Pampering Pets for Profits

Discussion
Jan 06, 2003
George Anderson

By George Anderson


While many retailers are struggling to eke out the smallest of gains, one class of specialty retailers is achieving booming increases in sales and profits.


Retailers such as Petsmart and Petco are pampering pets and finding that owners are willing to spend more on four-legged family members than they are on themselves.


David Mann, analyst, Johnson Rice told Reuters, “Pet parents will consistently spend on their pets despite a tougher economic environment. Investors like that defensive characteristic; their sales are not as tied to the economy as other retailers.”


Petco Chief Financial Officer James Myers told the news service that the retailer’s business is recession resistant if not recession proof. Mr. Myers points to a boom in pet ownership in the US as well as the demand for premium-priced products and services.


The American Pet Products Manufacturers Association (APPMA) says that 62 percent of US households owned a pet in 2000 compared to 56 percent in 1994. Total households also grew by 11 million during that period.


Moderator’s Comment: Can supermarkets and other broad
range retailers be competitive with specialty outlets for a major share of sales
in the pet food/products category?


Services such as pet obedience classes and grooming are
becoming an increasingly popular element of the specialty pet retailer’s business.
According to Reuters, Petco and Petsmart had service sales increase more than
30 percent in the third quarter of 2002 compared to the year prior.
[George
Anderson – Moderator
]

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