Petsmart 2009 Annual Report Download - page 10

in the United States own a pet, which equates to more than 71 million homes. In total, there are approximately
94 million cats and 78 million dogs owned as pets in the United States.
The APPA divides the pet industry into the following categories: food and treats, supplies and medicines,
veterinary care, pet services (such as grooming and boarding) and purchases of pets. The APPA estimates that food
and treats for dogs and cats are the largest volume categories of pet-related products and in calendar year 2009,
accounted for approximately $17.4 billion in sales, or 38.3% of the market.
Pet supplies and medicine sales account for approximately 22.5%, or $10.2 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, pet services, and purchases of pets represent approximately
26.9%, 7.5% and 4.8%, respectively, of the market.
Competition
Based on total net sales, we are North America’s leading specialty retailer of products, services and solutions
for the lifetime needs of pets. The pet products retail industry is highly competitive and can be organized into eight
different categories:
• Warehouse clubs and other mass merchandisers;
• Supermarkets (grocery stores);
• Specialty pet supply stores;
• Independent pet stores;
• Veterinarians;
• General retail merchandisers;
• Catalog retailers; and
• E-commerce retailers.
We believe the principal competitive factors influencing our business are product selection and quality,
convenience of store locations, store environment, customer service, price, and availability of other services. Many
premium pet food brands, which offer higher levels of nutrition than non-premium brands, are not currently sold
through supermarkets, warehouse clubs and other mass and general retail merchandisers due to manufacturers’
restrictions, but are sold primarily through specialty pet supply stores, veterinarians and farm and feed stores. We
believe our pet services business provides a competitive advantage that cannot be easily duplicated. We believe we
compete effectively in our various markets; however, some of our supermarket, warehouse club and other mass, and
general retail merchandise competitors are much larger in terms of overall sales volume and may have access to
greater capital.
Our Strategy
Our strategy is to be the preferred provider for the lifetime needs of pets. Our primary initiatives include:
Create meaningful differentiation that drives brand preference. We are focused on developing and strength-
ening our brand identity and enhancing the emotional connection pet parents make with their pets and with
PetSmart. We remain committed to our promise of providing Total Lifetime Care
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for every pet, every parent,
every time. We provide pet parents with information, knowledge, trust, and product solutions 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. Through extensive and on-going customer research, we are
gaining valuable insights into the wants and needs of our customers and developing solutions and communication
strategies to address them. Our PetPerks»program, which is available in all PetSmart stores, plays a central role in
this effort. We are also able to reach customers through various online communities and social networking sites.
With increasingly greater capacity to customize offers relevant to our customers, we are helping them build a
stronger and more meaningful bond with their pet and a greater loyalty to PetSmart.
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