Pets can be extremely loyal to their owners, showering affection in exchange for food and shelter. But are pet owners as loyal to the retailers supplying pet necessities? In today’s Insight Flash, we look at 1-800-PETMEDS, Chewy, Petco, and PetSmart using our newly launched CE-Q Subscription Dashboard and CE Receipt Data to evaluate which brands do the best at earning repeat business, attracting new customers, and leveraging basket size.
Pet food as a recurring purchase can be a source of loyalty in the space. However, it can be purchased at so many different retailers from drug stores to club stores that it may not be enough to hold shoppers’ attention. Chewy has exhibited superior performance to competitors in this respect, with 28% of those who first shopped in 2020 coming back one month later, versus 14% of PetSmart and Petco shoppers. 1-800-PETMEDS, which doesn’t have the food offering advantage, only saw 8% of shoppers return one month after their first purchase. After this first month decline, most of the pet retailers have seen a very quick plateau to a steady customer return rate, with 20% of Chewy shoppers who first shopped in 2020 returning two years later, 8% of PetSmart shoppers, 7% of Petco shoppers, and 6% of 1-800-PETMEDS shoppers.
Beyond just the percentage of customers returning, it is also useful to look at how their spend ramps over time and whether it becomes concentrated as loyalty builds. Again, among our tracked set Chewy appears to be the clear winner on this metric. Although new customers who first shopped in 2021Q4 spent $106, slightly less than 1-800-PETMEDS shoppers who spent $111, shoppers whose first transaction was in 2019Q3 have built a much stronger lifetime value at $1707, almost 50% higher than 1-800-PETMEDS, 86% higher than PetSmart, and almost double Petco. This advantage is similar for those who first bought their pets during the beginning of the pandemic in 2021Q2, with Chewy’s $1165 lifetime value 36% higher than 1-800-PETMEDS and 90% higher than PetSmart and Petco.
What’s driving this higher LTV? Our CE Receipt data allows for a deep dive into online consumer baskets to provide answers. For Chewy, a higher price per item is a major factor. The average price per item at Chewy was $15 over the last two years, versus $12 for Petco and $7 for PetSmart. PetSmart did lead Chewy in basket size at 5.3 items per transaction versus Chewy’s 4.5. But, Chewy’s average is still more than double that of Petco’s 2.2 items per transaction.