The Battle for Pet Retail Supremacy Heats Up

A battle between two big pet stores pits an omnichannel focus against a push to make physical stores more robust — and all of it is happening in the shadow of Amazon, and as subscription eCommerce comes into play in this retail sector.

Back in 2017, PetSmart boosted its digital offerings through the $3.35 billion acquisition of Chewy, the leading online retailer of pet food and products. Now, according to various reports, PetSmart is having problems paying its debts as growth has slowed. Meanwhile, according to The Wall Street Journal, “Petco Animal Supplies Inc., which is dedicating more of its stores to grooming and other services customers can’t get online, said it returned to growth in late 2018 after a stretch of declines.”

The competition between those two retailers comes as U.S. consumers spend “an estimated $70 billion on pet food, supplies, veterinary care and other services, compared with about $40 billion a decade ago, according to the American Pet Products Association,” the report said.

That market, of course, has attracted Amazon, which is gaining a bigger share of consumers’ overall retail spending, as documented by PYMNTS research. According to the newspaper report, Amazon “has an advantage because it can bundle a range of products in the same shipment to offset the high cost of shipping heavy bags of dog food or cat litter. The company generated about $3.3 billion in pet products sales in 2018, a more than 30 percent increase over the previous year, according to estimates by Packaged Facts, a market research firm.”

Meanwhile, PetSmart and Petco — both owned by private equity firms — continue to duke it out. PetSmart sees Chewy as a way to acquire new customers, according to comments made by a company executive to The Wall Street Journal. Petco, meanwhile, “struggled for years from declining foot traffic as online competitors grabbed more sales and food manufacturers broadened distribution. The company has recently expanded its veterinary services and improved its training classes and grooming facilities to encourage customers to make more trips to its stores.”

As PetSmart and Petco battle for consumer loyalty and spend, startups in that part of the retail industry are striving for market share via other methods. That includes subscription eCommerce.

One example is the Internet of Things (IoT)-based pet subscription service PupPod. In a recent PYMNTS interview, PupPod CEO Erick Eidus talked about how when he looked at all the products on the market for dogs, such as plush toys, he noted that none of them truly captured a dog’s intelligence, which inspired him to start thinking about building technology products for animals. With his experience designing early smartphone products, it became clear to Eidus that there would be a product category of IoT-connected devices for animals. “They just need to be designed from a dog’s perspective,” he noted.

On the PupPod website, consumers can pay either through the PayPal or Stripe payment gateways, and they choose a membership plan when they purchase their wobblers on PupPod’s site. Eidus’ company offers three subscription tiers – basic, premium and concierge – as “a way to test the market.” But so far, he has noticed that roughly 30 percent of his subscription customers have chosen the concierge plan, which is the highest tier, and most of the remaining customers went with the middle-tier plan.

Subscription eCommerce, in general, has had its own bumps along the way. And when it comes to Petco versus PetSmart — to say nothing of Amazon — that competition still has a long way to go. But when it comes to pet retail, larger commerce trends are playing out, and the coming year will certainly bring more clarity about which of those trends has the most fuel in this lucrative area.