[nofearengineer]

I read today that of the almost 16 billion dollar annual U.S. pet store market.

The two biggest market share holders were:

PetSmart - 40%
PetCo - 20%

I was astounded. Two companies holding 60% of the entire pet store market.

I have nothing against either one of these companies. I buy from PetSmart on a semi-regular basis, and probably would buy from PetCo too if they were in my area.

But it amazes me that specialty shops and "mom and pop" pet stores are being so completely crushed out of the marketplace.

I've always thought about "retiring" into owning and operating a pet store (focusing on aquaria of course), but I'm not sure if passion alone is enough to keep one out of bankruptcy court in the long run.

I'm interested in hearing some ideas about what the members think an independent store can offer that a big chain can't or won't.

 

[Italionstallion888]

I read today that of the almost 16 billion dollar annual U.S. pet store market.

The two biggest market share holders were:

PetSmart - 40%
PetCo - 20%

I was astounded. Two companies holding 60% of the entire pet store market.

I have nothing against either one of these companies. I buy from PetSmart on a semi-regular basis, and probably would buy from PetCo too if they were in my area.

But it amazes me that specialty shops and "mom and pop" pet stores are being so completely crushed out of the marketplace.

I've always thought about "retiring" into owning and operating a pet store (focusing on aquaria of course), but I'm not sure if passion alone is enough to keep one out of bankruptcy court in the long run.

I'm interested in hearing some ideas about what the members think an independent store can offer that a big chain can't or won't.

Better conversation and customer service, I can actually hobby talk with the employees b/c they know what they are doing. Better quality fish and plants. Prices are bit higher but I don't mine paying more for a better experience.

 

[twentypoundtabby]

Local fish stores around here have a reputation for providing healthy fish. Petsmart and Petco use one big filter system for all tanks of a specific type - one for all freshwater tanks and one for salt.
The LFS that I frequent has a big sponge filer per tank so they don't share the same filtration system. They also sterilize their nets between tanks - I've had to wait because they ran out of sterilized nets. They don't sell fish the same day they receive them.
Because of this I buy virtually all my fish from them.
What's also amazing is that the LFS fish prices are not higher than Petco or Petsmart.

So, what local fish stores provide me with is healthy fish.

 

[THE V]

As with any market survey its tough to compare apples to apples. What are they including in their market estimations?

Over half of the shelfspace is dedicated to dogs and cats in petco and petsmart. This means that half of their business they are competing with grocery stores and walmart.

Now if you were to just break down the aquarium market the market size would probably be less than 1 billion. It's tough to estimate because most of the LFS don't file public annual reports for some reason.

I imagine a LFS would show a much higher profit margin on livestock and higher share of the total market. Poorly cared for live inventory is a great way to lose money.

 

[DarkCobra]

Petsmart and Petco use one big filter system for all tanks of a specific type - one for all freshwater tanks and one for salt.

Or close to it. I say that because only half the freshwater tanks at a local Petco got wiped out when someone apparently dumped a bottle of insecticidal shampoo in one tank.

Now if they run an effective UV sterilizer on their big filter systems, having the tanks so interconnected might not be so bad. Come to think of it I've never heard whether this is the case. Anyone know?

You're lucky to have such a LFS in your area BTW. They are a dying breed. The few around here focus most heavily on high dollar saltwater, cichlids next, tropicals and planted tanks are almost an afterthought.

 

[CrypticLifeStyle]

Interesting, i would of guessed petco would of been doing better then petsmart.

@DarkCobra - Is that that same whacko running around Florida sabotaging tanks there as well, or is it becoming a mini-movement down south in general?

 

[DarkCobra]

@DarkCobra - Is that that same whacko running around Florida sabotaging tanks there as well, or is it becoming a mini-movement down south in general?

I haven't heard about that. What a crappy thing to do.

This particular instance happened a few years back, in Baton Rouge, LA. They never saw who it was, or what exactly was poured in the tank; they only surmised flea shampoo from the smell and suds.

 

[Bushkill]

And there are other chains / franchises in the mix. Pet Supplies Plus is a franchise with a good number of locations in the NJ/PA area.

In a nutshell, Petco / Petsmart really only cater to the casual and novice aquarist that isn't very demanding about quality of hardware or livestock. They've pretty much obliterated the LFS that used to be there for the kids and parents in the neighborhood that needed to replace a dead goldfish or guppy, are thrilled with cartridge filters, and maybe just ran out of flakes and need something to throw at the fish until their order arrives. Any LFS that wants to survive today, needs to provide what they don't: Knowledge, higher quality hardware, healthier livestock, and more choices in livestock.

And those numbers quoted leave out the bigger internet shops like Foster & Smith, Petsolutions, ThatPetPlace, and countless others. So the slice of the pie left for the brick and mortar LFS is quite a small sliver now.

