What Chewy’s Latest Announcement Means for Pet Specialty Brick-and-Mortars
Chewy has taken the first step in preparation for an initial public offering (IPO), the online retailer announced earlier this week, prompting some in the industry to question what this move says about the health of the business and the potential impact to the industry—particularly at ground level for independent pet specialty brick-and-mortars.
Commenters on Pet Product News’ Facebook post about the story noted that the move to go public indicates that PetSmart needs the cash flow that would be generated by doing so.
Phil Chang, retail strategy consultant and co-host of “This Commerce Life” podcast, agreed.
“The IPO is significant for PetSmart,” he said. “They probably need the working capital for their day-to-day operations.”
Although Chewy’s IPO filing doesn’t necessarily have an immediate measurable and direct impact on independent brick-and-mortars, it’s just the latest piece of intel to keep in mind.
“The infusion of cash to PetSmart is something that indie pet retailers should be thinking about,” Chang said. “They should be proactively defending against a more aggressive strategy from PetSmart.”
David Lummis, lead pet market analyst for market research firm Packaged Facts, and author of PPN’s monthly Market Outlook column, said retailers should expect more intense online competition.
It’s “probably not what most indie retailers want to hear, but, in some ways, it will likely be just more of the same for them,” Lummis said. “Increased management/stockholder pressure on Chewy will likely drive Chewy to build out even more rapidly, causing Amazon to ramp up faster and further as well.”
In addition, Chang theorized that Chewy’s potentially more aggressive online presence will probably equate to a concerted push to sell more commodity items.
“The IPO will most likely help Chewy also get very proficient at selling commodity items online,” Chang said.
But it’s not all doom and gloom. Retailers can continue to leverage and capitalize on their strengths.
“For indie retailers, this means identifying vulnerable commodity items in-store and being ready to replace them with more experiential or more valuable items that they’ll have to educate the consumer on,” Chang said.
Building out services—and focusing on offering what the internet cannot—can help brick-and-mortars stay strong in the face of mounting competition.
Indie retailers, Lummis said, will “have to double down even harder on their core strengths, including selections tailored to their neighborhood demographics, customer service and knowledgeable staff, pet care services, in-store adoptions and other events, and brands not available elsewhere, including online. Wherever possible, they should also be thinking about home delivery and/or BOPIS—buy online, pick up in-store.”