Mid-size pet retailers losing out in growing market
Three chains dominate sales, while independent shops carve out profitable niche
Pet parents — those doting cat and dog owners who shell out big bucks for organic food, doggie daycare or even spa treatments — are driving a booming industry in Canada.
But shoppers looking for bargains or specialty products and services are pushing out mid-size chains from an otherwise growing market.
Take for instance PJ’s Pets and Pets Unlimited, which operate under separate banners but are one company. Late last month, they announced they would close 27 of their 39 Canadian stores.
Over the past three fiscal years, the company reported annual losses be- tween $3 million and $6.9 million, according to a March PwC report to the Quebec Superior Court after it filed for creditor protection.
The report partly attributes the red ink to increased competition from larger pet retailers and retail stores. It also blames the low loonie as well as the company’s decision in 2011 to stop selling puppies in some stores following some public pressure.
That’s in contrast to an overall positive outlook for Canada’s pet shops.
“The industry is growing and we are seeing growth among both the major and the smaller players,” said Britanny Carter, an IBISWorld industry analyst.
Following years of growth, petstore industry revenue in Canada is expected to increase an additional 3.6 per cent this year to $2 billion, according to a recent report by the market research firm. Three major players — PetSmart, Pet Valu and Global Pet Foods — make up more than 40 per cent of the market share.
Many of the remaining shops are small, independent ones with fewer than four employees, according to the IBISWorld report.
Some, like PJ’s Pets and Pets Unlimited, are mid-size operations with multiple locations.
They all face competition from grocery stores that increasingly include a pet supplies aisle and discount retailers like Walmart.
Large pet store chains are able to compete by providing “a one-stop shop for all their pet care needs,” Carter said. Some PetSmart locations, for example, boast grooming, boarding, day camp, training and veterinary services.
Smaller chains and boutique shops must also carve out innovative ways to lure customers or they risk being pushed out of the market, said Carter.
An inability to stand out may be what led to the PJ’s Pets and Pets Unlimited closures, she added.
“What it seems the company has failed to do is truly differentiate.”
PJ’s Pets and Pets Unlimited didn’t return messages for comment.