Pet Sales in Discount Stores Versus Strictly Pet Retailers: Expert Analyst Daniel Binder Discusses the Difference in Income Demographics that Affect Sales in Each Type of Store

Wall Street Transcript

67 WALL STREET, New York - July 11, 2013 - The Wall Street Transcript has just published its Pet and Animal Care Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Improving Pet Acquisitions - Heightened Competition Among Medication Providers - Resiliency To Discretionary Spending Trends - Competition From Big-Box Retailers

Companies include: Petsmart Inc. (PETM), Wal-Mart Stores Inc. (WMT), Target Corp. (TGT), Walt Disney Co. (DIS) and many more.

In the following excerpt from the Pet and Animal Care Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What is the competitive landscape like for a pet supplier like PetSmart? Where does that company find its primary competition - mom and pops, online retailers or big-box stores like Target or Wal-Mart?

Mr. Binder: Nobody has that one solution for everybody, and so Wal-Mart can serve a lower income demographic that's going to be buying grocery-type dog food; PetSmart is going to serve a better income customer that's interested in buying a better dog food. Of course, they still sell the grocery end of the business, but it's a much smaller part of their volume.

The grocery end of the business is typically where we will see price competition from folks like Wal-Mart. I just asked PetSmart recently about price competition from the likes of Wag.com and Petco and other competitors out there, and they feel it's still rational. Their margins were fine right now, so they don't seem to be reacting to anything.

Then, there are the small mom-and-pop players that serve yet another part of the market. Many of them are focused on high quality and convenience. PetSmart is probably not as convenient for some as their local pet shop. And so, if they can get the right quality and services and be convenient, then that's a great option for folks who may be have more discretionary income and put a high value on that convenience factor.

TWST: One of the risks you mentioned in your PetSmart report is waning benefits from several product introductions in recent years. Can you elaborate? Are you looking to see management introduce more new products to spark sales, or to pare down product offerings?

Mr. Binder: PetSmart has done a lot in recent years to differentiate itself in the marketplace, and that has included a lot of reset activity and new product introductions. There have been new product introductions in vitamins, and hardlines with Martha Stewart...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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