The Battle to be Top Dog – PetSmart vs. PETCO
PetSmart is the world's leading company in the pet specialty industry owning close to 908 stores in different locations. With research showing that today 62 percent of Americans own a pet, up from 56 percent in 2000, the industry continues to grow as the top dogs in the animal care industry continue to battle it out. When it comes to gaining customer loyalty, PetSmart aims to cater for pet owners who treat Pets like their children. The company hosts a total life-time care plan that offers service exceeding its retail supplies. For instance, when the US Food and Drug Administration recalled unfit pet food produced in China, PetSmart turned this into an opportunity for bonding with its customers. The company called its customers through call and email, alerting them on the turn of events. They also gave refunds for returned products, paid vet bills for some ill animals to show that they were in control of the situation (Robinson, 2009).
PetSmart puts a lot of effort in strengthening its brand and image among its competitors. To start with, PetSmart has a history of establishing big more warehouse-like stores that put up a show of dominance, stocking all types of pet supplies and in large amounts. This strategy is known to have a psychological effect on customers - making them feel that they are buying from the best and most knowledgeable. Its outlets are also strategically positioned along with other major discount chains and easily accessible from the main streets.
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Diversification strategy seems to have worked best for PetSmart. Since the addition of professional pet services like veterinary, training, grooming, day care and boarding, the company has been able to differentiate itself significantly from its competitors, to its advantage. These services multiply the company's points of sales as customers frequent the store and help build its relationship with consumers. Added services also multiply transaction avenues via cross-selling and improved operating margins.
The company is especially famous for its luxurious Pet Hotel suites, for both cats and dog, which are unmatched in the whole industry (Robinson, 2009). Since the introduction of these specialty services, PetSmart has increased its sales by 10percent, denoting a 26 percent annual growth. PetSmart has great strength in terms of economies of scale that makes their expansion strategy much easier. This is because the nominal cost of adding an extra service to their current offering is much less compared to what another pet company would incur in order to start a service section at its own outlet.
PETCO is the second largest company in the pet industry coming hot on heels after PetSmart. The company aims to be the leading retailer in premium pet supplies within the US. It builds on this purpose by strategic positioning of outlets in the vicinity of popular shopping hubs. Just like PetSmart, PETCO too faces competition from strategic groups that trade in pet supplies. These retailers include pet super stores, online retailers, small pet shops grocery and drug stores, among others. However, capitalizing on the weaknesses found among its competitors, PETCO has managed to differentiate itself and create a competitive edge in the market.
PETCO has outdone itself with emphasis on variety. Today the company has more than 10,000 different products to offer the market. They also sell small pets like fish, birds, reptiles and other small animals. To compete with PetSmart, PETCO added an array of Pet services to its offerings that incorporate veterinary clinics, obedience classes and grooming sessions. However, these cannot be compared to the wide range of service found at PetSmart stores.
PETCO applies an emergent strategy to compete with PetSmart in order to consistently build its brand. After noting the continuous increase in the size of PetSmart's stores, PETCO responded to this trend by reformatting their typical store size to 15,000 square- foot. The larger stores have allowed the company to concentrate more on supplies and live animals , which have greater growth potential rather than merely food. The company also offers other pets, besides cats and dogs, in response to an increasing demand for other pets. Cost cutting- with over 654 stores in different locations, PETCO has been able to find a way of making their operations more cost-effective. Chaining of all its stores to a centralized distribution center greatly reduces the problem of high transportation costs.