strategic it plan for petsmart petperks

Running Head: STRATEGIC PLAN: PETSMART 1

Strategic Plan: PetSmart

Teresa J. Rothaar

Wilmington University

STRAGETIC PLAN: PETSMART

Strategic Plan: PetSmart

Introduction

Headquartered in Phoenix, Arizona, PetSmart is the largest specialty pet retailer in North

America, with 1,289 stores in the U.S., Puerto Rico, and Canada (PetSmart, 2014). In addition to

hard goods, the company also offers services such as grooming, dog training, boarding, and

veterinary care in select stores. The company sells birds, fish, reptiles, and other small animals,

but it does not sell dogs or cats. However, each store offers space for dog and cat adoptions to

local rescues. A stock market darling with a bright future only two years ago (Sandholm, 2012),

the company has since struggled with lackluster sales growth, and has recently been under

pressure to allow itself to be sold (Zack, 2014).

Company Vision/Mission

According to the company’s website, PetSmart’s mission/vision is “to provide Total

Lifetime Care to every pet, every parent, every time.”

Objectives & Goals

In its 2010 Annual Report, PetSmart spoke of focusing less on hard goods, which it felt

offered limited growth potential, and more on the burgeoning pet services market, in particular

its PetsHotel boarding facility (PetSmart, 2011). In its most recent Annual Report, the company

talks of having shifted its focus. While PetSmart intends to continue making inroads into

services, its primary objective going forward is to differentiate itself from the competition

through superior customer engagement, specifically:

Building a personal relationship with each customer and their pets.

Expanding the company’s private label goods, and continuing to expand pet

services.

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Putting a special focus on the company’s “most valuable” customers, which it

defines as those who purchase the company’s channel exclusive foods, utilize

grooming services, and who have recently adopted a dog or cat, or purchased fish.

To this effect, PetSmart has a number of IT initiatives planned, including a revamping of

PetSmart.com, giving store employees mobile devices to use while waiting on customers, and

offering customers the option to purchase online and pick up their order in a store. Subsequent to

the release of its Annual Report, PetSmart announced its intention to acquire ecommerce pet

retailer Pet360 (Hertzler, 2014). The company also wishes to build more stores, expand in

existing markets, and increase operating efficiency overall.

Industry Analysis

The pet industry has consistently remained one of the few bright spots of the American

economy since the 2008 economic crash. Although consumers have reined in spending in most

areas, they are spending more on their pets than ever before. According to the American Pet

Products Association (APPA), Americans will spend $58.51 billion on pet products and services

in 2014, up from $55.72 billion on 2013, and $41.2 billion in 2007. Approximately 68% of

American households own a pet, up from 56% in 1988, the first year the APPA began surveying

consumers. Dogs are the most popular pet, followed by cats and freshwater fish.

Brough (n.d.) reports that a psychological shift from pet ownership to pet parenting has

resulted in “pet parents” seeking out more specialized products and services for their pets, such

as natural and organic foods, concierge pet sitting and boarding, and pet travel. Services is an

especially strong category; about 22% of small pet businesses offset declines in their hard goods

sales by beefing up on services (Brough).

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Although the industry is large, most pet businesses are very small, with 92.2% of them

having four employees or fewer, and less than 8% having more than 20 employees (Brough).

PetSmart SWOT Analysis

Strengths

The PetSmart brand is large, well established, and well known.

Company image is very good overall.

Individual stores have good community ties, with in-store adoption centers and

sponsorship of local pet events, such as the Pittsburgh Pet Walk that precedes the

city’s annual marathon.

Weaknesses

Company may be too big for its own good, limiting its agility to respond to

changing trends.

Despite the company’s claims of wanting to penetrate services more heavily,

PetsHotel seems like an afterthought.

PetSmart.com is clunky and not intuitive; it’s nothing like Amazon.

Retail store checkout lines are notoriously long and slow, and self-checkout is not

offered at all.

PetPerks rewards card is nothing special.

Opportunities

Capitalizing on the recent purchase of Pet360, a successful pet ecommerce

business, and drawing on their expertise.

PetsHotel could be wildly successful if marketed properly; perhaps franchise

some locations?

