Turns out that PetSmart and Chewy.com weren’t the “purrfect” match, after all. Three years after it purchased the huge online retailer, PetSmart plans to sell all of its shares in Chewy and split the companies in two. What will this mean for Chewy customers? So far, the company’s not saying. In another change to where you’ll buy your cat food, Pet Valu is Covid’s latest retail victim and will close its US stores.
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I’ve had a love/hate relationship with PetSmart since it opened in my town. After all, it was the company that forced my favorite independent retailer — and so many others — out of business. Unfortunately, grudges can last a very long time. So I was unhappy when I heard PetSmart, one of the country’s largest pet supply retailers, had acquired one of the country’s largest online retailers, Chewy.com. Grabbing the lion’s share of brick and mortar sales wasn’t enough?
But now it looks like PetSmart bit off more than it can chew. It recently announced plans to sell all of its shares in Chewy and split the companies in two. PetSmart apparently has plans for life without Chewy. But how the breakup will affect Chewy customers remains to be seen. But Pet Product News speculates that it will be as good for Chewy as it is for PetSmart.
PetSmart : Always The Alpha Dog (Or Cat) On The Block
PetSmart has never made any bones about what many consider predatory pricing and its never-ending thirst for growth. For years, its aim has been to offer products and services in every channel of the pet industry, from food to full-service vet clinics and boarding.
David Lummis, lead pet market analyst for market research firm Packaged Facts, believes that will continue. “Looking ahead PetSmart is well-positioned to shift more of its focus to higher-margin services and Rx pet medications, especially given its long-standing relationship with Banfield,” Lummis told Pet Product News.
Jim and Janice Dougherty opened the first stores in what they expected would become a chain of discount pet-food warehouses in the 1980s. From the start, their intentions were clear. Their two Phoenix stores were called PetFood Warehouse, and they sold cat and dog food in bulk at deeply discounted prices in a warehouse atmosphere.
After changing ownership and its name several times, PetSmart now has more than 16500 stores in the US, Canada and Puerto Rico. Early on, it began partnering with rescue groups to hold adoption events in its stores. Its first permanent instore adoption centers and veterinary clinics opened in 1992. Two years later, it started PetSmart Charities as a separate nonprofit to promote adoptions and help rescue groups with such initiatives as spay/neuter services and low-cost veterinary care.
Since 1994, PetSmart Charities has made $400 million in grants to nonprofit groups throughout North America, helped nine million companion animals find homes and provided emergency relief assistance to more than 330,000 animals. Like it does to PetSmart, size matters to the foundation. Its website says it’s “the leading funder of animal welfare.”
Who Will Have The Biggest Bite?
Although it hasn’t commented on its breakup with PetSmart, like its “ex,” Chewy has always believed biggest is best. In an article in Harvard Business Review, Chewy.com cofounder Ryan Cohen talks about his dream of starting a multi-billion dollar business and becoming a leader in the industry.
One of the few retailers to benefit from Covid-19, Chewy.com had sales of $1 billion in the first quarter of 2020.
Loomis says PetSmart is in a good position to focus less on food and more on higher-margin services like grooming, boarding, dog daycare, prescription medications and vet clinics. But while Chewy will never be able to groom a cat online offer full-service medical care, it’s hot on PetSmart’s heels with its new telehealth service. Its pharmacy also recently began selling compounded medicine. Having taken a huge bite out of independent retailers’ sales, it’s now nibbling at the vets’ and compounding pharmacies’ business, too.
Covid -19 Forces Pet Valu Stores To Close
Pet Valu is closing all 358 US stores and warehouses, but not because of competition.
The company’s stores “have been severely impacted by the protracted Covid-19 restrictions,” chief restructuring officer Jamie Could said in a press release. “We thank all of our associates for their commitment to our company and our customers, and especially for going above and beyond so we could help customers as an essential service during the pandemic.”
As of now, Pet Valu stores are open and customers can continue using their gift cards and loyalty cards. However, they can’t place orders on the Pet Valu website.
Pet Valu US licenses its name and contracts for some services from Pet Valu Canada, a separate company. Pet Valu Canada has not been impacted by the pandemic.