PetSmart Considers In-Home Services

Discussion
Jul 24, 2009
Tom Ryan

By
Tom Ryan

PetSmart
Inc.is probing an expansion into in-home services, including dog walking,
backyard clean-up and aquarium set-up, in an effort to help differentiate
itself from mass retailers such as Wal-Mart Stores Inc.

PetSmart
currently offers grooming, training and kenneling at many of its 1,137
stores.

“In-home
services are a big opportunity, but we have a lot of work to do before
we determine how to make that work,” Robert Moran, who became the pet
retailer’s chief executive officer last month, recently told Bloomberg
News.
“It
becomes a competitive advantage if we can break the code on how to
provide that.”

The
challenge for PetSmart is how to deliver profitable, quality services,
he said. Mr. Moran, chief operating officer since 2001, also plans
to increase store-brand sales to as much as 30 percent of sales in
the next five years from 17 percent currently, as well as further increase
its emphasis in hard goods, which are about twice as profitable as
food and another differentiator.

The
moves come as Wal-Mart has been making a big push into the pet category.
Besides upgrading the quality of pet products, Wal-Mart is repositioning
pet food and supplies right in front of its other fast-growing business,
such as baby products. David Strasser, an analyst at Janney Montgomery
Scott, said Wal-Mart competes in about 20 percent of the items carried
by PetSmart.

“We
are concerned, as most of the overlap is in food and consumables, which
is a traffic-driving category for PetSmart,” Mr. Strasser said.

Conversely,
any move by PetSmart into at-home services would put pressure on the
many mom & pops currently supplying those services.

Jill
Tuesday, owner of No Furry Worries in Huntington Beach, Calif., told
the Orange
County Register
that
customers may trust these services from an established firm. In particular,
they’d likely have better procedures in place in case something goes
wrong than some entrepreneurs. But she said the work isn’t easy.

“I
would really question the training of the people they would hire,” Ms.
Tuesday said. “You can’t just hire a bunch of kids and then expect
people to let them into their homes.”

Discussion
Questions: What do you think of PetSmart’s potential move into at-home
pet services? What are the challenges in such as move? Will it help
differentiate the chain from retailers like Wal-Mart?

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15 Comments on "PetSmart Considers In-Home Services"


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Nikki Baird
Guest
Nikki Baird
11 years 9 months ago

The Peep Squad instead of the Geek Squad? In the case of the Geek Squad, Best Buy bought a company that had figured out how to aggregate what was a service being provided mostly by independents, and a nascent service at that. The same can be said for Home Depot’s in-home services–there was existing infrastructure. There is no equivalent predecessor-type company for Petsmart to buy–at least that I know of, and the existing market of dog walkers and backyard clean-up services is much more fragmented. That will make this model much harder, especially to take it across the country–I know in my own neighborhood these services are primarily offered by high school kids via flyers taped to light poles. I don’t see them suddenly sporting “Peep Squad” polos in a way that is going to make Petsmart feel comfortable branding them with their brand. It’s a great idea, but a long road to walk before the model will work.

Dick Seesel
Guest
11 years 9 months ago

PetSmart is following the Best Buy model: Establish a service-oriented niche (like Geek Squad) that becomes its own profit center as well as enhancing the overall brand position. Geek Squad has been a valuable marketing tool not only to drive direct competitors out of the marketplace, but also to differentiate Best Buy from Walmart and other discounters.

There is definitely an existing and growing market for PetSmart’s new services. Pet supplies are one of the few categories that seems recession-proof in the past year, and there is plenty of research demonstrating that the household dog or cat is perceived as a “member of the family.” The increasing number of empty-nest Baby Boomers in coming years (with some disposable income, if they’re lucky) will only drive this mindset further. So a smart move by PetSmart, as long as good execution accompanies good marketing.

Doron Levy
Guest
Doron Levy
11 years 9 months ago

This is essentially another product PetSmart will offer and it is a good one. People love their pets and major pet chains have been able to make good margin based on that love. In-home services will attract a higher end (read more money to spend) clientele. This will open up a new market for them and I could see in store sales increasing based on the quality of in home services they provide. Any retailer that offers a quality product or service is differentiating itself from Walmart.

Kevin Graff
Guest
11 years 9 months ago

The DIY trend of a few years back is quickly being replaced by the “Do It 4 Me” trend. Look at the growth of installed services at Home Depot and Home Hardware. Geek Squad, Nerds on Site are rockin’. Home meal replacement is rising, and it seems more and more people have someone cutting their lawn and even raising their kids.

So, if someone wants to walk my dog and scoop up the poop, I’d be the first in line!

Will it be tough to find and train staff to do the job right? Well, if HD and others can find people to install shingles and furnaces, I think Petsmart can handle teaching employees how to use a scoop. This is a winner!

