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Pet Stores in the US March 2014 1 WWW.IBISWORLD.COM Pet Stores in the US March 2014 1 Lucky dog: Pet owners will invest in premium products as disposable income rises IBISWorld Industry Report 45391 Pet Stores in the US March 2014 Andy Brennan 2 About this Industry 15 International Trade 29 Industry Assistance 2 Industry Definition 16 Business Locations 2 Main Activities 30 Key Statistics 2 Similar Industries 18 Competitive Landscape 30 Industry Data 2 Additional Resources 18 Market Share Concentration 30 Annual Change 18 Key Success Factors 30 Key Ratios 3 Industry at a Glance 18 Cost Structure Benchmarks 20 Basis of Competition 31 Jargon & Glossary 4 Industry Performance 21 Barriers to Entry 4 Executive Summary 22 Industry Globalization 4 Key External Drivers 6 Current Performance 23 Major Companies 8 Industry Outlook 23 PetSmart Inc. 10 Industry Life Cycle 24 PETCO Animal Supplies Inc. 12 Products & Markets 27 Operating Conditions 12 Supply Chain 27 Capital Intensity 12 Products & Services 28 Technology & Systems 13 Demand Determinants 28 Revenue Volatility 14 Major Markets 29 Regulation & Policy www.ibisworld.com | 1-800-330-3772 | [email protected] WWW.IBISWORLD.COM Pet Stores in the US March 2014 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 www.americanpetproducts.org American Pet Products Association www.petage.com Pet Age Magazine www.petbusiness.com Pet Business www.hsus.org The Humane Society WWW.IBISWORLD.COM Pet Stores in the US March 2014 3 Industry at a Glance Pet Stores in 2014 Key Statistics Revenue Annual Growth 09-14 Annual Growth 14-19 Snapshot $16.5bn 3.2% 2.7% Profit Wages Businesses $594.7m $2.2bn 13,156 Revenue vs. employment growth Number of pets (cats and dogs) Market Share PetSmart Inc. 9 210 40.3% 6 200 PETCO Animal 190 3 Supplies Inc. 180 0 19.5% Millions % change 170 −3 160 −6 150 Year 06 08 10 12 14 16 18 20 Year 05 07 09 11 13 15 17 19 Revenue Employment SOURCE: WWW.IBISWORLD.COM p. 23 Products and services segmentation (2014) 6% Key External Drivers Live animals Number of pets (cats and dogs) 13% Pet services Per capita disposable income External competition for the Pet Stores industry Number of households 52% Pet food 29% Pet supplies p. 4 SOURCE:SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Industry Structure Life Cycle Stage Mature 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 FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30 WWW.IBISWORLD.COM Pet Stores in the US March 2014 4 Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage Executive The Pet Stores industry has purred along members, pet owners frequently lavish Summary over the past five years as cats, dogs, fish them with all-natural and organic pet and birds have remained popular home foods and treats, in addition to high-end companions. Even during the Great services. Examples of pet services go Recession, which slowed demand beyond the traditional grooming, dog throughout most of the retail sector, the walking and training; today, premium industry continued to yield revenue services like pet therapy sessions and growth. This trend was mainly driven by pet-only flights are available for four- an increasing number of pet parents, or legged family members. This is the case pet owners who treat their four-legged particularly for dog and cat owners. These friends as family members. During the positive trends, combined with rising economic downturn, when consumers of sales, have increased profit margins for all income levels reduced spending, pet industry players in the five years to 2014; parents cut back on their personal IBISWorld estimates that margins have increased from about 3.1% of revenue in 2009 to about 3.6% in 2014. Indulgent pet parents will continue to drive In the five years to 2019, the Pet Stores industry is projected to maintain strong demand for premium pet food and services growth. As the economy continues its upward trajectory and consumers have discretionary spending before spending more discretionary income, revenue from less on their pets. Consequently, revenue premium products and services is growth for the industry slowed during the projected to increase. Moreover, the recession but maintained its overall number of pet-owning households is positive trend. Revenue is expected to expected to continue increasing, yielding increase at an average annual rate of greater demand for industry products. 3.2% to $16.5 billion in the five years to However, for basic pet supplies, 2014. In 2014, revenue is expected to competition from supermarkets, discount grow 1.4%. department stores and online-only The emerging trend of pet parents has retailers is expected to remain strong. In also commanded high demand for the five years to 2019, industry revenue is premium pet products and services. Since forecast to rise at an average annual rate pets are often considered family of 2.7% to total $18.9 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 family members, so products for pets can foods, medicine and accessories be considered nondiscretionary. A increases. According to the American Pet decrease in disposable income has little Product Association’s (APPA) National effect on demand because households Pet Owner’s Survey, the average dog or typically reduce spending on other cat owner spends between $200 and household and leisure products before $300 annually on food for their pet. The cutting down on pet food and toys. number of pets is expected to increase However, a rise in per capita disposable during 2014, creating a potential income increases the propensity for opportunity for the industry. households to purchase a greater WWW.IBISWORLD.COM Pet Stores in the US March 2014 5 Industry Performance Key External Drivers quantity of goods and premium items consumers with added convenience. continued that are more expensive. Per capita External competition for the Pet Stores disposable income is expected to increase industry is expected to increase in 2014, slowly in 2014. posing a potential threat to the industry. External competition for the Number of households Pet Stores industry According to the APPA’s most recent Pet food, toys and accessories supplied by National Pet Owners Survey, 68.0% of US this industry compete with comparable households own a pet. Consequently, an products offered by supermarkets, increase in the number of households will grocery stores, department stores and likely increase the number of pet owners online-only retailers. These retailers in the United States, supporting industry often sell the same products or very demand. The number of households is similar products as pet stores, providing expected to increase slowly during 2014. Number of pets (cats and dogs) Per capita disposable income 210 4 200 2 190 180 0 Millions 170 % change −2 160 150 −4 Year 05 07 09 11 13 15 17 19 Year 07 09 11 13 15 17 19 SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Pet Stores in the US March 2014 6 Industry Performance The Pet Stores industry has grown as higher disposable incomes encourage Current strongly over the five years to 2014. greater spending on pets. Performance Owners’ tendencies to treat their pets like With strong demand and rising sales, family members have powered the pet stores have experienced increasing financial resilience of this industry. By profit margins during the five-year period. offering more innovative, specialized and Sales of premium pet food, supplies and premium products and services, pet pet services in particular have driven up stores have been able to cash in on pet profitability because they typically have owners’ desires to pamper their pets. In higher markups. Further, industry addition, rising pet ownership in the revenue has been growing at a faster rate United States has led to overall higher than the number of employees or wages. demand for pet food and supplies. Wages are estimated to increase at an Consequently, revenue for the Pet Stores annualized rate of just 2.3% over the five industry is estimated to increase at an years to 2014, to $2.2 billion. IBISWorld average annual rate of 3.2% to $16.5 estimates that in 2014, average industry billion in the five years to 2014. Industry profit margins will reach 3.6% of total revenue is expected to jump 1.4% in 2014 revenue, up from 3.1% in 2008. Growth during the Industry growth in the five years to 2014 recession is largely attributable to higher pet Spending on specialty ownership and accompanying demand for pet products.
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