Competitive analysis of PetSmart and Petco in the pet retail industry

Pets Mart vs. Petco

The Battle to be Top Dog -- PetSmart vs. Petco

What is PetSmart's competitive strategy and how does their strategy relate to their own internal assessment? Give an example from the case.

At the center of PetSmart's internal assessment of themselves is the progression the company sees itself making from being a pure-play competitor to mass merchandisers including Wal-Mart where the stack-em-high format is prevalent, to being more balanced in services. The case study illustrates how PetsMart has been able to successfully strike a balance between being purely focused on pricing and availability which is critical in competing with mass merchandisers, to focusing on value-added services. The case study points out that PetsMart has been successful in generating $450M in sales this year, or 10% of the company's 4.5B sales overall. This has resulted in a 25% compound annual growth rate in services revenue alone. The use of the pet hotel concept has continually added value to the company's profits as the plans through 2010 have been augmented with even more aggressive growth plans (Sullivan, 2006). In addition, the toning down of the stack-em-high hard sell approach to managing their retailing operations has given way to wood grained countertops and blue slate roofs of faux storefronts in their stores and the development of extensive pet hotel amenities. All of these factors have contributed to PetsMart making the transition away from being purely focused on transactions with customers to concentrating more on how to earn their trust over the long-term. The CEO of PetSmart clearly sees his role as being one of creating exceptional value on behalf of his customers, and branding into areas to further support that strategy over time (Dalton, 2005).

2. How does Petco compete with PetSmart and other pet food stores and how does their competitive strategy relate to their own internal analysis? Give an example from the case.

Unlike PetsMart, Petco concentrates on having many more retail locations, combining services in the larger locations yet not to the extent of its primary competitor. Petco also concentrates more on providing food and suppliers for the more exotic pets that children and teenagers have. The primary focus of Petco is therefore more on pets that include reptiles and animals held in terrariums including turtles and other invertebrates. This has significantly changed the marketing strategies of Petco, online and offline, as the company targets a younger demographic overall. The inclusion of services has been a contributor to revenue, yet is not nearly as aggressively pursued as competitor PetsMart continues today doing (Dalton, 2005).