Anne Bieler
Guest
Anne Bieler
11 years 9 months ago

Pet Smart moving In-Home has so many elements of the right service at the right time. For busy parents who need help setting up an aquarium, to the dog-walker networks, to the clean-up services–all could appeal. Community base, name you can trust–all makes sense. The best long-term strategy right now is to develop long-term loyalty–this could work well to keep customers coming into the store.

A big caveat is execution; it needs to be professional and consistent if people are going to use these services on a continuing basis.

Carol Spieckerman
Guest
11 years 9 months ago

Pet services is one of the few remaining fragmented businesses out there that is still owned by small business and, with services being the new frontier at retail, it makes sense that PetSmart would go after it.

That said, I still don’t see the quality of in-store services hitting the mark just yet and neither of the two mega-pet chains have done a great job of addressing the needs of discerning “pet parents.” I still research and order most of my pet products online from boutique providers, where big-brand pet promotions aren’t screaming quite so loudly.

There is a tremendous need for consistent, high-quality out-of-store pet services; however, PetSmart will have to decide if the premise is to be great or just good enough.

W. Frank Dell II
Guest
11 years 9 months ago

If done right and at a rational cost it not only will be a winner, but also lock in customer loyalty. On the house call, a customer’s order could also be delivered, thereby increasing the transaction value. If done like an appliance repair call with a 4 hour window, and then to arrive late, it will fail.

Li McClelland
Guest
Li McClelland
11 years 9 months ago

Individualized at home dog training? Yes. Aquarium set up? Yes. Backyard cleanup? Those services are already a dime a dozen. Dog walking? No thank you. (I’ll hire the kid I know or the person in my neighborhood who can use some extra cash rather than give a complete stranger from corporate America the keys and access to my house.)

Bob Livingston
Guest
Bob Livingston
11 years 9 months ago

As has been mentioned, “the devil is in the details.” Clearly however, differentiation through service is the goal. Thus another retailer added to the list of those evaluating this emerging post-recession phase, that I feel will clearly place a very significant focus on the customer experience.

Zappos/Amazon yesterday was a headline grabber in this “Service Revolution.” I suspect others will be joining in. Many are experimenting with various approaches. If companies can work out the details and manage the costs, great service may be back “In Style” broadly, which will be great for consumers.

Chuck Barbee
Guest
11 years 9 months ago

While they’re making stops, why not offer pet food delivery to generate additional sales?

Connie Kski
Guest
Connie Kski
11 years 9 months ago

Considering that employees from Petcosmartland call my independent full-line pet store, on a regular basis, for advice on properly equipping and assembling habitats for various pets including fish and reptiles–I’m wondering how management can consider actually offering these services.

Janet Poore
Guest
Janet Poore
11 years 9 months ago

I think they’re missing the most obvious in-home service–PetSmart Mobile Pet Groomers. While many will still bring their pet into the store, there are many people who because of their own time constraints or their pets’ fear or temperament (especially cats), would prefer to use mobile groomers. PetSmart Mobile Grooming Vans would be a free advertising moving billboard too! They could even carry a limited supply of products for sale, like toys, treats, collars/leashes, brushes, etc.

Michael L. Howatt
Guest
Michael L. Howatt
11 years 9 months ago

Although it’s never a good strategy to do something just to combat Walmart (retailers should follow their own philosophies) I think this shows good long-term thinking and here’s why: as the population is getting older and less mobile they will need more help with their pets. It’s a proven fact that having pets can help prolong life so many older people will have them and this policy will help them immensely as long as it is reasonably priced. It will also give a warm and fuzzy feeling to the PetSmart brand. If people know they are helping their grandparents and their pets, it will elevate the Brand in consumers’ minds.

Ted Hurlbut
Guest
Ted Hurlbut
11 years 9 months ago

As Robert Moran said, it all comes down to whether they “can break the code on how to provide that.” This is not an extension of their existing business, it is not a leveraging of their existing skill set. It’s a whole new business. Providing customizable personal services is a business model that has resisted scalability, the Geek Squad excepted, especially when a retailer is trying to build it from the ground up.

This all comes back to the challenges volume-driven, national chain retailers have in addressing people-centered issues, which we’ve discussed many times on RetailWire in many different forms.

Doug Stephens
Guest
Doug Stephens
11 years 9 months ago

I think it’s the right move and the timing is probably good too. The youngest baby boomers are now 45 and as boomers age, they will be less inclined to want to drive (pet in tow) to the store to have them groomed and pampered. It makes perfect sense to offer an in-home service.

I agree with Ms. Tuesday, when she points out that personnel will be key. Recruiting people is always a challenge but all things being equal, this is a great way to create competitive distance and differentiation with Walmart.

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