IBISWorld Industry Report 45391 Pet Stores in the US February 2012 Caitlin Moldvay /XFN\ GRJ 3HW RZQHUV ZLOO LQYHVW LQ SUHPLXP SURGXFWV DV GLVSRVDEOH LQFRPH ULVHV 2 About this Industry 2 Industry Definition 2 Main Activities 2 Similar Industries 2 Additional Resources 3 Industry at a Glance 4 Industry Performance 4 Executive Summary 4 Key External Drivers 5 Current Performance 8 Industry Outlook 11 Industry Life Cycle 13 Products & Markets 13 Supply Chain 13 Products & Services 14 Demand Determinants 15 Major Markets 16 International Trade 17 Business Locations 19 Competitive Landscape 19 Market Share Concentration 19 Key Success Factors 20 Cost Structure Benchmarks 21 Basis of Competition 22 Barriers to Entry 23 Industry Globalization 24 Major Companies 24 PetSmart Inc. 25 PETCO Animal Supplies Inc. 28 Operating Conditions 28 Capital Intensity 29 Technology & Systems 29 Revenue Volatility 30 Regulation & Policy 30 Industry Assistance 31 Key Statistics 31 Industry Data 31 Annual Change 31 Key Ratios 32 Jargon & Glossary www.ibisworld.com | 1-800-330-3772 | info @ ibisworld.com
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WWW.IBISWORLD.COM Pet Stores in the US February 2012 1
IBISWorld Industry Report 45391Pet Stores in the USFebruary 2012 Caitlin Moldvay
WWW.IBISWORLD.COM Pet Stores in the US February 2012 2
The primary activities of this industry areRetailing pets
Retailing pet food and supplies
Providing pet grooming and boarding services
54194 Veterinary Services in the USEstablishments in this industry provides veterinary services.
81291 Pet Grooming & Boarding in the USOperators in this industry provide pet grooming and boarding services.
45411a E-Commerce & Online Auctions in the USBusinesses in this industry retails pet foods and pet supplies via the internet.
45411b Mail Order in the USEstablishments in this industry retail pet foods and pet supplies via mail-order or catalogs.
Industry Definition
Main Activities
Similar Industries
Additional Resources
About this Industry
For additional information on this industrywww.americanpetproducts.org/ American Pet Products Association
www.petage.com Pet Age Magazine
www.petbusiness.com Pet Business
www.hsus.org The Humane Society of the United States
The major products and services in this industry areLive animals
Pet food
Pet services
Pet supplies
WWW.IBISWORLD.COM Pet Stores in the US February 2012 3
Mill
ions
210
140
150
160
170
180
190
200
1703 05 07 09 11 13 15Year
Number of pets (cats and dogs)
SOURCE: WWW.IBISWORLD.COM
% c
hang
e
10
!4
!2
0
2
4
6
8
1804 06 08 10 12 14 16Year
Revenue Employment
Revenue vs. employment growth
Products and services segmentation (2012)
58%Pet food27.3%
Pet supplies
10.2%Pet services
4.5%Live animals
SOURCE: WWW.IBISWORLD.COM
Key Statistics Snapshot
Industry at a GlancePet Stores in 2012
Industry Structure Life Cycle Stage Growth
Revenue Volatility Low
Capital Intensity Low
Industry Assistance None
Concentration Level High
Regulation Level Medium
Technology Change Medium
Barriers to Entry Medium
Industry Globalization Low
Competition Level Medium
Revenue
$14.7bnProfit
$634.1mWages
$1.9bnBusinesses
13,730
Annual Growth 12-17
3.8%Annual Growth 07-12
2.8%
Key External DriversNumber of pets (cats and dogs)Per capita disposable incomeExternal competitionNumber of households
Market Share
p. 24
p. 4
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Pet Stores in the US February 2012 4
Key External Drivers Number of pets (cats and dogs)
Per capita disposable income
External competition
Executive Summary
Industry PerformanceExecutive Summary | Key External Drivers | Current PerformanceIndustry Outlook | Life Cycle Stage
WWW.IBISWORLD.COM Pet Stores in the US February 2012 5
Industry Performance
Growth during the recession
Current Performance
Key External Driverscontinued
Number of households
% c
hang
e
4
!4
!2
0
2
1705 07 09 11 13 15Year
Per capita disposable income
SOURCE: WWW.IBISWORLD.COM
Mill
ions
210
140
150
160
170
180
190
200
1703 05 07 09 11 13 15Year
Number of pets (cats and dogs)
WWW.IBISWORLD.COM Pet Stores in the US February 2012 6
Industry Performance
Growth during the recessioncontinued
Part of the family
WWW.IBISWORLD.COM Pet Stores in the US February 2012 7
Industry Performance
Product innovation
Competition from bigger stores
WWW.IBISWORLD.COM Pet Stores in the US February 2012 8
Industry Performance
Industry Outlook
Competition from bigger storescontinued
% c
hang
e10
0
2
4
6
8
1804 06 08 10 12 14 16Year
Industry revenue
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Pet Stores in the US February 2012 9
Industry Performance
Industry Outlookcontinued
Changing competition
Premium products will remain popular
WWW.IBISWORLD.COM Pet Stores in the US February 2012 10
Industry Performance
Changing competitioncontinued
WWW.IBISWORLD.COM Pet Stores in the US February 2012 11
Industry PerformanceLife Cycle Stage
SOURCE: WWW.IBISWORLD.COM
30
25
20
15
10
5
0
–5
–10–10 100 20–5 155 25 30
% G
row
th o
f pro
fi t/G
DP
% Growth of establishments
DeclineCrash or Grow?
