So first of all, what do we know about the "Pet Economy" in the United States?
- The “Pet Economy” in America now exceeds $41 billion per year
- Around 63% of all U.S. households own at least one pet
- The two largest competitors in the pet supply industry = PETCO and PetSmart (combined market share of 53% in 2006)
- PetSmart, in their 2006 Annual Report claimed: “our business is about relationships. It’s about the bond our customers have with their pets. It’s about our ability to understand those emotions, and to help the people who shop in our stores enrich that bond. It’s about providing our customers with superior service, understanding their needs and helping them find solutions that make them better, smarter and more confident pet parents. Today, pet parents want to provide the best level of care for their pets, who are valued members of the family.”
What did our team find when investigating the two largest pet supply competitors? We discovered PETCO and PetSmart were lacking in brand differentiation. The stores (and websites for that matter) had bland layouts, a cold feel, similar products, and, surprisingly, a major lack of customer service. All three of our group members visited various PETCO and PetSmart stores in the Detroit area with our dogs. We all discovered a complete lack of attention from store employees. For example, when I walked in the store and proceeded to wander around the store like I was lost, no one offered to help me or even greeted my pet. I felt like I was just visiting any old store. Looking at various rating sites, it appears that other pet owners also weren't impressed with their in-store experiences. Some common customer themes/complaints about PETCO and PetSmart include:
- Products in various stores aren't always located in the same places which makes them difficult to find.
- Customers aren't sure if they're getting the best deal on products. Several noted they could order some of the products on-line for a better price.
- Store visitors did not like the pressure sales (specifically from food reps).
- Some stores seemed to lack knowledgeable store employees and some did not appear to employee people who were interested in or even liked pets.
- Customers seemed to have mixed results with grooming services and some stores grooming areas were overbooked/overcrowded.
Although these were common complaints, some customers raved when:
- The employees recognized them as a regular customer and remembered their pet's name.
- The store provided them with unconventional surprises and delights. For example, one store’s employee actually ate a gourmet dog biscuit to show how tasty it was.
So how do you take these various consumer wants, add in some surprise and delight features, and differentiate yourself from competitors? Jake, Lisa, and I had many ideas in a report we produced entitled "Experience Co-Creation in the Pet Care Industry." Although the report is too detailed for a blog entry, here are some of the suggestions we had that were focused on actions affecting the customer experience in-store and via services.
- Strategically-placed Information Kiosks: Adding kiosks where customers can access online reviews and product ratings will assist customers in making informed decisions and also help employees become more knowledgeable about products PetSmart carries. The kiosks could also include an interactive store map to help customers find products within the store and be used to help customers research breeds, pet care providers, listings of pet-friendly parks, and local pet events. There could even be a breed-matching program installed here to help potential pet owners identify animal breeds that fit with their various lifestyles.
- Add “Pet Introduction” areas to the front of stores: Allowing pets to join in the shopping experience is a unique feature of PETCO and PetSmart stores. People who bring their animals into the store are aware of their pet's demeanor, and in most cases the animals brought into the store are friendly with both people and other animals. Presently, the aisle ways cause problems when pets are overly eager to meet and knock products off of shelves in their attempts. A solution to this issue would be a central open area within the store where pets could do a "meet and greet" and be able to interact in a safe environment. This would allow a more relaxed introduction and would foster the sense of community within the store.
- Add In-Store Pet Play Spaces: Upon registration/shot record approval, owners can sign-up online (or in store) to bring their pet to free, supervised play dates. PetSmart could create a distinct play environment in-store - more "home like"/less-cold. This could make the local store a community destination in addition to a retailer. While in the store for a play date, owners are able to purchase food, toys, or other necessities for their animals.
- Increase interaction between store employees and customers: As revealed by our visits to various PetSmart stores, the employee-customer experience leaves much to be desired. To improve this and create a solid relationship with customers, PetSmart could position a Wal-mart style greeter at the front of the store with a treat pouch. This greeter would address pets and their owners when they are entering stores. A surprise and delight feature could be accomplished through adding RFID tags built in to customer loyalty cards (with the customer name) and the pet's ID tag (with the pet's name). When the customer enters the store, an RFID reader would transmit onto a handheld device allowing employees to instantly have info on who the person/animal is, their common purchases, etc. This would help to connect the employees to the individual customers to help in the relationship building opportunity within the store.
- Expand pet sales strategy: Due to some of the boycotting of PetSmart and PETCO for selling "overpopulated" pets, what if PetSmart took an initiative to act as a shelter in lieu of allegedly selling pets from "puppy mills?" The company could partner with purebred rescue organizations and establish partnerships with non-commercial breeders. Another opportunity would be to provide information about training particular breeds or a breed-match program to assist in selecting a breed that suits people’s needs. By assisting in matching pets to owners, PetSmart can help to reduce the number of unwanted animals that end up in shelters.
Services are a unique area that provide a natural connection between the in-store and on-line experience platforms. Many Americans love to pamper their pets with luxury services ranging from massages, to pedicures to designer clothes and accessories. Services provide a great growth opportunity for PetSmart. Some stores have already expanded to offer overnight/boarding for pets. According to a 2007 IbisWorld report, services currently represent about 9% of overall industry revenue, and are supported by an annual growth rate of approximately 7%. This category is currently highly fragmented. Here are some ways PetSmart could expand into the pet services business:
- Create “Lose Weight with Your Pet” Programs: According to a 2004 CDC survey, more than 66% of Americans older than 20 are currently overweight or obese! A walk through the park reveals that many dogs suffer the same conditions as their owners. PetSmart could sponsor weight loss exercise groups, potentially even partnering with a local weight loss organization. Participants could meet at a local PetSmart store to go on a walk with friends and their pets with the stored providing poop bags, water/treats at end of trip (for the pets), and information about pet nutrition. This would foster community spawn friendships and also create an extra visit to PetSmart for customers.
- Create local pet parks: In cities / suburbs, PetSmart could sponsor pet parks. These would be safe-fenced areas that could also be used for pet exercise and socialization, PetSmart dog obedience classes, as well as outdoor pet competitions (obedience, agility, etc.). Brand awareness and community goodwill would be the primary benefit of this initiative, which could help to improve customer store visits and brand loyalty.
- Grooming on the Go: Access to services is another area where PetSmart could innovate. While the company currently offers a wide variety of custom grooming services as well as the option to use the store’s equipment to groom your own pet, PetSmart could offer a mobile grooming service for busy pet owners. Improved access (saved time) would be greatly appreciated by busy professionals. A premium could be charged for these services. The mobile grooming service could be scheduled on-line and the vans could also be used to deliver food and other products purchased by the customer on-line at the time they scheduled their service visit.
- Vacation Planning for Pets: For any pet owner, vacationing with or without a pet is a challenge. Utilizing the in-store kiosks and their website, PetSmart could assist owners in finding pet care when they go on vacation or work trips. This service could be enhanced by including such things as pre-screened "foster homes" complete with photos of home/other pets/amenities (fenced yards, living areas, etc.), availability calendars for pet sitters, the sizes of pets pet sitters accept, and recommendations from other pet owners who have used a specific sitter’s services. PetSmart could also offer travel advice, certifying places/ hotels/ airlines/ etc. for pet friendly travel. Additionally, they could offer tips as to which airlines are the most pet-friendly, which crates are the best for carry-on, tips to surviving layovers, etc. PetSmart could also work with select major airports to create brand-sponsored pet rooms or courtyards within the secure area (airports have smoking rooms, why not a pet room). This would be a major convenience factor to pet owners. Presently, pet owners must take their pets outside to "do their business," requiring them to go through the security screening process all over again.