 

[Alaskan Fishface]

I love our local fish store, it focuses manly on salt water but also has an interesting nano fish area and now more plants and moses. The customer service can be slow but when you get attention the information is valuable and trust worthy. I like that they try to stock interesting rarer fish that you don't see at the big box shops. They will also order fish, etc for you.

 

[t2ak]

I stopped shopping at chain stores the day I got this response to a question:

Me: "Do you have any female Dwarf Gourami's?" After having a male bagged up.
Clerk: "No."
Me: "Will you be getting any in soon?"
Clerk: "No"
Me: "Is there a reason why you will not be? I was hoping to get a pair."
Clerk: "They are ugly." no joke....

I just picked up my bag, paid and walked out. I was actually planning on planning on picking up the marineland C-220 I have now while I was there. I went to the LFS instead. I paid 10% more than I would have at the chain but at least I got my female(RIP Thanks to the cat) and some info and advice on other things while I was there.

 

[mattjm20]

It's *REALLY* hard to run one of these businesses. I spoke to the owner of a good LFS in my area and he said profit margins are really bad -- and trust me, this guy overcharges by a mile on everything. It's like $5 for a tetra and equipment/food/medication is over the moon. I supported him by buying my angels, cacatuoides, and 90G tank, but I can't justify buying "normal" things from him anymore, even though I want to.

It basically all comes down to economies of scale. Petco/Petsmart have the scale to get preferable pricing on everything. The small guys don't, and have to pass high prices on to the customer as a result...

It's sad, but reality. I had also thought it would be fun to open a shop one day but now it seems crazy, especially in high-cost areas (in terms of real estate prices and taxes) such as the NY metropolitan area.

 

[Bananableps]

I have to agree with the above post. I've heard similar things from the LFS owners I've spoken to.

If this is your retirement plan, I'd make sure you have enough saved up to outright buy the plot for your store.

I buy livestock from LFS stores but I can't afford to buy all my fishtank needs from them.

Often, the big chains don't carry more sensitive fish which ship poorly, so that's at least one advantage for the LFS.

 

[sowNreap]

I really don't have anything but Petsmart in my area. I order most of my aquarium stuff online. The only LFS is mostly devoted to snakes & small reptiles, a few birds, some saltwater fish & very, very few freshwater fish. When I was buying fish they didn't have ANY. Last time I was there they only had some Black Skirt Tetras. NO plants, & very few aquarium supplies. So my only choice for fish is Petsmart or order online which is too expensive when just getting Oto's, Serpae Tetras & Black Skirt Tetras.

 

[Kb0961]

what's even more amazing is that there's really only a few companies out there that own a huge chunk of the pet industry

http://www.central.com/
http://www.unitedpetgroup.com/

as for mom and pop stores. they are getting harder and harder to find every day as the big chain stores have pretty much killed most of them. it really is a shame

I remember back in the day when there used to be thousands of independent tank manufacturers. but the big boys have pretty much priced them out of the market with their dollar per gallon sales

 

[DogFish]

Pet-Smart-CO didn't kill the Mom & Pop LFS…..the "Wal-Mart shopper" metality of hobbyist did. Which is also the reason there aren't many Mom & Pop anything- brick & mortar store left.

Pet-Smart-COs live by Dog & Cat food sales, everything else is an add on sale and/or attention 'draw'. Both companies could dump aquatics/reptiles & small animals tomorrow and they would be fine and most likely be more profitable. With the internet presence in the hobby, most of you will live to see that happen. Even my generation, Baby Boomers, have embraced Online shopping.

Right now show of hands, who buys big ticket filters, pumps, lights online?

Online stores blow away Pet-Smart-COs on equipment the same way, Pet-Smart-COs blew away the Mom & Pop LFS. Retail shelf space is based on sales per sq. ft. of sales space. We see a fish tank as a home for fish, plants, inverts. To a retailer a fish tank is a shelf, that has to be profitable. Stop buying Aquatic supply, the more profitable segment of that department, eventually that space gets replaced with dog food bags. Fish sales alone will not justify an Aquatic dept. to a chain retailer any more than it did for Mom & Pop LFS operators.

Eventually, there will only be aquatics online. At first the pricing will be cheap as the online shops fight for market share. Most will fail, the survivors will become the only option. They will either price fix or continue to cut expenses and of course quality will suffer.

If there is a any hope for the hobby to live on it will be that Hobbyist will go full circle to our roots of breeding our own fish, growing our own plants and building our own tanks vs. shopping. So maybe it not a bad thing after all.

BTW - PetSmart Central System.