Potential Hidden GemsFuture Industries
Quality GrowthHigh growth in economic importance; weaker companies close down; developed technology and markets
Time WastersHobby Industries
MaturityCompany consolidation;level of economic importance stable
Shake-out
Shake-outQuantity GrowthMany new companies; minor growth in economic importance; substantial technology change
Key Features of a Growth Industry
Revenue grows faster than the economyMany new companies enter the marketRapid technology & process changeGrowing customer acceptance of productRapid introduction of products & brands
E-Commerce & Online Auctions
Animal Food ProductionMail Order
Toy, Doll & Game Manufacturing
Veterinary ServicesPet Stores
WWW.IBISWORLD.COM Pet Stores in the US February 2012 12
Industry Performance
Industry Life Cycle
This industry is Growing
WWW.IBISWORLD.COM Pet Stores in the US February 2012 13
Products & Services
Pet food
Pet supplies
Products & MarketsSupply Chain | Products & Services | Demand DeterminantsMajor Markets | International Trade | Business Locations
KEY BUYING INDUSTRIES99 Consumers in the US
The Pet Stores industry relies on consumers to purchase pet products and to utilize industry services.
KEY SELLING INDUSTRIES31111 Animal Food Production in the US
This industry supplies pet stores with a vast array of pet food.
33993 Toy, Doll & Game Manufacturing in the US This industry supplies pet toys and accessories to industry operators.
54194 Veterinary Services in the US This industry provides veterinary care services such as vaccinations to industry operators.
Supply Chain
Products and services segmentation (2012)
Total $14.7bn
58%Pet food27.3%
Pet supplies
10.2%Pet services
4.5%Live animals
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Pet Stores in the US February 2012 14
Products & Markets
DemandDeterminants
Pet ownership
Products & Servicescontinued
Services
Live animal purchases
Pet ownership segmentation in the US (2011)Animal Share of total pets (%)
Birds 4.3Cats 22.9Dogs 20.7Horse 2.1Freshwater Fish 40.0Saltwater Fish 2.3Reptiles 3.4Small Animals 4.2
SOURCE: AMERICAN PET PRODUCTS ASSOCIATION
WWW.IBISWORLD.COM Pet Stores in the US February 2012 15
Products & Markets
Major Markets
DemandDeterminantscontinued
IncomeDemographics and lifestyle
Major market segmentation (2012)
Total $14.7bn
28%Consumers 45 to
54 years old
7%Consumers over
65 years old
24%Consumers 35 to
44 years old
18%Consumers 25 to
34 years old
13%Consumers 55 to
64 years old
10%Consumers under
25 years old
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Pet Stores in the US February 2012 16
Products & Markets
International Trade
Major Marketscontinued
WWW.IBISWORLD.COM Pet Stores in the US February 2012 17
Products & Markets
Business Locations 2012
MO1.9
West
West
West
Rocky Mountains Plains
Southwest
Southeast
New England
Great Lakes
VT0.3
MA2.0
RI0.5
NJ3.3
DE0.5
NH0.7
CT1.5
MD1.9
DC0.1
1
5
3
7
2
6
4
8 9
Additional States (as marked on map)
AZ2.2
CA13.2
NV0.9
OR2.0
WA3.1
MT0.3
NE0.5
MN1.7
IA0.9
OH3.9 VA
2.7
FL7.7
KS0.9
CO2.6
UT0.7
ID0.5
TX5.6
OK0.9
NC2.5
AK0.2
WY0.3
TN1.5
KY0.7
GA2.2
IL4.1
ME0.6
ND0.2
WI1.9 MI
3.5 PA4.4
WV0.3
SD0.2
NM0.6
AR0.5
MS0.4
AL1.0
SC1.3
LA1.0
HI0.4
IN2.0
NY7.4 5
67
8
321
4
9
SOURCE: WWW.IBISWORLD.COM
Mid- Atlantic
Establishments (%)
Less than 3% 3% to less than 10% 10% to less than 20% 20% or more
