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December 1, 2017

I have seen the pet industry undergo titanic changes, and I see more on the horizon. Change can be scary—the unknown often is—but it is coming whether we like it or not, and with change also comes opportunity.

Recessions will come and go. Market forces will, of course, impact all businesses, but during the 2008 financial crisis, the pet industry continued to thrive and grow. While the pet industry will continue to grow over the next decade, there has been a shift in the way many people purchase their products.

For independent retailers, the threats have changed. Twenty-five years ago, most independent retailers would have probably listed big box chains as the biggest menace. By 2017, Petco and PetSmart controlled 60 percent of the retail pet market. They certainly didn’t have that much market penetration 30 years earlier. However, they did not end independent pet stores.

Other threats involved grocery and huge retailers like Walmart. If premium brands previously available only through pet stores were suddenly obtainable at the local supermarket or Walmart, how would that allow pet stores to stand out? How could any pet store, even the biggest chains, compete against a company that dwarfed them all? For a variety of reasons, supermarkets and Walmart never picked up the vast majority of products available in pet stores, and even if they had, challenges with niche products and service would have prevented them from putting the independents out of business.

Shopping habits are migrating online. Of course, this isn’t new, but it is increasing at a dynamic rate. As per the APPA 2017-2018 National Pet Owners Survey, the percentage of pet owners in the United States who purchased dog food online increased by nine points in just the last two years. Large chains, and certainly Walmart, have built robust online presences and businesses. However, the current “800-pound gorilla” isn’t Walmart or big box stores—it’s Amazon.com.

Amazon captured 54 percent of online purchases of dog food in the last 12 months. This is almost more than PetSmart.com and Walmart.com/SamsClub.com combined. Pet specialty sites like Chewy.com, DrsFosterSmith.com and Petfooddirect.com don’t come close to Amazon either. The difference between this threat and others that came before is that this represents a fundamental shift in how people shop. While no one possesses a crystal ball, or at least not a working one, I don’t think it is a risky prediction to suggest that online shopping will continue to grow for the foreseeable future and that companies like Amazon will wind up controlling a sizable share of most retail sales in the United States.

That being said, they won’t control it all. Independent pet stores will survive.

First, for the next few decades, there will still be people raised before the internet age who prefer the physical experience of shopping. Whether that involves trying on clothes prior to purchase or testing two or three pet toys before selecting one, we are still a long way from being able to replicate that experience online.
Second, services like dog training and grooming cannot be replicated online. These services (especially grooming) require a physical component that either means a groomer or dog trainer has to come to the owner or the pet owner has to physically go to an actual location. Pet stores that offer these and other services are investing in channels that cannot easily be taken away by the Amazons of the world.

Third, sites like Amazon are self-service. That’s fine if you know what you want, but nothing it currently offers can take the place of an involved, caring staff that offers advice and insight regarding the best products and their use.

These are some of the many reasons why independents were able to thrive in the age of the big box stores, and it is why those who continue to value great staffs, quality relevant services and excellent products at reasonable prices will continue to succeed in the future.

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