The strategies: Chewy and Petco aim to capture a larger share of pet owner spending by leaning into healthcare and services.

• Chewy opened its first Vet Care clinic this year to tap new revenue streams and build a fresh customer pipeline. Now operating six clinics, the retailer reports that customers acquired through these locations are outperforming expectations, with stronger cross-category shopping and post-visit purchases on Chewy.com since Q2.
• Petco—which runs Vetco hospitals, mobile clinics, and grooming services—is working to harness customer data more effectively to better understand shoppers' buying patterns, refine engagement strategies, and boost wallet share, said CEO Joel Anderson during the company’s earnings call.

Why it matters: Pet adoption rates, which surged during the pandemic, have returned to normal levels. As a result, pet supply retailers need to find more ways to drive growth.

• In addition to services, Chewy launched its Chewy+ paid membership program earlier this year. While it is still early days, the retailer’s data shows Chewy+ members consistently place more orders and have higher cross-category penetration and greater mobile app engagement relative to non-Chewy+ customers.
• Chewy also continues to benefit from its flagship Autoship program, which accounted for $2.3 billion in revenues in Q3, up 9% YoY and roughly 80% of the company’s net sales.
• Petco revamped its merchandise mix by creating more space on shelves for faster-turning SKUs and reducing the variety in certain categories to simplify customers' decision-making processes.

Our take: Personalization can go a long way in deepening ties with customers. Pet owners, like any other shoppers, want retailers to know them and recognize their needs.

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