“I don’t have any comment on that,” said Mark A. Muhlstein, senior vice president of marketing for PetSmart Inc. of West Conshohocken, Pa., which has stores in 12 states. PetSmart’s stock trade and its stock price are tied to PetSmart.
But Mr. Muhlstein said that there was an underlying industry that made pet stores profitable—and there is no such thing as an industry that makes pet shops profit. He also said he doubted that pet shops could make more than a nickel a day off animal parts.
Another industry, he said, is the pet supply house that ships the parts. Many parts are very expensive—up to $10,000 for a paw, for example. The profit margins for the pet supplies house are so steep that they can sell any animal part for as much as 70 cents on the dollar.
“It creates a sort of free lunch,” Mr. Muhlstein said.
Pet stores typically run on margins of around 30 percent or so that can rise to more than 40 percent when they stock too many of the best-selling parts. But some of those margins could have to be slashed if the prices of high-end parts become more competitive than the parts in the pet supply house. In recent months, many parts from animal parts suppliers that would normally cost a dollar at PetSmart have cost $2.00—even though most are from cheaper animal products like chicken or dog kennels.
The industry would be better off if retailers began stocking only the best-selling items, said Dr. Rupa Kaur, founder of the Pet Industry Foundation, a trade organization for animal care, rescue groups and other organizations that save pets from puppy mills and puppy mills that use animals at slaughter and raise their puppies.
“That’s an industry-wide, major improvement,” said Dr. Kaur, who also was a veterinarian and is currently a visiting professor at Oregon State University.
A second problem is that many pet stores make huge profits from the expensive part—even if they are selling less costly parts. “Pet stores are making a lot of money off of what are actually the lowest-income pets,” said Dr. Jena Robinson, director of the Center on Veterinary Behavior at the University of Michigan Medical School. “It’s a big problem.”
When a veterinarian or veterinarian assistant, or a technician, is the customer, she will buy a puppy because he or
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