Professional Documents
Culture Documents
Pet Stores in The US Industry Report
Pet Stores in The US Industry Report
WWW.IBISWORLD.COM
Britanny Carter
15 International Trade
Industry Definition
16 Business Locations
Main Activities
Similar Industries
18 Competitive Landscape
29 Industry Data
Additional Resources
29 Annual Change
29 Key Ratios
3 Industry at a Glance
28 Industry Assistance
29 Key Statistics
4 Industry Performance
21 Barriers to Entry
Executive Summary
22 Industry Globalization
Current Performance
23 Major Companies
Industry Outlook
23 PetSmart Inc.
26 Operating Conditions
12 Supply Chain
26 Capital Intensity
13 Demand Determinants
27 Revenue Volatility
14 Major Markets
WWW.IBISWORLD.COM
Main Activities
Retailing pets
Retailing pet food and supplies
Providing pet grooming and boarding services
Similar Industries
Additional Resources
WWW.IBISWORLD.COM
Industry at a Glance
Pet Stores in 2015
Key Statistics
Snapshot
Revenue
Profit
Wages
Businesses
$17.5bn
3.7%
$1.4bn
$2.4bn
Market Share
PetSmart Inc.
38.6%
12
210
200
190
Millions
% change
PETCO Animal
Supplies Inc.
18.8%
4
0
4
Year 07
2.9%
13,556
180
170
160
09
Revenue
11
13
15
17
19
21
150
Year 06
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 23
6%
Live animals
Number of pets
(cats and dogs)
13%
Pet services
52%
Pet food
29%
Pet supplies
p. 4
SOURCE:
WWW.IBISWORLD.COM
SOURCE:
WWW.IBISWORLD.COM
Industry Structure
Mature
Regulation Level
Medium
Low
Technology Change
Medium
Low
Barriers to Entry
Medium
Industry Assistance
None
Concentration Level
Medium
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 29
Industry Globalization
Low
Competition Level
High
WWW.IBISWORLD.COM
Industry Performance
Indulgent
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Industry Performance
Number of households
According to the APPAs most recent
National Pet Owners Survey, 68.0% of
US households own a pet. Consequently,
an increase in the number of households
will likely increase the number of pet
owners in the United States, supporting
industry demand. The number of
households is expected to increase
during 2015.
Per capita disposable income
200
190
% change
Millions
180
170
160
150
Year 06
1
0
1
08
10
12
14
16
18
20
Year
09
11
13
15
17
19
21
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
Industry revenue
8
6
% change
Current
Performance
4
2
0
Year 07
09
11
13
15
17
19
21
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
Competition from
bigger stores
External
competition
from supermarkets and
mass merchandisers has
pressured industry demand
conscious consumers, allowing larger
stores to capture a higher share of the
market. Moreover, many consumers
have gravitated online to purchase
competitively priced products;
e-commerce stores can sell products at
lower prices while maintaining profit
margins because they do not maintain a
retail storefront and, therefore, avoid
the costly rental rates associated with
high-traffic retail space.
High-end goods are primarily sold
through specialty pet stores and other
niche retailers, providing a degree of
guaranteed sales for operators, shielding
them from direct competition. This is
because manufacturers typically place
restrictions on ultra-premium pet
products, selling them only to specialty
pet stores. Such restrictions have aided
niche retailers targeting the high-end
market over the past five years.
Big-box specialty stores, such as
PetSmart and Petco, combine the best of
both worlds; these stores offer a broad
selection of pet products and operate on a
scale large enough to pass cost savings
down to consumers. Furthermore, many
large stores also provide premium
products, a factor that has augmented
competition for small specialty stores. As
a result, big-box stores have posted
healthy gains over the five-year period.
WWW.IBISWORLD.COM
Industry Performance
Industry
Outlook
Pet
ownership will
continue increasing as a
growing number of people
live alone
pet services is expected to favorably affect
industry profit margins during the next
five years. Wages are expected to increase
at a slower rate than revenue, at a 2.4%
annualized rate to $2.7 billion, assisting
the average industry profit margin.
However, price-based competition from
online retailers and supercenters will limit
returns. IBISWorld forecasts profit
margins to increase from 8.1% of revenue
in 2015 to 8.3% in 2020. Rising
profitability and expanding pet ownership
levels will also continue to bring new
entrants to the industry. Consequently,
the number of companies is projected to
increase at an average annual rate of 1.0%
to 14,257 in the five years to 2020.
