Petsmart - Well Trained in the Pet Industry

Industry Overview

Well Trained in the Pet Industry

PetSmart's unique position as the largest pet retailer of services and products has allowed it to

gain the largest individual market share in the pet industry. According to PetSmart, it has a 14

percent share in a 32.1 billion dollar pet product industry. The company competes mainly with

mass discount stores such as Wal-mart, and grocery stores. However, PetSmart's advantage is

its specialty retail status; it has a great depth of pet products that customers want and mass

discount and grocery stores cannot match. Additionally, with few pet specialty competitors, it

can sustain such a large percentage of the entire pet product industry. Other specialty retailers,

such as PetCo and family shops, only hold 10% of the market combined. PetSmart also holds a

strong 15% of the entire pet services industry, such as pet grooming and boarding services.

UNLV Rebel Investment Research Challenge November 29, 2010

Student Research

Pet Product and Service Expenditures on the Rise

There's little doubt that American's love their pets. Pet parents consider their furry friends part

of the family – which has made PetSmart's product line and services a staple. According to the

American Pet Products Association (APPA), pet industry expenditures have consistently

increased steadily from $28.5 billion in 2000 to $45.5 billion in 2009. Even during the recent

recession, expenditures have consistently increased yearly, with an estimate of $47.7 billion at

the end of 2010. According to this data, pet expenditures can be considered on par with baby

or school products – a family necessity that households purchase regardless of the economic

status.

Competitor Comparison

PetSmart maintains a strong balance sheet and a clear, conservative investment and growth

strategy. Amongst other specialty retailers, PetSmart stands out by how much it has outperformed

the market during the recent recession. In comparison to other companies that take up

big block real estate with strong balance sheets, PetSmart has enjoyed better ROE and growth.

In recent years the profit margin has shown to be decreasing and we believe this to be an

opportunity