business analysis

Petsmart Outline.docx

Section 1: Basic Company Information

-All information from PetSmarts website-

Number of employed: Approximately 53,000

Number of pet-stores: Approximately 1,433

Number of PetSmart PetsHotel locations for dog and cat boarding: 202

Percent of stores that have veterinarian care: More than 60 percent.

Mission/ Vision Statement: “To provide Total Lifetime Care for every pet, every parent, every time – which means that we offer solutions, superior products, unmatched services and superb customer service.” http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/PetSmart-Mission-Statement.htm

“Pets inspire us—to be better and to live better. That's why we're committed to a culture of sustainability.”

“Our Think Twice mission is to create simple, informative and engaging ways to consider the environment in everything we do. The program encourages our associates to reduce environmental dependencies and to create business value through sustainable practices. We measure our overall sustainability efforts in six areas: Energy and Carbon, Recycling, Waste, Water, Green Products, and Partnerships and Engagement. As a result, PetSmart was named one of the greenest big companies in America by Newsweek”

“At PetSmart, we believe pets make us better people. That’s why we create more moments for people to be inspired by pets. And sometimes, those moments are made even more memorable by simple pleasures that we can never take for granted, like the smell of clean air or abundance of green grass.

Keeping our waters clear, skies bluer and air fresh is important to us, and that’s why we’re always looking for ways to do what’s best for our environment. Our commitment to environmental sustainability challenges us to see the world differently. Some might see an empty, vacant lot; we see a Pop-Up dog park providing a space for creating millions of moments. Others see a discontinued toy destined for the landfill; we see a chance to spark playtime between a loving, adoptable pet and a potential new pet parent. Innovative ideas like these help us make a difference in our environment, one moment at a time.

We are dedicated to caring for our customers, associates and communities. Not just because it’s what they expect, but because it’s the right thing to do. And by making responsible decisions today, we can help to create a better world tomorrow for everyone. That’s why we created our Think Twice initiative. We began our sustainability journey in 2008 with the goal of understanding and measuring our impact. Since then, we’ve implemented hundreds of changes to reduce our impact on the environment.”

Competition:

Warehouse clubs and other mass merchandisers;

•Grocery stores; (Target, Walmart, Kmart, WinCo)

•Specialty pet supply stores; (PetCo, for example)

•Veterinarians;

•General retail merchandisers;

•Farm and feed stores;

•E-commerce and catalog retailers; (Amazon. Ebay maybe? People sell dog food and other various feed for animals on eBay)

•Independent grooming, boarding, and training service providers.

The Pet industry:

The pet industry serves a large and growing market. The American Pet Products Association, or “APPA,” estimated the calendar year 2013 market at approximately $55.5 billion, an increase of over 200% since calendar year 1994. Based on the 2013 - 2014 APPA National Pet Owners Survey, approximately 68% of households in the United States own a pet, which equates to over 82 million homes. In total, there are approximately 96 million cats and 83 million dogs owned as pets in the United States. As noted in the APPA National Pet Owners Survey Background and Purpose document, this survey is the first National Pet Owners Survey to be conducted online, which may affect comparability against prior surveys.

The APPA divides the pet industry into the following categories: food and treats, supplies and medicines, veterinary care, services (such as grooming and boarding) and live animal purchases. The APPA estimates that pet food and treats are the largest volume categories of pet-related products and in calendar year 2013, accounted for an estimated $21.3 billion in sales, or 38.4% of the market.

Pet supplies and medicine sales account for 23.8%, or $13.2 billion, of the market. These sales include dog and cat toys, collars and leashes, cages and habitats, books, vitamins and supplements, shampoos, flea and tick control, and aquatic supplies. Veterinary care, other services, and live animal purchases represent 25.6%, 8.1%, and 4.1%, respectively, of the market

“Our Strategy”: Prior to 2014, our key strategy was to be the preferred provider for the lifetime needs of pets. Our primary initiatives included developing innovative products and services, engaging with our customers in an authentic and personalized way, and driving consistent execution in our stores.