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Expansion of private label brands, especially organic and natural foods.

Use technology to make stores more customer-friendly, especially self-checkout,

and to make PetPerks rewards card a better program.

Threats

Petco can take over the market, and possibly acquire PetSmart at a fire sale price

down the road.

Small, independent specialty retailers and service providers are more agile and

can quickly adapt to industry trends, as well as provide more personalized service.

PetSmart’s size makes it more vulnerable to negative press than its tiny

competitors.

Amazon, Wal-Mart, Costco, etc., can offer pet foods and products at potentially

lower prices than PetSmart.

IT Recommendations

The following IT projects are recommended to support PetSmart’s goal of differentiation

through customer engagement and relationship building:

Food Lion has a kiosk in each store where customers can scan their rewards cards

and receive coupons personalized just for them. Alternatively, they can go on the

store’s website and have the coupons loaded directly to their card. PetSmart

should do the same thing with their PetPerks rewards card.

There is currently no way to book grooming, training, veterinary, or boarding

appointments through PetSmart.com; the website instructs customers to call each

individual location. This is unacceptable for a large company operating in 2014.

Customers should be able to book appointments through the website, and

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additionally sign up to receive coupons and reminders via email, such as when

their pet is due for a vaccination.

Although both of these projects need to be done—and even more could be recommended

(such as self-checkout registers)—I recommend that PetSmart implement the PetPerks project

first, as that is the one that is geared most toward personalization of the customer experience.

Currently, the PetPerks card offers nothing particularly special to customers. There is no

personalization; it’s just another store card. A PetPerks customer should be able to visit

PetSmart.com, log in to their PetPerks account, and fill out profiles for each of their pets, which

PetSmart could use, in conjunction with past purchase history, to offer each customer coupons

that are personalized just for them and their particular pets. This builds a relationship between

the pet parent and PetSmart, and gives them a reason to shop there instead of at Petco or a big

box store.

Food Lion’s in-store coupon kiosk, located just inside each store’s entrance, is terrific for

driving sales because it reminds customers to get their special offers just as they are entering the

store. A customer who comes into the store intending only, for example, to buy milk may decide

to pick up some other items once they see that Food Lion has given them coupons for those

items. PetSmart can do the same thing not only to drive impulse hard goods sales, but to promote

services. A customer who comes in to purchase a bag of dog food may decide to take a look at

the grooming shop if the in-store kiosk prints a coupon offering x% off a grooming appointment.

PetPerks should be the heart of PetSmart’s efforts to build stronger relationships with

customers, and the technology exists to make it a true rewards program instead of just another

store card.

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References

American Pet Products Association. (n.d.). Pet Industry Market Size & Ownership Statistics.

Retrieved from http://www.americanpetproducts.org/press_industrytrends.asp

Brough, C. (n.d.). Pet Businesses Will Prosper: Industry Trends for 2014 and Beyond.

MultiBriefs. Retrieved from

http://www.multibriefs.com/briefs/exclusive/pet_businesses_will_prosper.html#.VAyXO

GRdWKs

Hertzler, L. (2014, September 5). PetSmart to Acquire Montco E-Commerce Company Pet360.

Philadelphia Business Journal. Retrieved from

http://www.bizjournals.com/philadelphia/news/2014/09/05/petsmart-to-acquire-montco-

e-commerce-company.html

PetSmart. (2014). PetSmart 2013 Annual Report. Retrieved from

http://phx.corporate-ir.net/External.File?

item=UGFyZW50SUQ9MjMzOTUyfENoaWxkSUQ9LTF8VHlwZT0z&t=1

PetSmart. (2011). PetSmart 2010 Annual Report. Retrieved from

http://phx.corporate-ir.net/External.File?

item=UGFyZW50SUQ9OTE5MDB8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

Sandholm, D. (2012, 13 February). Cramer: Put PetSmart Stock On Your Radar. CNBC.

Retrieved from http://www.cnbc.com/id/46373423

Zack, G. (2014, September 6). Bank Of America: PetSmart Sale Unlikely. Bidness Etc.

Retrieved from http://www.bidnessetc.com/25155-bank-of-america-petsmart-sale-

unlikely/1/

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