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Pet Smart
 

Pet Smart

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  • Evaluating and reconfiguring the value chain associated with the pet industry, PetSmart change their vision and business strategy. In the early years of operation, they were mainly a warehouse of pet supplies.
  • Taking the risk in being a first mover has given PetSmart the competitive advantage over the market. Compared to Petco, PetSmart started most of these services in the early 90’s and they followed a few years later.
  • In 1996, PetSmart took the plunge..the global plunge that is and invested in a large pet retailer in the U.K. In this purchase, they took over 52 stores.
  • The company reported comparable store sales growth of 5%, services sales growth of 9%, and total sales up 6.8%.

Pet Smart Pet Smart Presentation Transcript

  • “Every Pet, Every Parent, Every Time”
    Trinity Autumn Stone
  • History
    Founded in 1986 by Jim and Janice Dougherty
    In 1987, opened their first two stores in Arizona
    PetSmart Charities, Inc., a nonprofit organization that’s dedicated to ending euthanasia and finding homes for homeless pets
    Went “public” in 1993 on the NASDAQ market
  • History
    In 1996, PetSmart made their Internet debut
    Added pet boarding services, PetsHotels in 2000
    As of today, there are over than 1,192 pet stores in the United States, Canada and Puerto Rico with over 184 in-store PetsHotel facilities
  • The Vision of PetSmart
  • What is PetSmart’s strategy?
    To be the preferred provider for the lifetime needs of pets
    Create differentiation that drives brand preference
    Offer superior customer service
    Focus on operating excellence
    Grow our pet services business
    Add stores and provide the right store format to meet the needs of our customers
  • Internal Environment of PetSmart
    Resources and Capabilities
    PetPerks® - giving them direct insight into the wants and needs of “pet parents”
  • Internal Environment of PetSmart
    Resources and Capabilities
    Variety of pet services offered under one roof
    Examples:
    PetSmart Grooming
    PetSmart PetsHotel®
    PetSmart Training
    PetSmart Doggie Day Camp℠
    Banfield Veterinary Clinics
    PetSmart Charities
  • External Environment of PetSmart
    Threat of Substitutes
    Warehouse clubs
    Grocery stores
    Specialty pet supply stores
    Independent pet stores
    Veterinarians
    E-commerce retailers
  • External Environment of PetSmart
    Rivalry
    Large amount of competitors creates intense rivalry for PetSmart
    Establishing a strong identity
    Creating brand loyalty
  • Business Strategies
    Convenience
    generally located at sites co-anchored by strong destination mass merchandisers
    In or near major regional shopping centers
    Also engaged in an ongoing expansion program, opening stores in new and existing markets
  • Business Strategies
    Differentiation
    Wide variety of product lines
    Store exclusive brands
    Martha Stewart Pets and GNC Pets
  • Reconfiguring Value
    Radically New Value Chain
    In 2000, PetSmart evaluated their mission and vision and changed it
    Changed from a warehouse mindset to a more service driven pet retailer
    Expanding pet services
  • First Movers
    First movers in the pet industry in almost every service offered
    PetSmart Charities
    Veterinary Services
    Pet Training
    PetsHotels
  • Types of Diversification
    Vertical Scope
    Adding pet services to their existing business structure
    Subsidiary companies of PetSmart
    Provided the company with increased control and power in the market
    Fortunate in the successes of the integrations
  • Types of Diversification
    Geographic Scope
    Acquired an established pet retailer in the United Kingdom
    Eliminated some of the start up risks in the market
    “Bit off a little more than they can chew."
    Opened new stores in the Canadian market
    Eight stores
    Ontario Market
  • CAGE Framework
    Cultural distances
    PetSmart chose to enter markets with a similar culture as the U.S. market
    Value of having a pet
    Language and social norms
    Administration distances
    European Pet Food Industry Federation
    European Union
  • CAGE Framework
    Geographic distances
    Locations of the stores purchased
    Distribution centers
    Possible shipping from U.S.
    Economic distances
    Consumer buying trends
    Consumer incomes
  • Entry Vehicles
    Nonequity Vehicles
