Wal-Mart Stores, Inc. (WMT) and Target Corporation (TGT) are highlighting the pet retail area in stores by adding new SKUs and limited edition products, respectively, as both companies aim to serve the lower-to-moderate income demographic in the grocery end of pet food, says Daniel Binder, Managing Director and Senior Equity Research Analyst at Jefferies & Company, Inc.
“Wal-Mart‘s focus has been more about adding SKUs back, not just in pet, but also across the stores and at the same time achieving a better in-stock position. In fact, I remember Wal-Mart highlighting pet as a good area in one of its earnings calls over the last year,” Binder said.
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Both Wal-Mart and Target are serving a different type of customer than PetSmart, Inc. (PETM), Binder says, that being a lower-income demographic buying grocery-type dog and cat food. While the pet space is not a primary focus of either company, it is an area that WMT and TGT are taking interest.
“Target has done more in pet this past year, too, with the introduction of new treats and limited edition product. I don’t think it was necessarily a huge needle mover for the entire company’s business, but it was unique. By and large, they’re going to have a grocery selection on the food side, too,” Binder said.
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