After announcing it will close its health clinics, Walmart-the world’s largest retailer-debuted a major expansion of its pet care services today that includes opening five new pet service centers in Arizona and Georgia by the end of this month and early November.
New pet services centers will have entrance doors beside Walmart stores, which will be run by PetIQ: a company specializing in veterinary care and pet products. Those centers will offer routine veterinary services such as wellness exams, vaccinations, minor medical procedures, and grooming for cats and dogs, among others. This is coming after the good opening of the first pet services center launched by Walmart last year in the Atlanta area.
Kaitlyn Shadiow, vice president of merchandising for pets at Walmart U.S., said there is growth potential in the pet category because it drives high-frequency transactions across a wide customer base. “The business case is there,” she said, noting that about 25% of customers at the first pet services location were first-time buyers of pet products at Walmart. Shadiow noticed a “halo effect” whereby visits for veterinary or grooming services were also driving sales of pet food and other ancillaries.
Walmart is entering pet care services. The established players are getting much fiercer, the Chewy and Petco making bold moves by increasing veterinary services offerings. This services market has attracted interest of the company because of its relative higher profit margin than traditional pet supplies and frequent customer visit.
The COVID-19 global pandemic has fueled pet ownership and related spending, with yearly household expenditures estimated to reach $1,445 per animal by 2026 and $1,733 by 2030, according to Morgan Stanley Research. The total spending industry on pets is poised to expand from $122 billion in 2019 to $261 billion by 2030.
But the data from Walmart also shows increasing demand for services related to pets. The most popular limited-time offer to-date in the Walmart+ membership program has been a subscription to veterinary telehealth provider Pawp.
The company’s strategy focus is on the pet category to attract more youthful and better-class shoppers. After all, it would be Gen Z that grows at the fastest rate in terms of pet ownership. Shadiow discovered 36% year-over-year growth in customers whose household income was above $100,000, when shopping in the pet category.
More recently, Walmart has announced its decision to close all 51 health clinics it runs for people due to “challenging reimbursement environments and escalating operating costs.” Such a move represents a U-turn by the retailer, which began with an ambition to avail quality, affordable healthcare services to its customers.
Shadiow concluded that pet care offered a less complicated and more lucrative business model, and Walmart can further use its diversified products to cater to pet owners. “We feel a lot more confident in the ability for this to be successful over the long term,” she stated.
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