.0

Coverage Ratios
Earnings Before Interest & Taxes (EBIT) /
Interest 12.4 7.0 5.9 9.7 9.0 25.9 7.8
Net Profit + Dep., Depletion, Amort. / Current
Maturities LT Debt 13.6 n/a n/a n/a n/a n/a n/a

Leverage Ratios
Fixed Assets / Net Worth 0.5 0.7 0.5 0.6 0.7 0.4 1.2
Debt / Net Worth 1.8 2.2 1.7 1.7 1.4 1.3 3.2
Tangible Net Worth 34.6 24.5 25.9 24.5 25.7 30.1 8.9

Operating Ratios
Profit before Taxes / Net Worth, % 36.0 40.9 34.0 33.8 40.8 32.8 n/a
Profit before Taxes / Total Assets, % 16.1 10.8 8.5 11.4 11.2 16.4 6.4
Sales / Net Fixed Assets 23.8 26.0 43.5 24.7 24.8 24.9 21.9
Sales / Total Assets (Asset Turnover) 3.6 3.9 4.3 4.1 3.9 4.3 3.9

Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading 33.7 36.4 39.4 37.2 38.9 36.1 n/a
Cash after Operations 4.5 3.3 4.9 3.6 3.9 2.3 n/a
Net Cash after Operations 4.5 3.7 5.1 4.1 5.0 2.6 n/a
Cash after Debt Amortization 2.2 1.6 1.8 1.8 1.9 1.4 n/a
Debt Service P&I Coverage 6.2 3.8 5.8 8.7 5.6 10.2 n/a
Interest Coverage (Operating Cash) 8.6 8.3 15.5 15.1 12.7 16.7 n/a

Assets, %
Cash & Equivalents 13.6 13.3 12.0 14.2 16.1 11.8 9.4
Trade Receivables (net) 8.6 6.5 9.2 7.4 7.6 5.0 10.5
Inventory 44.7 44.9 47.9 43.1 38.7 51.1 49.7
All Other Current Assets 1.4 0.7 4.6 2.9 2.9 2.8 3.1
Total Current Assets 68.2 65.4 73.7 67.6 65.3 70.7 72.6
Fixed Assets (net) 23.7 22.7 16.3 20.8 22.6 15.1 22.5
Intangibles (net) 4.7 5.2 4.1 5.0 4.1 9.4 1.6
All Other Non-Current Assets 3.3 6.6 5.9 6.6 8.0 4.8 3.2
Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Total Assets ($m) 719.3 362.6 936.1 729.3 50.5 146.4 532.4

Liabilities, %
Notes Payable-Short Term 9.8 10.8 12.5 14.9 18.4 6.7 12.6
Current Maturities L/T/D 2.2 1.5 1.3 4.4 5.2 4.4 1.0
Trade Payables 13.9 17.1 24.5 19.6 18.7 16.9 28.1
Income Taxes Payable 0.2 0.1 0.2 0.1 0.1 0.2 0.2
All Other Current Liabilities 14.6 14.9 9.6 8.4 5.7 13.1 12.6
Total Current Liabilities 40.7 44.3 48.2 47.4 48.1 41.3 54.5
Long Term Debt 15.0 20.0 14.3 16.2 16.9 6.8 29.4
Deferred Taxes 0.2 0.1 0.2 0.1 n/a 0.2 0.4
All Other Non-Current Liabilities 4.8 5.8 7.4 6.8 5.1 12.1 5.1
Net Worth 39.3 29.7 30.0 29.5 29.8 39.5 10.5
Total Liabilities & Net Worth ($m) 719.3 362.6 936.1 729.3 50.5 146.4 532.4

Maximum Number of Statements Used 60 77 85 80 50 19 11

Source: RMA Annual Statement Studies, 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 USOctober 2017   31

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 USOctober 2017   32

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
±3%. | 1-800-330-3772 | info

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