Petsmart 2012 Annual Report Download - page 10

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Pet supplies and medicine sales account for 23.8%, or $12.6 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 live animal purchases represent 25.7%, 7.8% and 4.0%, 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 seven different categories:
• Warehouse clubs and other mass merchandisers;
• Grocery stores;
• Specialty pet supply stores;
• Veterinarians;
• General retail merchandisers;
• Farm and feed stores; and
• E-commerce and catalog retailers.
We believe the principal competitive factors influencing our business are product selection and quality, customer service,
convenience of store locations, store environment, 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 grocery stores, 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. In addition, our unique relationship with Banfield allows us to sell therapeutic pet foods
at our stores with Banfield hospitals. We believe our pet services business provides a competitive advantage that cannot be easily
duplicated. We compete effectively in our various markets; however, some of our grocery store, warehouse club and other mass
and general retail merchandise competitors are much larger in terms of overall sales volume and may have better access to capital
or other competitive advantages.
Our Strategy
Our strategy is to be the preferred provider for the lifetime needs of pets. Our primary initiatives include:
Develop innovative 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 remain committed to our promise of providing
Total Lifetime CareSM for every pet, every parent, every time. We provide pet parents with information, knowledge, trust and
product solutions, including both exclusive and private label 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. Through extensive and on-going customer research, we are gaining valuable insights into the wants and needs of our
customers and we are developing solutions and communication strategies to address them. Our PetPerks program, which is available
in all our 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 believe we are helping
them build a stronger, more meaningful bond with their pets and greater loyalty to PetSmart. We continually seek opportunities
to strengthen our merchandising capabilities allowing us to provide a differentiated product assortment, including pet specialty
channel exclusive products and our proprietary brand offerings, to drive innovative solutions and value to our customers.
Based on net services sales, we are North America's leading specialty provider of pet services, which includes professional
grooming, training, day camp for dogs and boarding. Full-service veterinary hospitals are available in 816 of our stores, through
our partnership with Banfield and other third parties in Canada. Pet 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, provide cross-selling opportunities, allow us to forge a strong relationship with our customers,
increase transaction size and enhance operating margins.
Engaging with our customers in an authentic and personalized way. Our emphasis on the customer is designed to provide an
unparalleled shopping experience every time a customer visits our stores. Using a detailed associate learning curriculum and role-
playing techniques, we train 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.