PetCo, Multi-Systems in 4' segments each with it's own sump. Typical layouts being single 4', double 4' and occasionally a triple 4' systems. PetCo runs chillers on their Goldfish systems.

 

[Qwe]

http://www.plantedtank.net/forums/showthread.php?t=563010

The first two pages of that thread have a lot of good insight into what a bunch of people are looking for in a LFS. The main thing that stuck out to me was the concept of a destination point. Somewhere to look at beautiful display tanks, chat with knowledgeable hobbyists, get inspiration, etc.
I personally feel like quality LFSs are a huge benefit to the hobby and we should do what we can as hobbyists to keep the good ones going...

 

[THE V]

Markets are constantly shifting and changing.

An excellent example was for those of you old enough to remember all of the great local video stores that there used to be. They slowly got gobbled up by the national brands. Then suddenly a major shift in the market and online streaming is the way to go. Now all of the big national video chains are out of business. All markets change in time. Some do it very rapidly like this one. Others move more slowly.

LFS - used to be plentiful but now they are slowly dieing out. This is not only due to economies of scale as mentioned but also by pure mismanagement in a shifting marketplace. It's not easy to see where the niches are for a business to flourish.

My favorite LFS has a very small and kind of dusty section for food and equipment. Really not much inventory. The big box stores all offer this so they don't make much money on it. They have a pretty good inventory of 100+ gallon tanks and a few small ones. They will also order in anything that you would like. The big box stores don't do this.

Where it really shines is in there selection of livestock. Most of the floor is freshwater including a large plant section. They've also got a good saltwater section with tons of frags. They've got on average 8-10 people working the floor. It commonly takes 30 minutes or more to get someone to help you. Their employee turnover is also very low with some many of the same people working for 7-8 years there. Let's just say that none of the big box stores have anything like this. BTW their markup from their supplier on livestock is 80-90% (I've seen his list when he ordered stuff in for me). They take good care of their livestock because it's their main profit center even though their prices are generally LOWER than the big box stores.

The big box stores really don't care than much about the livestock because their main interest is in selling equipment and supplies. Their margins due to economies of scale are much better for these items. Taking care of fish take trained employees. Trained employee's are VERY expensive. The ROI (Return on Investment) is just not sufficient to justify the cost.

 

[DogFish]

I agree with you up to one point:

…..The big box stores really don't care than much about the livestock because their main interest is in selling equipment and supplies.….Taking care of fish take trained employees. Trained employee's are VERY expensive.…..

Livestock is inventory, no modern business is uninterested in being profitable on any inventory. Aquatic maintenance isn't rocket science, if an employee can tie their shoes, and go to the bathroom on their own, they can do the Functional Duties in an Aquatic dept., training time/cost are about the same for a stock person or cashier.

Of course that is not the same as being an experienced aquatic mentor and sales person. That level is beyond company training, that takes personal commitment. Of course that is true in any occupation.

I've found in store after store, year in year out, be it Mom & Pop LFS or chain pet store, the employees are no different that the hobbyist. There is the same bell curve of knowledge and competence. For any mis/under informed person in a Aquatic dept. there are 1000s of the same level hobbyists. We are all constantly learning in this hobby and that includes those of us that roamed the earth in those prehistoric days of Metaframe Tanks, and air powered Teasure chests. :wink:

We have 5-6 LFS worth the gas money to visit in ChicagoLand, which is a sad statement considering I'm referring to area populated by 9million people. Only years ago there were 3 to 4 times more.

 

[THE V]

Livestock is inventory, no modern business is uninterested in being profitable on any inventory. Aquatic maintenance isn't rocket science, if an employee can tie their shoes, and go to the bathroom on their own, they can do the Functional Duties in an Aquatic dept., training time/cost are about the same for a stock person or cashier.

This is acting actually a common misconception. The business world is full of instances where accepting little profit or a even a loss on some inventory increases their overall profitability. This is true where the item they are taking a loss on drives multiple purchases of other items.

The produce section of your local grocery store is a good example. Most if the time these have a net profit of less than 1-2%. Spoilage constantly makes these into a negative margin. However who would shop at a grocery store without a produce section? Or at a grocery store with a dirty produce section?

Another good example is the OS I'm typing on now. Android was created mostly free of charge. Google is taking a hefty loss on the product. Google makes money by the increase web traffic through google search on the phones and the play store.

Petco's dollar per gallon sale is also a great example. They take a loss on the deal because it drives purchases of lights, filters, food, medication, decorations, etc.. all with a very healthy profit margin and repeat business driving from the original loss on the tank.

 

[scapegoat]

PetSmart - 40%
PetCo - 20%

I was astounded. Two companies holding 60% of the entire pet store market.

i'm astounded the number isn't higher. Ask anyone anywhere in the country the name of a pet store and they'll mention one, or both, of those.