What Retailers Should Understand About Pet Industry Mergers and Acquisitions
It’s often said that with change comes opportunity. With the pet retail industry facing structural changes in the form of consolidations, mergers and acquisitions, fresh opportunities are surfacing for independent retailers looking to forge new relationships, expand product and service offerings, and differentiate their stores from the competition.
Typically, consolidation is driven by a variety of motivators, including the desire to expand the menu of products or services offered by taking on a successful business that already offers those products or services—for example, a successful pet food company acquiring a smaller holistic pet product line—or the desire of a non-pet-care business looking to tap in to new markets by immersing itself in the lucrative pet industry.
The pet community has seen a number of high-profile consolidations in recent years. In one of the largest acquisitions in retail history, PetSmart purchased e-commerce site Chewy.com in 2017, in a sale reported at more than $3 billion. Multinational consumer goods corporation Procter & Gamble Co. bought Natura Pet Products, then sold its entire pet line to Mars. Best known for its candy line, Mars is, in fact, a global leader in the pet care industry, with its Mars Petcare line boasting a portfolio of roughly 50 brands representing more than 50 percent of Mars business, including three of the top-five pet food brands in the world. With its recent acquisition of VCA Animal Hospitals, Mars Petcare also became the largest veterinary health group in North America.
But it’s not all big business being bought by bigger business. Small or regional independent retailers are also in the mix, including Jack’s Pet, purchased by Pet Valu; Distributor Animal Supply Co., which acquired three companies in one year—Holistic Pet Source, Lads Pet Supplies and Bark to Basics, a family-owned business that serves independent retailers, day cares, kennels, animal hospitals and groomers in six states; and Central Garden & Pet, which purchased General Pet Supply, a pet food and supplies distributor in the Midwestern U.S.
So what does this mean for independent retailers in the pet community? Simply, it means independent retailers need to stay abreast of all the mergers and acquisitions that are happening so they can strategize ways to shift their own business model to not only adapt to changes, but to also thrive in an ever-evolving business climate.
“Consolidation of manufacturers and distributors can affect us immediately,” said Sally Adams Trufant, general manager of B&B Pet Stop, a local, family-owned pet retailer in Mobile, Ala. “There are fewer companies to buy from, fewer people to partner with and fewer opportunities to play one against another for better pricing and deals.
“Consolidation in the industry isn’t new—it has been happening for years. Independent pet retailers should be working with whomever is left and brainstorming ways to sell the products, treating these businesses with the respect they deserve and conducting every business transaction with the utmost honesty and integrity.”
Adapting to change while continuing to cater to the needs of your target audience is key to the success of independent retailers faced with ongoing competition from bigger businesses. By keeping your finger on the pulse of your community and the industry as a whole, you can use your knowledge and your own brand loyalty in your favor by simply knowing your customers and strategizing new ways to expand your audience base. Attend trade shows to stay up-to-date on trends, network with the entire pet community, build new relationships and broaden your exposure—all in an effort to stay ahead of the competition. The time is right to differentiate yourself.
“The coming year is bright for the industry,” said Davis Johnson, president of Executive Insight Properties, an Issaquah, Wash.-based market research firm specializing in the retail industry. “We’ll see a focus on services and items that brick-and-mortar retailers can use to differentiate from online competition, as well as a renewed focus on channel strategy on the part of brand partners.”
“Pet ownership continues to grow every year, so there will always be a need for pets and supplies,” she said. “While much of retail continues to move online, we believe there will always be a place for a well-stocked, super-clean destination pet store with lots of healthy live animals and a knowledgeable staff. We continue to play a major role in our community and maintain very close relationships with many of the local groups. It’s not only the right thing to do, it’s good for business.”
Jacinthe Moreau is the president of World Pet Association (WPA). Moreau has broad international experience in the animal health industry. Her career trajectory, which includes a variety of roles at companies such as Vetoquinol, Merial, Merck, VetSource and VCA Animal Hospitals, prepared her to lead WPA.