If
you have been an avid pet lover over the last decade there is a high chance you
frequently found yourself at PetSmart or Petco, America’s two largest pet stores,
whether it was to get necessities for your pet or spoil them just because you
felt like it.
With new carriers of pet supplies and new
technology of online shopping, PetSmart and Petco were facing a lot of new
competition in the market share. These declining companies needed to seek new
resources and strategies to gain sustainable competitive advantages over their
competitors. PetSmart Inc. bought Chewy, the online pet shop, for $3.8 billion,
they wanted to improve their sales by entering into e-commerce, hoping to
increase their sales revenue by selling their products in a new market. Petco
decided to focus on developing and enhancing the services they offer that you can’t
purchase online, such as grooming and pet sitting.
Petco has been improving its veterinary services and
training classes to draw people to stores. Photo: Paul Ladd/Associated Press
While Petco’s financial performance has progressed
after re-vamping it’s in store services, PetSmart Inc. continues to decline in
sales and grow in debt even after acquiring Chewy.
PetSmart’s CEO J.K. Symancyk said that the
firm is intentionally keeping the businesses separate because of where each company
stands in terms of their growth. PetSmart is established and has a mature customer
base, while Chewy is a new and upcoming company, their focus is on obtaining
new customers. If PetSmart Inc. wanted to treat each company as having a
separate target market, then they should have made a different marketing mix
for each business. Instead they treated both PetSmart and Chewy as a combined
target market, they lacked developing unique products for each target segment
and differentiated campaigns and promotional tactics to increase sales and
clientele.
Ron Coughlim, CEO of Petco, said in an
interview, “Our objective is to have a sustainable company, if we tried
to play Amazon’s and Chewy’s game, that would be a losing hand”.
Petco has seen recent success once again again
because the company avoided to engage in head-on competition and developed on
an existing product that you can’t physically order online. It seems that
PetSmart should look to Petco for future advice on how to turn their business
around.
I chose this article because I find it very
interesting that two very well known companies now have to fight to maintain
their place in the market. It emphasizes how important it is for any company,
whether big or small, has to have a strategic and well thought out plan in
order to be successful. Not only does a company have to have a strategic plan
in place but in order to stay relevant they must continue to adapt and update
it as time goes on and their external environment changes.
By: Khadeeja Safdar and Miriam Gottfried
Feb 20, 2019 8:00 a.m. ET
By: Khadeeja Safdar and Miriam Gottfried
Feb 20, 2019 8:00 a.m. ET
https://www.wsj.com/articles/dog-days-arent-over-for-pet-store-rivals-11550667601?mod=cx_picks&cx_navSource=cx_picks&cx_tag=undefined&cx_artPos=5#cxrecs_s
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ReplyDeleteI always went to PETCO or Pet Smart for my dog. I always preferred PETCO. I find this article for interesting because of the power struggle these two big companies had with each other and now they have to face outside source.
ReplyDeleteI enjoyed this article. I honestly would hate to see either go out of business.
ReplyDeleteThis was a very interesting article to read. As a pet owner, I have shopped at both Petco and PetSmart. I feel both have their strengths and weaknesses. One key factor for the two companies to look at, is the competition that comes from the smaller pet stores, such as Natural Pawz or Pet Supermarket. I personally, shop at Pet Supermarket, as it is in the front of my neighborhood and prices can be matched from any of its competitors. Although I hope nothing happens to either of the two major companies, I do feel that differentiation is at the heart of their success.
ReplyDelete