    Opening the new stores in Canada
    Licensing
    Franchising
    Equity Vehicles
    Acquisition
    Pet City Holdings, plc
  • Alliances
    In 2010, PetSmart teamed up with two major retail companies
    Martha Stewart
    GNC
    Smart business move
    Opened up different segments in the market
  • Martha Stewart Pets
    “Exclusive Product Line Combines Martha's Dedication to Pets with Quality and Style”
    Product line hit the shelves in June 2010
    Expanded the pet accessory division
    apparel, collars, leashes, bedding, feeding, grooming and bathing supplies
    Products designed, tested and approved by Martha and her pets
  • GNC Pets
    Designed a dietary and supplement product line for dogs and cats
    Targeted for health consensus pet parent
    Partnership came from the customer requests
    Demonstrates the shift in the view of pets by our society
  • Acquisitions
    Started acquiring companies in 1993
    UniPet Distributors
    The whole pet product warehouse idea got started with this company
    Almost every year of business since 1993, PetSmart has been involved in an acquisition
  • More Acquisitions
    PetStuff, Inc in 1996
    Pet Food Giant in 1996
    Sporting Dog Specialties, Inc in 1996
    Medical Management International, Inc (MMI) in 1999
    PetsHotel Plus in 2000
  • Creating Synergy
    Adding the specialty product lines increased PetSmart market share and power
    Increased their financial strength, especially during the current economic standings
    Creating the alliances helped PetSmart gain access to others’ capabilities
  • New Venture Creation
    PetSmart started as an opportunity in 1986
    Knowledgeable management staff
    Constantly generating new “ideas”
  • PetSmart’s Management
    Multidivisional organizational structure
    finances, marketing, counsel, store operations, supply chain, real estate, human resources, and strategic planning and development
    All divisional leaders report to the President and CEO
    Bob Moran elected in 2009
  • Changes in Our Economy
    In 2008, our economy took a downward turn for the worse
    “Great Recession”
    Luxury market
    However, pet industry seems to be unaffected the recession
  • Recession
  • Pet Industry Statistics
    Total U.S. Pet Industry Expenditures
    Year                 Billion
    2011                 $50.84 Est.
    2010                 $48.35 Actual
    2009                 $45.5 2008                 $43.2 2007                 $41.2 2006                 $38.5  2005                 $36.3 2004                 $34.4 2003                 $32.4 2002                 $29.5 2001                 $28.5 1998                 $23 1996                 $21 1994                 $17  
    http://americanpetproducts.org/press_industrytrends.asp
  • PetSmart Statistics
    Reported strong first quarter 2011 results
    Net income of $71 million on $1.5 billion in revenues, with earnings up 33%.
    12% dividend yield, based on closing stock price of $45.37 as of 7/5/2011
  • PetSmart’s Stock
  • Recommendations
    Be conscious of individual margins on sales of high and low end merchandise
    Continue to track product trends with the PetPerks program
    Monitor services that have outgrown their profitability or their marketability cause budget cuts may be looming
    Explore new niche markets
  • Sources
    www.petsmart.com
    http://phx.corporate-ir.net/phoenix.zhtml?c=93506&p=irol-timeline
    http://americanpetproducts.org/press_industrytrends.asp
    http://phx.corporate-ir.net/phoenix.zhtml?c=93506&p=irol-govManage
    http://phx.corporate-ir.net/phoenix.zhtml?c=196265&p=irol-newsArticle&ID=1425177&highlight=
    http://phx.corporate-ir.net/phoenix.zhtml?c=196265&p=irol-newsArticle&ID=1443008&highlight=
    http://phx.corporate-ir.net/phoenix.zhtml?c=196265&p=factset15
    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9OTE5MDB8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
    http://americanpetproducts.org/press_industrytrends.asp
    http://www.dividend.com/blog/?p=34613
    http://en.wikipedia.org/wiki/Late-2000s_recession
    http://www.fediaf.org/self-regulation/
    http://www.forbes.com/2011/06/20/daily-dividend-report-petm-stt-bxp-rop-wtw-marketnewsvideo.html?partner=yahootix
    http://weeklypets.blogspot.com/
    http://smallbiztrends.com/2010/01/pet-industry-trends-for-2010.html
    http://www.ritholtz.com/blog/wp-content/uploads/2010/06/Recession-Recovery.png
    http://www.tickerspy.com/stockcharts.cgi?&symbol=PETM&size=medium