I have a dog. I suspect that many of you have pets also. I can only speak for myself, but I sure seem to spend a lot of money on food, leashes, toys, clothes, etc. for my dog. You would think with this need to keep buying things in order to take care of my pet, pet store product managers would have a very easy life. It turns out that you would be wrong. So what’s going on here – why are pet store product managers struggling and do they need to change their product development definition?
What’s Wrong With Pet Stores?
It was just a few years ago that two of the largest pet stores were purchased by private equity firms that saw great potential in them. One of the stores, Chewy.com was an online pet store and the other, PetSmart operated a lot of walk in stores. Although either one of these purchases could have resulted in big profits, so far neither one has panned out. The online company, Chewy.com is still trying to pay down their debt even as their growth has slowed down. PetSmart went through a period of non-growth before finally starting to grow again.
You would think that this would be a great market for product managers to focus on. It turns out that over two-thirds of the homes in the U.S. own a pet. Last year these animal owners spent US$70B on such items as pet food, veterinary care, supplies, and other pet related services. This number is up from the $40B that we spent on our pets just a decade ago. If you could capture even a portion of that, it sure would look good on your product manager resume.
One of the biggest problems that pet store product managers have encountered is that they have been unable to capture a great deal of pet owner’s spending. The reason for this is that popular high-end dog food such as Blue Buffalo have started selling their product in places such as Target and Walmart. Likewise, online firms such as Amazon and Chewy.com have offered to ship heavy bags of dog food for free thus cutting into profits that PetSmart can generate.
How Are Pet Store Product Managers Going To Turn Things Around?
All of these changes have created a real challenge for the pet store product managers. The PetSmart product managers have decided that they can’t fight the online pet supply vendors and so they have decided to join them. The customer bases that the two major pet stores are going after are different. PetSmart views its customer base as being a mature customer base. On the other hand, Chewy.com is more focused on attempting to acquire new customers.
The PetSmart product managers realize that they have a problem on their hands and they are taking steps to try to solve it. PetSmart has suffered from fewer people coming into their stores, competition from online competitors, and food manufacturers who broadened their distribution to other stores. The PetSmart product managers have responded to these challenges by expanding their veterinary services. They have also improved their grooming facilities. The goal is to find ways to encourage customers to make more trips to their store.
One of the challenges that pet store product managers are facing is that they are dealing with slim margins. Between 60% – 70% of the cost of a bag of dog food goes back to the manufacturer. When items are sold online, the seller also has to deal with marketing and shipping costs that can both eat into their profit margin. One way to deal with this is for pet stores to sell prescription pet medicines online and encourage their customers to sign up for automatic refill shipments. Product managers also have to keep their eyes on Amazon who can bundle heavy bags of dog food with other products ordered by customers. Amazon has also introduced their own line of premium pet food to compete in the market.
What All Of This Means For You
There are a lot of pets out there. Those pets have many needs: food, toys, clothes, etc. One would think that it would be easy to be a pet store product manager because you would always have people needing your products. However, the reality turns out to be much different and pet store product managers have to take a close look at their product manager job description because they are struggling to find ways to make their stores profitable.
There are two large pet store chains that dominate the pet store market. PetSmart operates a large number of walk-in stores and Chewy.com runs a popular online pet supply company. Both companies are currently struggling to become profitable. U.S. pet owners spend over $70B on their pets each year. Pet store product managers are struggling because they have not been able to capture as much of the pet spending as they would like to have. PetSmart has decided that they are going to start to offer their products online in order to better compete with Chewy.com. The PetSmart product managers are also rolling out new offerings as they expand their veterinary services and enhance their grooming services. The pet store product managers are struggling because of the low margins that are associated with products like dog food. Additionally, Amazon is now starting to move into the pet supply market and this may make things even more difficult in the future.
Pet store product managers are in a good place in such that their customers do need their products. In fact, their customers have clearly shown that they are willing to spend to get the products that these product managers are offering. However, competition and low margins are making life difficult for these product managers. What they are going to have to do is to find ways to offer products that no one else offers in order to attract more repeat business. We’ll have to see if pet store product managers can get their stores to start to obey.
Question For You: What new services do you think that pet store product managers could start to offer in order to generate more repeat business?
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What We’ll Be Talking About Next Time
I can only speak for myself, but if I was a product manager who was put in charge of a marijuana product, I would be very, very happy. Think about it, what does every product manager want: we want our customers to want our product. When it comes to the product development definition for marijuana, there is no question that it is a very popular product. In fact, with the recent change in laws that has made marijuana legal for a number of different activities, more and more new products that have marijuana in them are being created and introduced. One of the biggest growth areas is drinks that have been infused with cannabis (marijuana). There is only one problem that the product managers of these products will have to deal with: cannabis tastes really, really bad.