2. 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
3. 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
5. 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
6. Internal Environment of PetSmart Resources and Capabilities PetPerks® - giving them direct insight into the wants and needs of “pet parents”
7. 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
8. External Environment of PetSmart Threat of Substitutes Warehouse clubs Grocery stores Specialty pet supply stores Independent pet stores Veterinarians E-commerce retailers
9. External Environment of PetSmart Rivalry Large amount of competitors creates intense rivalry for PetSmart Establishing a strong identity Creating brand loyalty
10. 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
12. 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
13. First Movers First movers in the pet industry in almost every service offered PetSmart Charities Veterinary Services Pet Training PetsHotels
14. 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
15. 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
16. 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
17. CAGE Framework Geographic distances Locations of the stores purchased Distribution centers Possible shipping from U.S. Economic distances Consumer buying trends Consumer incomes
18. Entry Vehicles Nonequity Vehicles Opening the new stores in Canada Licensing Franchising Equity Vehicles Acquisition Pet City Holdings, plc
19. Alliances In 2010, PetSmart teamed up with two major retail companies Martha Stewart GNC Smart business move Opened up different segments in the market
20. 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
21. 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
22. 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
23. 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
24. 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
25. New Venture Creation PetSmart started as an opportunity in 1986 Knowledgeable management staff Constantly generating new “ideas”
26. 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
27. 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
29. 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
30. 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
32. 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
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%.
