As demand for veterinary care rise, pet retailers are inching into health care
Pet retailers want shoppers to come to them for all their veterinary and health care needs.
Online pet pharmacy PetMeds wants to be the destination for all things pet and wellness, recently acquiring PetCareRx and offering telehealth visits through Vetlive. Petco partnered with pet insurer Nationwide, announcing a multi-year partnership in October to offer insurance to more pets. Meanwhile that same month, Chewy expanded its CarePlus health and wellness offering by giving customers the option to select and customize their pet’s plans through a partnership with insurer Lemonade Pet.
Health services are generally seen as a stable revenue stream at a time when some consumers might start to pull back on discretionary items. The average unit price for CPG pet products rose 11% in January and some retailers have even reduced their assortment to avoid excess inventory, according to a March report from NielsenIQ. And there’s an opportunity for retailers to take share in a category that’s experiencing demand, with traffic at veterinary clinics up 6.5% in 2021, on top of a 4.5% growth in 2020, according to data analytics firm VetSuccess. As a result, pet retailers are accelerating their investments in pet health services by expanding their offerings.
Over 23 million U.S. households adopted a pet during the pandemic, according to the American Society for the Prevention of Cruelty to Animals (ASPCA). This triggered a flood of new patients at veterinary hospitals. As a result, some pet parents have to schedule veterinary visits months in advance and some clinics have turned down new patients, said Lauren Beitelspacher, associate professor in marketing at Babson College.
The entry of pet retailers in the health category can offer convenience for people looking to get their pets’ veterinary visits checked off.
“It’s two trips condensed to one,” Beitelspacher said. “It may be less expensive or require less paperwork or bureaucracy.”
Additionally, offering health services allow these retailers can gain access to comprehensive data around pets’ overall well-being, said Brad Jashinsky, director analyst at Gartner. They can then use this data to inform their mix of products and services, among other strategic decisions, he said.
“The more that they know about the pet, the more that they can offer additional services and products,” Jashinsky said. “As dogs, cats and other pets age, [health services] become a huge business and also a part of that recurring business.”
Some pet retailers are already using customer data for personalization. Petco’s Chief Customer Officer Darren MacDonald previously told Modern Retail in December that it is developing a personalization model that would improve online recommendations and tailor people’s shopping journeys.
“This 360-degree health and wellness [strategy] enables you to certainly buy your dog food and buy your dog bed or your cat tree but we also make it seamless for you to take care of your animal in all the other ways that you need to take care of them,” MacDonald said. “So we have vet vaccination clinics, and if you’ve gone to a vet vaccination clinic, we seamlessly pass off that information to our vets and to our groomers.”
Already, almost 1.9 million pets went to Petco’s hospitals and clinics in 2022, CEO Ron Coughlin told investors on an earnings call last month. The retailer has grown its veterinary business from 10 hospitals at the beginning of 2018 to 247 currently. Its paid loyalty program, called Vital Care, has over half a million members and experienced massive growth over the past year.
PetMeds, on the other hand, wants to be the market leader in pet wellness and health. PetMeds CEO Matt Hulett told Modern Retail that it sees telemedicine as an area of opportunity and its position as a long-time e-commerce player as an advantage. He said that while there are only a handful of states where pet parents can legally contact and get prescribed medication from a vet virtually, the regulations are quickly changing.
“It’s not convenient to take your pet to the vet all the time unless they absolutely need to be there,’ said Hulett. “There’s a vet shortage. So providing a 24/7 service where you can get really great quality service and care and actually pay less than the vet visit and you don’t have to drive is really appealing for a lot of consumers.” PetMeds also signed a deal with Pumpkin Insurance in February to provide pet insurance to customers.
Gartner’s Jashinsky said that retailers must make sure that the cost of building out the infrastructure is worth the return. When pet retailers build out space for vet clinics they also lose space that could have been for merchandise. For instance, PetSmart is using spaces inside its store to allow veterinarians to open their own practice.
Additionally, retailers could be liable for malpractice. Chewy, for example, has faced skepticism from veterinarians interviewed by CNBC who claim that its telehealth service, called Connect With a Vet, can be harmful in certain instances where a physical exam is needed.
“The bar for customer service is so much higher in pet care,” Jashinsky said.