Lucky Dog: Pet owners will invest in premium products as disposable income rises

WWW.IBISWORLD.COM Pet Stores in the US December 2012 1

IBISWorld Industry Report 45391

Pet Stores in the USDecember 2012 Caitlin Moldvay

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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

31 Industry Assistance

32 Key Statistics

32 Industry Data

32 Annual Change

32 Key Ratios

33 Jargon & Glossary

www.ibisworld.com | 1-800-330-3772 | [email protected]


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Mil

lio

ns

200

140

150

160

170

180

190

1703 05 07 09 11 13 15Year

Number of pets (cats and dogs)

SOURCE: WWW.IBISWORLD.COM

% c

ha

ng

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)

52.1%Pet food

31.9%Pet supplies

10.5%Pet services

5.5%Live animals


Key Statistics Snapshot

Industry at a GlancePet Stores in 2012

Industry Structure Life Cycle Stage GrowthRevenue Volatility Low

Capital Intensity Low

Industry Assistance None

Concentration Level Medium

Regulation Level Medium

Technology Change Medium

Barriers to Entry Medium

Industry Globalization Low

Competition Level Medium

Revenue

$14.7bnProfit

$516.1mWages

$2.0bnBusinesses

13,613

Annual Growth 12-17

3.8%Annual Growth 07-12

2.8%

Key External DriversNumber of pets (cats and dogs)

Per capita disposable income

External competition

Number of households

Market Share

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FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 32



Key External Drivers Number of pets (cats and dogs)H1&


Industry Performance

Growth during the recession

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Growth during the recessioncontinued

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Industry Outlook

E



Industry Outlookcontinued

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Changing competitioncontinued

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Industry PerformanceE



Industry Life Cycle E-(0,1&2/'"1-0%&21&2/&7&)0(.-


Products & Services

Pet food

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Products & Markets

DemandDeterminants

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Products & Markets

Major Markets

E


Products & Markets

International Trade ?/-,0/7-2(/73&-07',&7#-242-%&21&7##("/-,'&7-&-


Products & Markets

Business Locations 2012

MO1.9

WestWestWestWestWest

West

West

Rocky MountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountainsMountains PlainsPlainsPlainsPlainsPlainsPlainsPlains

SouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwestSouthwest

SoutheastSSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheastSoutheast

New EnglandgEngland

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

VA2.7

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

3.5PA4.4

WV0.3

SD0.2

NM0.6

AR0.5

MS0.4

AL1.0

SC1.3

LA1.0

HI0.4

IN2.0

NY7.4 5

6

78

3

21

4

79


t

Mid-

AtlanticAtlanticAtlanticAtlantic

Establishments (%)

Less than 3%

3% to less than 10%

10% to less than 20%

20% or more

Great

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Products & Markets

Business Locations +,-&>-(0,1&70,&50267023%&3(#7-,'&2/&-("-


Key Success Factors Attractive product presentation?/&(0',0&-(&'07."1-(6,01&7/'&,/#("07),&5"0#


Competitive Landscape

Cost Structure Benchmarks

Profit

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Basis of Competition [",&-(&6,'2"6&87002,01&-(&,/-0%&7/'&)0(.2/)&50(;-78232-%&90(6&50,62"6&50('"#-1&7/'&1,042#,1:&-



Barriers to Entry i2)



Industry Globalization

E


Player Performance >2/#,&2-1&,1-78321


Major Companies

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Major Companies

Other Companies +,->670-&7/'&+DEFG&70,&-


Major Companies

Other Companiescontinued

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Capital Intensity E-(0,1&2/'"1-0%:&1262370&-(&6(1-&(-


Operating Conditions

Revenue Volatility +,-&1-(0,1&1,33&'21#0,-2(/70%&P,=)=&5,-1&7/'&-(%1Q&7/'&/(/'21#0,-2(/70%&50('"#-1&P,=)=&5,-&9(('Q=&`



Regulation & Policy E



Industry Assistance E-(0,1&2/'"1-0%&'(,1&/(-&0,#,24,&7/%&15,#2;#&)(4,0/6,/-&1"55(0-:&2/&-


Key StatisticsRevenue

($m)

Industry Value Added

($m)Establish-

ments Enterprises Employment Exports ImportsWages ($m)

Domestic Demand

Number of Pets - Cats and Dogs

(Million)

2003 10,234.7 1,987.3 15,835 13,790 88,620 -- -- 1,441.3 N/A 143

2004 11,064.5 2,102.1 16,541 14,213 90,933 -- -- 1,512.5 N/A 153

2005 11,486.7 2,078.9 16,813 14,483 98,384 -- -- 1,469.9 N/A 163

2006 11,925.2 2,330.0 17,130 14,558 101,237 -- -- 1,690.0 N/A 154

2007 12,872.9 2,400.4 17,638 14,804 109,870 -- -- 1,813.8 N/A 163

2008 13,246.2 2,442.9 17,110 14,115 106,460 -- -- 1,818.9 N/A 165

2009 13,338.9 2,516.9 16,650 13,632 109,167 -- -- 1,816.3 N/A 171

2010 13,712.4 2,604.2 16,502 13,305 105,327 -- -- 1,865.3 N/A 165

2011 14,164.9 2,701.9 16,651 13,411 107,749 -- -- 1,915.7 N/A 169

2012 14,745.7 2,803.5 16,867 13,613 110,443 -- -- 1,975.9 N/A 173

2013 15,424.0 2,920.2 17,137 13,817 113,867 -- -- 2,049.0 N/A 177

2014 16,102.7 3,040.9 17,480 14,093 118,991 -- -- 2,140.4 N/A 181

2015 16,730.7 3,137.3 17,847 14,347 123,379 -- -- 2,225.2 N/A 185

2016 17,098.7 3,252.0 18,257 14,662 126,957 -- -- 2,283.5 N/A 189

2017 17,799.8 3,319.5 18,750 15,014 131,522 -- -- 2,370.2 N/A 193

Sector Rank 46/119 42/119 46/119 41/119 44/119 N/A N/A 47/119 N/A N/A

Economy Rank 441/1149 571/1149 247/1148 239/1148 302/1149 N/A N/A 503/1149 N/A N/A

