How Petco, Walmart and Others Are Homing in on Pet Health Care
Racking up consumer-level sales of $9 billion and handily surpassing the average annual growth rates of the U.S. pet industry overall, pet medications are chugging along at a healthy pace. This is hardly surprising given the inherently health-centric nature of the category, the aging and overweight pet population, and the overarching humanization trend.
Survey after survey shows that pet owners who view their furry friends as full-fledged family members spend significantly more on them, especially when it comes to health care. The human-animal bond also means that pet owners are interacting more, and more intimately, with their four-legged companions, making it a matter of pet and human health alike that the animals be free of parasites, an especially important consideration in households with young children. Reflecting this need, parasiticides constitute the No. 1 product segment, accounting for more than two-fifths of pet medication sales, followed by vaccines, anti-infectives and pain medications. Yet another aspect of pet market humanization, technological advancements in human medical care are crossing over virtually overnight, including more sophisticated diagnostics such as DNA testing, resulting in earlier detection of conditions calling for pet medications.
At the same time, along with almost every area of consumer product retailing, the pet medications business is realigning as sales stream online. As any veterinarian will affirm, e-tailers have been siphoning sales away from the veterinary channel for years, spearheaded in large part by PetMed Express, which closed in on sales of $300 million in fiscal 2019 while also feeling the e-commerce heat. In the past year, PetSmart’s Chewy.com, Walmart and Petco (teaming up with Express Scripts) have entered or expanded their presence in the online prescription pet medications space. And while Amazon has yet to do so, it’s a virtual certainty given the juggernaut’s long-term commitment to pet products, including OTC pet medications.
Due to their small size and, in many cases, need for regular refills, pet medications are ideal for low-cost or free shipping and auto-replenishment, with most websites happy to do most of the legwork when it comes to tracking down prescriptions. Forced to adopt an “if you can’t beat ’em” approach, even veterinarians are contributing to the e-commerce boom, creating their own online marketplaces for pet medications with the help of third parties such as Vet’s First Choice. Veterinary services, too, are expanding online, as with Petco’s PetCoach and Vet24seven’s MyPetDoc/Ask.Vet online consultation platforms. As a result, online sales of pet medications are forecast to grow briskly in the coming years, rising to around one-fifth of the market by 2022 from around 15 percent at present.
Nevertheless, and despite the additional trend of veterinary industry consolidation, the number of traditional vet clinics is growing, and e-commerce is part of the reason why. While competing online themselves, major brick-and-mortar-based retailers also are aiming to keep consumers flowing into their physical stores by expanding the services portion of the business, with much of the action focused on veterinary. Via Banfield, PetSmart is already a force to be reckoned with in the veterinary space. But now Petco is building out as well, complementing its PetCoach online network with freestanding clinics. In addition, in August, Petco announced that it had essentially doubled its number of full-service, in-store clinics via the addition of three new regional veterinary partners—Global Veterinary Partners, VitalPet and VetnCare—and is planning to expand the number of clinics provided by its established partners Thrive and the Pet Vet.
The activity is not restricted to the pet specialty channel. Encouraged by the early results of its arrangement with PetIQ, Walmart is bringing vet clinics into as many as a thousand Walmart stores by 2023. Concomitant with the expansion, in addition to its new WalmartPetRx.com online platform, Walmart is stocking its more than 4,500 in-store pharmacies with the 30 most-requested pet medications, meaning pet shoppers will be able to pick up their pet’s prescription medications while doing their regular grocery runs.
The upshot of all the above is a more brilliant spotlight on pet health along with exponentially expanding options for obtaining veterinary care and prescription and OTC pet medications. To protect and grow their share of the veterinary services and pet medications businesses, veterinarians and retailers (including e-tailers) will have to work even harder. But for pet medications and pet owners, current market directions look like a win-win.
David Lummis is the lead pet market analyst for Packaged Facts, a division of MarketResearch.com, and author of Packaged Facts’ annual U.S. Pet Market Outlook report. The information and data above are from his most recent project, Pet Medications in the U.S., 6th Edition.