WWW.IBISWORLD.COM Pet Stores in the US February 2012 18
Products & Markets
Business Locations
Southeast
West
Mid-Atlantic
Great Lakes
%
30
0
10
20
Sout
hwes
t
Wes
t
Gre
at L
akes
Mid
-Atla
ntic
New
Eng
land
Plai
ns
Rock
y M
ount
ains
Sout
heas
t
EstablishmentsPopulation
Establishments vs. population
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Pet Stores in the US February 2012 19
Level & Trend Barriers to Entry in this industry are Medium and Steady
WWW.IBISWORLD.COM Pet Stores in the US February 2012 23
Competitive Landscape
Industry Globalization
Barriers to Entrycontinued
Level & Trend Globalization in this industry is Low and the trend is Steady
WWW.IBISWORLD.COM Pet Stores in the US February 2012 24
Player Performance
Financial performance
Major CompaniesPetSmart Inc. | PETCO Animal Supplies Inc. | Other Companies
35.0%Other
PetSmart Inc. 44.3%
PETCO Animal Supplies Inc. 20.7%
SOURCE: WWW.IBISWORLD.COM
Major players(Market share)
PetSmart Inc. Market share: 44.3%
WWW.IBISWORLD.COM Pet Stores in the US February 2012 25
Major Companies
Player Performance
Player Performancecontinued
PetSmart Inc. – fi nancial performance
Year*Revenue
($ million) (% change)Net Income
($ million) (% change) Employees (% change)
2007 4,672.7 10.4 258.7 39.8 43,000 N/C
2008 5,065.3 8.4 192.7 -25.5 46,000 7.0
2009 5,336.4 5.4 198.3 2.9 45,000 -2.2
2010 5,693.8 6.7 239.9 21.0 47,000 4.4
2011* 6,103.8 7.2 301.8 25.8 47,500 1.1
2012* 6,531.0 7.0 348.3 15.4 48,500 2.1
*EstimatesSOURCE: ANNUAL REPORT AND IBISWORLD
PETCO Animal Supplies Inc. Market share: 20.7%
WWW.IBISWORLD.COM Pet Stores in the US February 2012 26
Major Companies
Other Companies Pet Supplies PlusEstimated market share: 3.6%
Player Performancecontinued
Financial performance
Petco Animal Supplies Inc. – fi nancial performance*
YearRevenue
($ million) (% change) Employees (% change)
2007 2,400 9.1 20,100 2.7
2008 2,550 6.3 22,000 9.5
2009 2,700 5.9 23,200 5.5
2010 2,800 3.7 23,500 1.3
2011* 2,925 4.5 24,400 3.8
2012* 3,050 4.3 25,500 4.5
*EstimatesSOURCE: FORBES.COM
WWW.IBISWORLD.COM Pet Stores in the US February 2012 27
Major Companies
Other Companiescontinued
Pet Supermarket Inc.Estimated market share: 1.6%
Pet Food ExpressEstimated market share: Less than 1.0%
WWW.IBISWORLD.COM Pet Stores in the US February 2012 28
Capital Intensity
Operating ConditionsCapital Intensity | Technology & Systems | Revenue VolatilityRegulation & Policy | Industry Assistance
Tools of the Trade: Growth Strategies for Success
SOURCE: WWW.IBISWORLD.COM
Labo
r Int
ensiv
eCapital Intensive
Change in Share of the Economy
New Age EconomyRecreation, Personal Services, Health and Education. Firms benefi t from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation.
Traditional Service EconomyWholesale and Retail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore fi rms must use new technology or improve staff training to increase revenue growth.
Old EconomyAgriculture and Manufacturing. Traded goods can be produced using cheap labor abroad. To expand fi rms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products.
Investment EconomyInformation, Communications, Mining, Finance and Real Estate. To increase revenue fi rms need superior debt management, a stable macroeconomic environment and a sound investment plan.