IVA/Revenue (%)

Imports/Demand

(%)Exports/Revenue

(%)

Revenue per Employee

($000)Wages/Revenue

(%)Employees

per Est.Average Wage

($)

Share of the Economy

(%)

2003 19.42 N/A N/A 115.49 14.08 5.60 16,263.82 0.02

2004 19.00 N/A N/A 121.68 13.67 5.50 16,633.13 0.02

2005 18.10 N/A N/A 116.75 12.80 5.85 14,940.44 0.02

2006 19.54 N/A N/A 117.79 14.17 5.91 16,693.50 0.02

2007 18.65 N/A N/A 117.16 14.09 6.23 16,508.60 0.02

2008 18.44 N/A N/A 124.42 13.73 6.22 17,085.29 0.02

2009 18.87 N/A N/A 122.19 13.62 6.56 16,637.81 0.02

2010 18.99 N/A N/A 130.19 13.60 6.38 17,709.61 0.02

2011 19.07 N/A N/A 131.46 13.52 6.47 17,779.28 0.02

2012 19.01 N/A N/A 133.51 13.40 6.55 17,890.68 0.02

2013 18.93 N/A N/A 135.46 13.28 6.64 17,994.68 0.02

2014 18.88 N/A N/A 135.33 13.29 6.81 17,987.92 0.02

2015 18.75 N/A N/A 135.60 13.30 6.91 18,035.48 0.02

2016 19.02 N/A N/A 134.68 13.35 6.95 17,986.40 0.02

2017 18.65 N/A N/A 135.34 13.32 7.01 18,021.32 0.02

Sector Rank 49/119 N/A N/A 86/119 49/119 45/119 90/119 42/119

Economy Rank 937/1149 N/A N/A 845/1149 746/1149 802/1148 1043/1149 571/1149

Figures are inflation-adjusted 2012 dollars. Rank refers to 2012 data.

Revenue (%)

Industry Value Added

(%)

Establish-ments

(%)Enterprises

(%)Employment

(%)Exports

(%)Imports

(%)Wages

(%)

Domestic Demand

(%)

Number of Pets - Cats and Dogs

(%)

2004 8.1 5.8 4.5 3.1 2.6 N/A N/A 4.9 N/A 7.0

2005 3.8 -1.1 1.6 1.9 8.2 N/A N/A -2.8 N/A 6.5

2006 3.8 12.1 1.9 0.5 2.9 N/A N/A 15.0 N/A -5.5

2007 7.9 3.0 3.0 1.7 8.5 N/A N/A 7.3 N/A 5.8

2008 2.9 1.8 -3.0 -4.7 -3.1 N/A N/A 0.3 N/A 1.2

2009 0.7 3.0 -2.7 -3.4 2.5 N/A N/A -0.1 N/A 3.6

2010 2.8 3.5 -0.9 -2.4 -3.5 N/A N/A 2.7 N/A -3.5

2011 3.3 3.8 0.9 0.8 2.3 N/A N/A 2.7 N/A 2.4

2012 4.1 3.8 1.3 1.5 2.5 N/A N/A 3.1 N/A 2.4

2013 4.6 4.2 1.6 1.5 3.1 N/A N/A 3.7 N/A 2.3

2014 4.4 4.1 2.0 2.0 4.5 N/A N/A 4.5 N/A 2.3

2015 3.9 3.2 2.1 1.8 3.7 N/A N/A 4.0 N/A 2.2

2016 2.2 3.7 2.3 2.2 2.9 N/A N/A 2.6 N/A 2.2

2017 4.1 2.1 2.7 2.4 3.6 N/A N/A 3.8 N/A 2.1

Sector Rank 44/119 58/119 64/119 52/119 40/119 N/A N/A 42/119 N/A N/A

Economy Rank 370/1149 481/1149 548/1148 425/1148 365/1149 N/A N/A 392/1149 N/A N/A

Annual Change

Key Ratios

Industry Data



Jargon & Glossary

BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.

CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) 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 IBISWorlds reports are made using the US Bureau of Economic Analysis implicit GDP price deflator.

DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.

ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.

ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.

EXPORTS Total value of industry goods and services sold by US companies to customers abroad.

IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.

INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.

INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.

INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industrys contribution to GDP, or profit plus wages and depreciation.

INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.

LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industrys life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industrys products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.

NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.

PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a companys profitability. It is calculated as revenue minus expenses, excluding interest and tax.

VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than 20%; high volatility is 10% to 20%; moderate volatility is 3% to 10%; and low volatility is less than 3%.

WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also included in this figure.

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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Lucky Dog: Pet owners will invest in premium products as disposable income rises

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