WWW.IBISWORLD.COM
Industry Performance
Changing
competition
Smaller
WWW.IBISWORLD.COM
Industry Performance
The industrys contribution to the economy is
expected to grow over the 10 years to 2020
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
15
10
Quantity Growth
Pet Stores
Animal Food Production
Veterinary Services
-5
-10
-10
Decline
-5
Shrinking economic
importance
10
15
20
WWW.IBISWORLD.COM
Industry Performance
industry
is M
ature
WWW.IBISWORLD.COM
Supply Chain
Consumers in the US
The Pet Stores industry relies on consumers to purchase pet products and to utilize industry
services.
31111
33993
54194
6%
13%
Live animals
Pet services
52%
Pet food
29%
Pet supplies
Total $17.5bn
Pet food
Because food is a necessity for all pets, it is
not surprising that pet foods make up the
largest product segment for the industry.
This segment covers a wide range of
products such as dry and wet food for dogs
and cats, bird feed, crickets and worms for
reptiles, and other treats and supplements
for a number of different household pets.
In the five years to 2015, retailers have
increasingly provided all-natural and
organic food products. These premium pet
foods tend to be higher priced with larger
markups, a factor which has benefited
industry revenue. Today, a variety of
premium pet foods are available to pets.
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Demand
Determinants
Income
Households with higher incomes are able
to spend more on discretionary items and
services sold at pet stores, leading to
higher demand. As such, over the past
five years, pet-owning households with
high disposable income have been the
main customers for luxury and trendy pet
products, including premium pet food
and designer pet toys. In addition, those
with higher incomes tend to travel
frequently, so they are more likely to
utilize pet boarding services or purchase
products that allow their pet to travel
with them.
Demographics and lifestyle
The change in demographics and lifestyle
of households is an important
WWW.IBISWORLD.COM
Demand
Determinants
continued
Major Markets
4.6%
Consumers aged
75 and older
11.4%
Consumers aged 65 to 74
5.5%
Consumers
aged under 25
24.6%
Consumers aged 45 to 54
15.7%
Consumers aged 25 to 34
21.6%
Consumers aged 55 to 64
Total $17.5bn
16.6%
Consumers aged 35 to 44
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Major Markets
continued
International Trade
WWW.IBISWORLD.COM
West
New
England
AK
0.2
Great
Lakes
WA
ND
MT
3.0
Rocky
Mountains
ID
OR
1.9
West NV
0.7
1.7
SD
0.2
WY
0.5
MN
0.2
0.3
Plains
CO
0.6
KY
1.0
OK
0.8
NC
2.6
TN
AZ
NM
2.3
0.6
Southwest
TX
5.5
HI
0.4
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.3
1.5
0.8
3.5
2.2
0.5
SC
Southeast
0.5
MS
AL
0.9
1.2
GA
2.2
0.4
LA
0.9
FL
8.1
Establishments (%)
0.5
1.9
AR
0.3
1.5
13.0
WV VA
2.7
0.8
1.8
CA
West
3.9
MO
KS
2.5
OH
1.8
4.1
4.5
IN
IL
0.5
UT
PA
3.6
0.8
0.5
1 2
3
NY
7.6
5 4
MI
1.8
IA
NE
0.3
WI
ME
MidAtlantic
9 DC
0.1
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
20
West
The West has the second-highest
proportion of pet stores in the country;
the region is estimated to have 19.2% of
industry stores. California has the highest
number of pet stores in the country at
13.2%. The primary reasons for the
higher-than-average number of pet stores
in the West are population density and
income levels. The West has 17.1% of the
nations total population; furthermore,
both California and Nevada have higherthan-average median incomes by state.
Mid-Atlantic
The Mid-Atlantic region has an estimated
18.1% of pet stores. The most popular
states include New York and
Pennsylvania, which account for a
respective 7.6% and 4.5% of the
industrys locations. These states have
some of the highest populations in the
United States due to their large
metropolitan centers. The region also has
10
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
0
Great Lakes
Southeast
The Southeast holds the highest number
of industry establishments; 22.1% of pet
stores are estimated to be in the region.
The Southeast is the most populated
region of the United States with one
quarter of the nations population. Given
the higher proportion of households,
there is a greater demand for industry
retailers. Within the Southeast, Florida
has the highest number of pet stores, at
8.1% of the nations total.
West
Business Locations
Establishments
Population
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
18
Competitive Landscape
industry is M
edium
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
Economies of scope
Successful operators need a range of the
most popular pets and pet supplies at
different levels of price and quality.
Offering a wider variety of products will
attract a larger customer base.
