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The influx of mergers and acquisitions (M&A) in the pet industry began well before the 2020 holiday season kicked off. Heavy hitters, including both pet retailers and manufacturers, are making waves, as agreements are being signed left and right. If industry insider predictions prove correct, these M&As won’t be slowing down anytime soon.

Arguably, the most attention-grabbing shakeup to happen last year was the closure of all U.S. Pet Valu operations, including its 358 stores, which was announced in November 2020.

Vic Mason, president of trade association World Pet Association (WPA), attributed the chain’s downfall to its store layout and an e-commerce platform that “made it unable to keep pace with retailers like Chewy and other big-box stores,” despite its growth over the past decade.

“As someone who is a proponent of the industry, it devastates me that such a fine line separates success and failure,” Mason said. “But in a high-growth market like the pet industry, it is these small advantages and smart choices that can make a difference in keeping your doors open or having to shut down your business.”

The closing of Pet Valu stores lead to a number of acquisitions. Pet Supplies Plus, a Livonia, Mich.-based pet franchise, acquired 40 locations previously operated by Pet Valu in late December. Then, in a twist of events, the company was acquired by the Franchise Group in late January in an all-cash transaction valued at about $700 million. At the time of the acquisition, Pet Supplies Plus had 537 stores covering 36 states.

“Pet Supplies Plus and Pet Valu are two very different companies,” Mason said. “Pet Supplies Plus specialized in purchasing and building up small to mid-range-sized companies. It had a strong and resilient balance sheet, and in June 2020, Pet Supplies Plus displayed first quarter growth of over 2 percent, year-over-year. The company also accepted over 12 new franchise agreements during the first half of 2020, due to their e-commerce platform.”

Smaller regional chains have also gotten in on the game. Rumford Pet Express, like Pet Supplies Plus, gobbled up its own share of Pet Valu locations. In early March, the pet specialty retailer of natural pet foods expanded into four former Pet Valu locations throughout its home state of Rhode Island. Officials said it was the largest single-year expansion for the retailer ever. 

Similarly, in December, Feeders Supply Co., a retailer of pet foods and pet supplies with locations in Kentucky and Indiana, announced it was rebranding two Pet Valu locations.

Come On In, We’re Open

In addition to these big transactions, pet retailers and businesses across the country are cutting the ribbon, so to speak, and are opening new stores in cities all over the nation.

Woof Gang Bakery & Grooming, which is based in Orlando, Fla., just added its 10th store in the Greater Houston area. Prior to that, the specialty pet retail and grooming franchise expanded its presence in Las Vegas, opening a third location in October. Last August, New Mexico and Colorado gained their own Woof Gang Bakery & Grooming stores.

When asked what makes now a good time to expand and/or acquire operations, especially when considering the ongoing pandemic, Paul Allen, founder and CEO of Woof Gang Bakery & Grooming, told PPN, “Now is a prime time to expand retail operations, particularly due to significant opportunities with greater availability of commercial spaces and lower rents. In terms of acquisitions, there are a lot of ‘mom-and-pop’ stores that are passionate about the pet industry and that are great ambassadors within their communities.

“However, due to a lack of services offered in-store this past year, they struggled to compete with online retailers,” Allen added. “This gives us an opportunity to work with these local businesses, enable them to stay within the pet industry and become a part of Woof Gang Bakery & Grooming.”

Moving forward, Woof Gang Bakery & Grooming plans to open 25 to 30 new stores nationwide, and five to six new stores in the state of Texas, Allen said.

Rob Flanagan, president of Wag N’ Wash Natural Pet Food & Grooming, a specialty retailer offering grooming, retail and self-wash services in nearly 20 locations across the country, also pointed to leasing rates as a good reason to expand within the retail space.

“We [are seeing] a softening in the commercial real estate leasing rates,” Flanagan said. “It didn’t slow down as much as people thought when COVID-19 first hit, but it is not accelerating at the pace it was in 2014-2019. There are possible great long-term leases available for the right concept.”

Perhaps most significant, though, according to Flanagan, is that the number of pet-owning households reportedly soared in 2020.

“Many shelters did not have enough dogs to adopt, which is a first,” Flanagan said. “This is a significant increase in customers, which is one of the factors in Wag N’ Wash’s continued success. These customers are not temporary customers, but a new sticky life customer, and we see this strong trend continuing through 2021.”

Wag N’ Wash, which will be opening a new location in St. Louis come mid-2021, has plans to open several other stores in the next two years in key markets, Flanagan said.

Pet Wants is another company celebrating growth. The Cincinnati-based pet food and supplies franchise recently reported record growth for 2020 with a 25 percent year-over-year revenue increase. The company also recently added 22 new franchises, bringing its total territories to 111. Officials said that they hope to add 47 more in 2021.

On the services side, dog social club Skiptown is making strides in Dallas, with plans to open locations in Atlanta and Nashville, Tenn., this year, while Scenthound is expanding its reach in Atlanta.

“With at least 10 Scenters opening in Atlanta, we are excited to make a big splash in this new area,” Tim Vogel, CEO of Scenthound, said in an announcement in mid-March. “This is just the beginning for our expansion in Georgia, and we are excited to watch our franchise partners take care of the dogs in their communities and keep them healthy. As we grow, we are able to continue to remove barriers so that people can love and connect with their dogs every day.”

By this spring, Scenthound, which is based in Jupiter, Fla., will have 14 Scenters open and 41 franchise locations in development across seven states, officials said.

Destination Pet, a pet health care and services company that operates in 22 states, recently added specialty retail to its network of offerings with the acquisition of Exceptional Pets. Exceptional Pets was founded in 2019 by Exceptional Healthcare and has five locations in the Phoenix metropolitan area.

PPN presents its list of top pet retail and business news from January 2020 to now: