Jim and Janice Dougherty came up with the idea to open a pet supermarket in 1986. They established Pacific Coast Distributing, Inc after receiving start-up capital from venture capital firm Phillips-Van Heusen Corporation that same year. Its first two stores, known then as PetFood Warehouse, opened in Arizona in 1987. In 1989 the company name changed to PetSmart, and the stores offered a full-range of pet services.

After vertwo decades of development, PetSmart has become the largest specialty pet retailer and service provider in the United States. PetSmart combines online sales of pet food, supplies and offline pet supportive services. Services include pet grooming, pet training, kenneling, pet healthcare and almost all other popular pet services. There are currently, 1,045 stores in operation throughout the United States and Canada. In 650 PetSmart stores BanField, The Pet Hospital, provides customers with expert veterinary care.

The Number of U.S. Pets Is 1.26 Times That of U.S. Population 

The 2007-2008 Survey of U.S. Pets, conducted by the American Pet Products Manufactures Association (APPMA) summarizes the latest industry data related to pet population and pet-related spending.  The report also provides insight into future U.S. pet industry trends.

The Survey data shows that 71.1 million U.S. households (63% of the total) own pets. The number of pets is close to 382 million, approximately 1.26 times that of the entire U.S. population (Based on the data released by U.S. Census Bureau, U.S. had a population of 302 million in 2007). While more and more households choose small animals, the vast majority raise dogs and cats.

In 1998, US$23 billion was spent on pets in the United States. This amount increased to US$41.2 billion in 2007 due to the growing number of pets;. The total number is estimated to hit US$43.4 billion in 2008. Pet food and pet healthcare account for a considerablely large portion of pet-related spending. Pet grooming and kenneling generates approximately US$3 billion in value annually.  

Future U.S. pet industry trends include increases in high-end pet products consumption. Services like pet daily grooming & bathing, pet physical training, pet trust, pet health, pet insurance and will continue to develop.

China's Pet Market Enters Fast Track

Over the past ten years, China's pet industry has developed even faster than the U.S. pet industry. This rapid growth in China can be attributed to an increase in the national standard of living. A growing number of Chinese are changing their leisure and consumption patterns as their standard of living reaches new heights. Chinese youth face tremendous pressure from a high-paced society. They turn to their pets to reduce stress and escape the pressures of their everyday life.
 
The College of Veterinary Medicine at China Agricultural University recently published a new report. According to this report if a country's per capita GDP is between US$3000 and US$8000, its pet industry will develop rapidly. Presently, Beijing, Shanghai, Guangzhou, Chongqing and Wuhan account for China's Top 5 pet cities. Beijing's per capita GDP reached US$3000 in 2001, making Beijing one of the most advanced cities in the world. In 2007 Beijing's per capita GDP was US$7370, and national per capita GDP was US$2456, setting a record high. Spurred by strong economic growth, China's pet market is booming. The statistics show that the annual growth rate of the purebred dog and cat markets continuously increases by more than 20%. Since late 2004, China's pet market total value reached over RMB6 billion. At this point that number has escalated to RMB15 billion, with a predicted excess of RMB40 billion in 2010. 

The proven business model that began in the U.S. market has now made its way to China. In domestic first tier cities the pet services industry including pet hospitals, pet training camp, pet kennels, and pet grooming is flourishing. Nevertheless, the overall development of China's pet industry still lagged behind that of the U.S. and other strong pet economies. China's penetration ratio of pets per household and pet products-related expenses and services is relatively low (A sign of enormous development potential).  

In Beijing there were fewer than 100,000 dogs registered in 2001. This number increased by seven times within a five year period, growing to 750,000 in 2007.The actual number of dogs owned by Beijing households was modestly estimated at 1.5 million in 2007 (Source: Beijing Public Security Bureau), to account for unregistered large-sized dogs and households with extra dogs. This figure is increasing by 8% every year.

The increasing number of dogs plays an active role in fostering the growth of China's pet market. According to China's Pet Industry statistics, there were less than 20 pet services stores in Beijing in 2001. As of 2007,the number of stores is over 500, greater than  20 time increase. According to a pet food survey conducted by Nestle and Aifen, in 2001 only 0.5% of Beijing's dogs were fed high-end pet food. In 2007 5% of dogs were fed high-end food (the U.S. ratio is 30%), reflecting the fast development of the domestic pet market.

The domestic pet chain services industry is gradually taking shape as a result of strong ecomonic growth combined with huge market potential. Pet chains like China Pet (chinapet.com), Pet Dog (apetdog.com), Tom Dog (tomdog.com.cn), Bzwdog (bzwdog.com) and Cool Baby (coolbaby.net.cn), mostly adopt a ¡°click and brick¡± operation model, providing pet owners with online and offline services. This presents a massive market opportunity as domestic pet owners consumption increases and their needs for pet services diversify.

Upstream Products and Services Forge a Complete Pet Industrial Chain

In terms of industrial supply chain, China¡¯s future pet market development will mainly converge on upstream products supplies and pet services provisions. This conclusion is based on both the development of the U.S. pet industry and the industry characteristics of China's current pet industry. 

Specifically, the upstream products supplies and services provisions cover the following four aspects:

1. Pet food & products manufacturing: As China's pet food and supplies market starts to mature, Chinese consumers tend to focus on imported brands. (China is one of the world¡¯s largest pet food suppliers). However, Chinese enterprises will begin to spot domestic market opportunities as both domestic pet food consumption and heightened brand recognition for professional products come into play. Therefore, expensive pet food and suppliers has become the most important source of domestic pet industry's output value.

2. Pet medical: Only after the pet industry reaches a certain stage of economic development does this new segment (pet medical) takes shape. In Beijing, Shanghai and other Chinese large and medium-sized cities, there are dozens of pet hospitals. According to the non-professional pet industry statistics about 70 pet hospitals are unevenly distributed in Beijing.. Most of these hospitals are small-sized and none of them have become the industry leader. This leaves for the market for pet hospitals with a large growth potential. We believe the future pet medical industry will enter a rapid development stage as more and more citizens raise pets.

3. Pet care: With the growth of the pet market, professional pet grooming, bathing and training services outlets will open in China's large and medium-sized cities, creating a huge services network. Additionally, more and more pet owners are willing to permit professional pet experts to take care of their pets, because they cannot waste time doing it themselves due to their fast pace of life and intense workload. Thus, pet services will develop in become increasingly professional and franchised.

4. Pet origin certification: China will gradually bring in purebred dogs from developed economies after domestic pet-raising level improves. Domestically, major cities hold various types of purebred dog matches each year. More and more pet owners will ask the dog sellers for a purebred dog certification. Therefore, professional dog origin identification, DNA testing, the chip implantation as well as the issuing of origin certificates will become popular in the domestic pet market.

Three Services Modes Tend to Be Mature

Since China will learn from the development of the U.S. pet industry  China's pet services trends will follow similar paths, including:

Comprehensive pet services chain: While the market opportunity of pet industry is quite large, China has yet to form a complete industrial services standard. Pet services chains should accelerate development, provide a standardized, uniform, professional pet services providers' network in order to offer China's pet industry a favorable development environment.

Pet media: As the development of the pet industry matures, pet owners will feel an urgency to have an Internet platform to share a variety of products and service experiences brand awareness, and market promotions of product suppliers. Therefore, vertical portals with a pet industry focus will show good signs of development in the future.

Pet club: With the increasing number of pets, pet management (one of the important features of the future pet industry development) will develop in a standardized fashion. Therefore, pet clubs will become one of the developing aspects of the pet industry in the near future. Pet clubs can hold events like public education of pet owners, knowledge on how to raise pets, pet breeding, pet origin certification, pet health, and so on.