Profit
Industry profit, as measured by
earnings before interest and taxes, is
expected to grow to 8.1% of revenue in
2015, up from 5.8% in 2010. A growing
pet population and an increasing
willingness of pet owners to spend on
their pets, particularly on premium or
high-margin products, has driven this
increase in profitability. Furthermore
pet stores are increasingly offering pet
services, which typically have higher
WWW.IBISWORLD.COM
19
Competitive Landscape
Industry Costs
(2015)
3.5
9.1
100
Profit
Wages
Purchases
Depreciation
Marketing
Rent & Utilities
Other
8.1
13.6
80
Percentage of revenue
Cost Structure
Benchmarks
continued
60
74.0
57.7
40
1.1
20
0.9
0
4.0
6.5
2.0
10.0
7.6
1.9
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
20
Competitive Landscape
Cost Structure
Benchmarks
continued
Depreciation
Depreciation expenses are expected to
account for about 1.1% of revenue in
2015. This low level of depreciation is
typical for retailing industries, which are
very labor intensive and require minimal
capital costs in operations. However, this
figure is high compared with other
retailing industries because pet stores
must acquire special cages and tanks for
animals in addition to shelving and cash
registers for stores.
Other costs
In 2015, rental costs and utilities costs
are expected to represent 10.0% of total
revenue respectively. Operators in this
industry also incur a variety of other
expenses including administrative,
insurance, security and advertising costs.
In particular, both large and small
operators invest about 1.9% of their
revenue toward marketing and
advertising to generate store traffic and
boost sales.
Basis of Competition
in
this industry is
Highand the trend
is I ncreasing
Internal
Pet stores compete with each other based
on price, product variety, customer
service, brand awareness, variety of pet
services and store location. Since product
External
Historically, supermarkets have been the
primary sellers of pet food products.
Large supermarkets stock a wide variety
of pet food and supplies. Bulk purchases
by supermarkets generally enable them
WWW.IBISWORLD.COM
21
Competitive Landscape
Basis of Competition
continued
Barriers to Entry
Level
High
Medium
Mature
Low
Medium
Medium
None
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
22
Competitive Landscape
Industry
Globalization
Level & Trend
lobalization
G
in this
industry is L owand
the trend is S
teady
WWW.IBISWORLD.COM
Major Companies
Major players
(Market share)
42.6%
Other
Player Performance
PetSmart Inc.
Market share: 38.6%
Since its establishment in 1987, Phoenixbased PetSmart has become the top
specialty retailer of pet food and supplies.
PetSmart operates 1,333 stores, typically
located in regional shopping centers near
other superstores and warehouse stores.
The company employs about 53,000
people in the United States and Canada.
By offering more than 11,000 pet
products and providing various pet
services, PetSmart aims to provide a
one-stop shopping experience. In March
2015, the company went private through
an $8.3 billion buyout by BC Partners.
PetSmart categorizes its merchandise
into three main categories: consumables,
hard goods and pets. Consumables
include pet foods, treats and litter, as well
as premium products, many of which are
not found in supermarkets or mass
merchandisers. Pet supplies such as
collars, leashes, health and beauty aids,
shampoos, medication, toys, pet carriers,
dog kennels, cat furniture, equestrian
SOURCE: WWW.IBISWORLD.COM
(% change)
Operating Income
($ million)
(% change)
2010-11
5,400.0
5.9
406.6
15.3
2011-12
5,800.0
7.4
475.8
17.0
2012-13
6,400.0
10.3
616.7
29.6
2013-14
6,543.1
2.2
655.9
6.4
2014-15
6,653.7
1.7
668.2
1.9
2015-16
6,962.6
4.6
755.5
13.1
Year**
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Financial performance
In the five years to fiscal 2016, revenue
from PetSmarts US operations is
expected to increase at an average
annual rate of 5.2% to $7.0 billion,
outpacing industry-wide growth.
Company growth has been aided by
store expansions and rising sales of
Player Performance
PETCO Animal
Supplies Inc.