At PetSmart, we believe that pets make us better people. That is why we create more moments for people to be inspired by pets. Beginning in 2014, we refreshed our strategic priorities, which are centered around caring for our customers, caring for our associates, and caring for our communities. Our new customer strategy is to develop moment-making products, services, and experiences for pet parents. We will focus on the following three initiatives:

Connecting with all pet parents in an authentic and personalized way.  Through extensive and on-going customer research, we continue to gain valuable insights into our customers' preferences and needs and we are developing solutions and communication strategies to address them. Our emphasis on connecting with the pet parent is designed to ensure we are relevant to our customers, by providing an unparalleled shopping experience every time a customer visits our stores or PetSmart.com. In order to stay relevant with our customers, we plan to enhance the customer experience through technology. Our PetPerks customer loyalty program, which is available in all our stores and on PetSmart.com, enables us to deliver personalized offers and other content based on the customer's purchases, preferences, and unique needs. Our new, enhanced promotional capabilities support this program, by allowing customers to enroll in PetPerks via pin pads at the register. We plan to accelerate our deployment of new omni-channel capabilities, which include launching a new PetSmart.com website platform and redesigned mobile site, expanding our in-store availability feature online, equipping our store associates with mobile devices to help customers, and rolling out order online/pick-up-in-store capability. With increasingly greater capacity to customize in-store and online offers relevant to our customers, we believe we are helping them build a stronger, more meaningful bond with their pets, and greater loyalty to PetSmart.

We are training our store associates to identify customer needs and provide appropriate solutions. We measure our success in every store, and a portion of the annual incentive program for the store management team is linked to customer satisfaction. By providing pet parents with expertise and solutions, we believe we are strengthening our relationships with customers, building loyalty, and enhancing our market leading position, thus differentiating ourselves from our competitors.

Expanding our proprietary and exclusive products and services.  We are focused on developing and strengthening our brand identity and enhancing the emotional connection pet parents make with their pets and with PetSmart. We are committed to developing moment-making products, services, and experiences for pet parents. We provide pet parents with information, knowledge, and product solutions, including both exclusive and proprietary offerings, that help their pets live long, healthy, and happy lives. Our marketing and advertising efforts focus on emphasizing our unique offerings for customers and promoting our strong value proposition. We continually seek opportunities to strengthen our merchandising capabilities allowing us to provide a differentiated product assortment and innovative solutions. We expect to build on the success of our proprietary brands in consumables, and work with our national brand vendors to bring in new PetSmart-exclusive formulations and sub-brands. In hardgoods, our focus is on continuing to grow our existing brands, developing new PetSmart-only unique assortments, and building out our pipeline of innovation for the future.

Services are an integral part of our strategy, and we are focused on driving profitable growth in our services business. We believe services further differentiate us from our competitors, drive traffic and repeat visits to our stores, increase transaction size, provide cross-selling opportunities, and allow us to forge strong relationships and build loyalty with our customers

Attracting and retaining our most valuable customers. Our most valuable customers buy channel-exclusive foods, use grooming services, and are new pet parents of dogs, cats, and fish. We plan to introduce hundreds of new items as part of our consumables reset in the first quarter of 2014. For our grooming customers, we are launching our "Pet Expressions" creative grooming services across the chain, including chalking, stenciling, and feathering, with washable, non-toxic ingredients. We offer puppy starter kits for new pet parents, providing them with savings and an introduction to our best products and services. We believe this will serve as a powerful tool for driving conversion and increased customer retention.

Our expansion strategy includes increasing our share in existing multi-store markets, penetrating new markets, and achieving operating efficiencies and economies of scale in merchandising, distribution, information systems, procurement, marketing, and store operations. We continually evaluate our store format to ensure we are meeting the needs and expectations of our customers, while providing a return on investment to our stockholders.

We believe these strategic initiatives will continue to generate sales growth, and allow us to focus on managing capital and leveraging costs, to produce returns for our stockholders.