E-Commerce & Online Auctions
Animal Food ProductionMail Order
Toy, Doll & Game ManufacturingVeterinary Services
Pet Stores
Capital intensity
0.5
0.0
0.1
0.2
0.3
0.4
SOURCE: WWW.IBISWORLD.COMDotted line shows a high level of capital intensity
Capital units per labor unit
Pet StoresRetail TradeEconomy
Level The level of capital intensity is Low
WWW.IBISWORLD.COM Pet Stores in the US February 2012 29
Operating Conditions
Revenue Volatility
Technology& Systems
Capital Intensitycontinued
Level The level of Technology Change is Medium
SOURCE: WWW.IBISWORLD.COM
Volatility vs Growth
Reve
nue
vola
tility
* (%
)
1000
100
10
1
0.1
Five year annualized revenue growth (%)–30 –10 10 30 50 70
Hazardous
Stagnant
Rollercoaster
Blue Chip
* Axis is in logarithmic scale
A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment.
When a fi rm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly.
Pet Stores
Level The level of Volatility is Low
WWW.IBISWORLD.COM Pet Stores in the US February 2012 30
Operating Conditions
Industry Assistance
Regulation & Policy
Revenue Volatilitycontinued
Level & Trend The level of Regulation is Medium and the trend is Steady
Key tariffsGoods Low rate High rate
Saddlery and harness for any animal (excluding dogs – see above) 2.8 2.8Dog leashes, collars, muzzles, harnesses and similar 2.4 2.4Pet food 0.0 0.0
SOURCE: USITC
Level & Trend The level of Industry Assistance is None and the trend is Steady
WWW.IBISWORLD.COM Pet Stores in the US February 2012 31
WWW.IBISWORLD.COM Pet Stores in the US February 2012 32
Jargon & Glossary
BARRIERS TO ENTRY Barriers to entry can be High, Medium or Low. High means new companies struggle to enter an industry, while Low means it is easy for a firm to enter an industry.CAPITAL/LABOR INTENSITY An indicator of how much capital is used in production as opposed to labor. Level is stated as High, Medium or Low. High is a ratio of less than $3 of wage costs for every $1 of depreciation; Medium is $3 – $8 of wage costs to $1 of depreciation; Low is greater than $8 of wage costs for every $1 of depreciation.CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using 2012 as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the ‘real’ growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.DOMESTIC DEMAND The use of goods and services within the US; the sum of imports and domestic production minus exports.EARNINGS BEFORE INTEREST AND TAX (EBIT) IBISWorld uses EBIT as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding tax and interest.EMPLOYMENT The number of working proprietors, partners, permanent, part-time, temporary and casual employees, and managerial and executive employees.ENTERPRISE A division that is separately managed and keeps management accounts. The most relevant measure of the number of firms in an industry.ESTABLISHMENT The smallest type of accounting unit within an Enterprise; usually consists of one or more locations in a state or territory of the country in which it operates.EXPORTS The total sales and transfers of goods produced by an industry that are exported.IMPORTS The value of goods and services imported with the amount payable to non-residents.
INDUSTRY CONCENTRATION IBISWorld bases concentration on the top four firms. Concentration is identified as High, Medium or Low. High means the top four players account for over 70% of revenue; Medium is 40 –70% of revenue; Low is less than 40%.INDUSTRY REVENUE The total sales revenue of the industry, including sales (exclusive of excise and sales tax) of goods and services; plus transfers to other firms of the same business; plus subsidies on production; plus all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); plus capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.INDUSTRY VALUE ADDED The market value of goods and services produced by an industry minus the cost of goods and services used in the production process, which leaves the gross product of the industry (also called its Value Added).INTERNATIONAL TRADE The level is determined by: Exports/Revenue: Low is 0 –5%; Medium is 5 –20%; High is over 20%. Imports/Domestic Demand: Low is 0 –5%; Medium is 5 –35%; and High is over 35%.LIFE CYCLE All industries go through periods of Growth, Maturity and Decline. An average life cycle lasts 70 years. Maturity is the longest stage at 40 years with Growth and Decline at 15 years each.NON-EMPLOYING ESTABLISHMENT Businesses with no paid employment and payroll are known as non-employing establishments. These are mostly set-up by self employed individuals.VOLATILITY The level of volatility is determined by the percentage change in revenue over the past five years. Volatility levels: Very High is greater than ±20%; High Volatility is between ±10% and ±20%; Moderate Volatility is between ±3% and ±10%; and Low Volatility is less than ±3%.WAGES The gross total wages and salaries of all employees of the establishment.
Industry Jargon
IBISWorld Glossary
HUMANIZATION A trend where pet owners treat pets as humans, providing them with services such as pet hotels and grief counseling.JUST-IN-TIME (JIT) A strategy implemented to improve profitability by reducing inventory and purchasing the raw materials that are needed for the immediate term only.
PET BOARDING AND DAY-CARE Long- and short-term options for owners who need assistance looking after their pets. Services include feeding, walking, grooming and lodging.PET PARENTS Pet owners who are enthusiastic about their pets and treat them as members of their family.
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