Market share: 18.8%
Revenue
($ million)
(% change)
Employees
(People)
(% change)
2010
2,750.0
1.9
23,400
0.9
2011
2,800.0
1.8
23,500
0.4
2012
3,020.0
7.9
22,000
-6.4
2013
3,130.0
3.6
22,000
0.0
2014
3,200.0
2.2
22,500
2.3
2015
3,291.0
2.8
25,100
11.6
*Estimates
SOURCE: FORBES.COM
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Other Companies
WWW.IBISWORLD.COM
Operating Conditions
of capital
intensity is L ow
Capital intensity
Economy
Retail Trade
Pet Stores
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Pet Stores
Veterinary Services
Mail Order
Capital Intensive
Labor Intensive
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity
continued
Technology
& Systems
of
Technology Change
is M
edium
Revenue Volatility
Level
The level
of
Volatility is L ow
Volatility vs Growth
1000
Level
The level
Hazardous
Rollercoaster
100
10
Pet Stores
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
WWW.IBISWORLD.COM
Operating Conditions
Revenue Volatility
continued
Regulation is
Mediumand the
trend is S
teady
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is N
oneand the
trend is S
teady
WWW.IBISWORLD.COM
Key Statistics
Industry Data
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Revenue
($m)
13,468.9
13,710.0
14,212.6
14,309.3
14,643.4
15,152.9
16,157.3
16,647.1
16,979.6
17,518.5
18,056.4
18,476.5
19,221.6
19,820.7
20,156.8
51/145
469/1336
Annual Change
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
Revenue
(%)
1.8
3.7
0.7
2.3
3.5
6.6
3.0
2.0
3.2
3.1
2.3
4.0
3.1
1.7
62/145
587/1336
Industry
Value Added
($m)
2,468.8
2,784.5
3,240.9
2,939.8
3,036.9
3,208.2
3,608.4
3,746.4
3,876.4
3,999.3
4,109.7
4,216.1
4,379.0
4,502.5
4,587.6
44/145
544/1336
Establishments
17,130
17,644
17,110
16,650
16,502
16,345
16,810
17,154
17,329
17,750
18,242
18,438
19,043
19,539
19,749
56/145
295/1336
Enterprises Employment
14,558
101,235
14,804
109,802
14,115
106,912
13,632
109,595
13,305
106,103
13,064
107,454
13,306
110,294
13,390
112,555
13,390
114,356
13,556
118,945
13,772
122,928
13,776
127,414
14,057
130,944
14,263
135,160
14,257
137,089
50/145
53/145
290/1336
319/1336
Exports
---------------N/A
N/A
Industry
Value Added
(%)
12.8
16.4
-9.3
3.3
5.6
12.5
3.8
3.5
3.2
2.8
2.6
3.9
2.8
1.9
69/145
591/1336
Establishments
(%)
3.0
-3.0
-2.7
-0.9
-1.0
2.8
2.0
1.0
2.4
2.8
1.1
3.3
2.6
1.1
57/145
418/1336
Enterprises Employment
(%)
(%)
1.7
8.5
-4.7
-2.6
-3.4
2.5
-2.4
-3.2
-1.8
1.3
1.9
2.6
0.6
2.1
0.0
1.6
1.2
4.0
1.6
3.3
0.0
3.6
2.0
2.8
1.5
3.2
0.0
1.4
85/145
35/145
631/1336
263/1336
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Key Ratios
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Sector Rank
Economy Rank
IVA/Revenue
(%)
18.33
20.31
22.80
20.54
20.74
21.17
22.33
22.50
22.83
22.83
22.76
22.82
22.78
22.72
22.76
38/145
944/1336
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue per
Employee
($000)
133.05
124.86
132.94
130.57
138.01
141.02
146.49
147.90
148.48
147.28
146.89
145.01
146.79
146.65
147.03
98/145
935/1336
Imports
---------------N/A
N/A
Wages
($m)
1,869.9
1,931.8
2,015.0
2,008.5
2,034.8
2,084.6
2,228.5
2,295.2
2,325.1
2,387.6
2,448.5
2,497.7
2,591.4
2,659.2
2,692.8
49/145
534/1336
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Number of pets
- cats and dogs
(Mils)
154
163
165
171
165
169
173
177
181
185
189
193
197
201
205
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
3.3
4.3
-0.3
1.3
2.4
6.9
3.0
1.3
2.7
2.6
2.0
3.8
2.6
1.3
64/145
563/1336
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Number of pets
- cats and dogs
(%)
5.8
1.2
3.6
-3.5
2.4
2.4
2.3
2.3
2.2
2.2
2.1
2.1
2.0
2.0
N/A
N/A
Wages/Revenue
(%)
13.88
14.09
14.18
14.04
13.90
13.76
13.79
13.79
13.69
13.63
13.56
13.52
13.48
13.42
13.36
48/145
869/1336
Employees
per Est.
5.91
6.22
6.25
6.58
6.43
6.57
6.56
6.56
6.60
6.70
6.74
6.91
6.88
6.92
6.94
43/145
891/1336
Average Wage
($)
18,470.88
17,593.49
18,847.28
18,326.57
19,177.59
19,399.93
20,205.09
20,391.81
20,332.12
20,073.14
19,918.16
19,603.03
19,790.14
19,674.46
19,642.71
98/145
1187/1336
Share of the
Economy
(%)
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
44/145
544/1336
SOURCE: WWW.IBISWORLD.COM
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IBISWorld Glossary
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IBISWorld Glossary
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