Big Chain Market Share and Independents

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.

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.

I agree with you up to one point:

THE V said:

…..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.…..

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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.

DogFish said:

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.

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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.