Why pet retailers are getting into healthcare [Boss Insurance]


Pet retailers want shoppers to come to them for all of their veterinary and healthcare needs.

Online pet pharmacy PetMeds wants to be the destination for all things pets and wellness, recently acquisition of PetCareRx and offer telehealth visits through Vetlive. Petco has partnered with pet insurer Wellness Company, Inc., announcing a multi-year partnership in October to bring insurance to more pets. During that same month, Soft expanded its CarePlus health and wellness offering by offering customers the ability to select and customize plans for their pet through a partnership with insurer Lemonade Pet.

Healthcare services are generally seen as a stable source of income at a time when some consumers may begin to withdraw from discretionary items. The average unit price for CPG pet products rose 11% in January, and some retailers even reduced their assortment to avoid excess inventory, according to a March report from NielsenIQ. And there is an opportunity for retailers to take part in a category that is seeing demand, with increased traffic to veterinary clinics. 6.5% in 2021, in addition to 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.

On 23 million American 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 owners have to schedule veterinary visits months in advance and some clinics have refused new patientssaid Lauren Beitelspacher, associate professor of marketing and associate director of the Retail Supply Chain Institute at Babson College.

Pet retailers’ entry into the health category can be handy for people who want to get their pets’ vet visits checked off.

“It’s two trips condensed into one,” Beitelspacher said. “It may be cheaper or require less paperwork or bureaucracy.”

Additionally, the health services offering gives these retailers access to comprehensive data on the general well-being of pets, said Brad Jashinsky, chief analyst at Gartner. They can then use that data to inform their line of products and services, among other strategic decisions, he said.

“The more they know about the animal, the more additional services and products they can offer,” Jashinsky said. “As dogs, cats and other pets age, [health services] become a huge business and also a part of this recurring business.

Some pet retailers are already using customer data for personalization purposes. Darren MacDonald, Chief Customer Officer of Petco previously said Modern Retail in December that he is developing a personalization model that would improve online recommendations and adapt people’s buying journeys.

“This 360 degree health and wellness [strategy] certainly allows you to buy your dog food and buy your dog bed or cat tree, but we also allow you to take care of your pet in all the other ways you need to take care of your pet. ‘them,’ MacDonald said. “So we have vet vaccination clinics, and if you’ve been to a vet vaccination clinic, we pass that information on transparently to our vets and groomers.”

Already, nearly 1.9 million pets went to Petco hospitals and clinics in 2022, CEO Ron Coughlin told investors during an earnings call last month. The retailer has grown its veterinary business from 10 hospitals in early 2018 to 247 currently. Its paid loyalty program, called Vital carehas over half a million members and has seen massive growth over the past year.

PetMeds, on the other hand, wants to be the market leader in pet health and wellness. PetMeds CEO Matt Hulett told Modern Retail he sees telemedicine as an area of ​​opportunity and his long-time position as a player in e-commerce as an advantage. He said that while there are only a handful of states where pet parents can legally contact and obtain veterinarian-prescribed medications virtually, regulations are changing rapidly.

“It’s not practical to take your pet to the vet all the time unless he absolutely needs to be there,” Hulett said. “There is a shortage of veterinarians. So providing a 24/7 service where you can get really high quality service and care and pay less than going to the vet and you don’t have to drive is really appealing to many consumers. PetMeds also signed an agreement with Pumpkin Insurance in February to provide pet insurance to customers.

Gartner’s Jashinsky said retailers need to ensure the cost of building infrastructure is worth the return. When pet retailers build space for veterinary clinics, they also lose space that could have been reserved for merchandise. For example, PetSmart uses spaces inside its store to allow veterinarians to open their own practice.

Additionally, retailers could be held liable for malpractice. Chewy, for example, has faced skepticism from veterinarians interviewed by CNBC who say his telehealth service, called Connect With a Vet, can be harmful in some cases where a physical exam is needed.

“The bar for customer service is so much higher in the pet care business,” Jashinsky said.