What to Make of the Chewy IPO

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On Thursday, June 13th, Chewy Inc. raised just over a billion dollars through it’s initial public offering. Selling 46.5 million shares at $22 a pop resulting in a company valuation at roughly $8.8 billion, Chewy began trading stock on the NYSE under the acronym “CHWY” on Friday, June 14th.

Keep in mind that Chewy is an asset of PetSmart and despite operating at a net loss in 2017 and 2018 of several hundred million, Chewy has experienced significant growth in net sales, profit margin, active customers, and per-customer net sales in recent years. (Source: PetBusiness)

What to Make of The IPO

What does this mean for independent pet retailers? Pet Engine Marketing owner and founder Matt Aldrich weighs in with his thoughts on the IPO:

The independent pet retailers that have strong digital marketing strategies combined with building lines of income beyond standard retail offerings are going to be more than fine - they’re going to profit hugely in the next few years.
— Matt Aldrich, Founder of Pet Engine Marketing

“I think this is a great sign for independent pet retailers. I see it as a move to raise capital and shore up debts for both Chewy and PetSmart. Obviously their growth over the past few years has proven that they’re a major player in the pet industry, nobody is questioning that., but the business model of not making reasonable profits on their products has led to debts and expenses that are only viable with a business that big, but still not a great sign.

For independents, this is nothing to worry about and should be encouraging that what they’re doing is working. The independent pet retailers that have strong digital marketing strategies combined with building lines of income beyond standard retail offerings are going to be more than fine - they’re going to profit hugely in the next few years. Continue to focus on providing extra services, outstanding customer experiences, and premium product selection and Chewy won’t have a huge impact on your business.”

If that’s you, keep doing your thing! We applaud you. If it’s not you, it’s not too late! Join our free community for pet store owners and give us a follow on our social platforms, or we can get right to work and get you up to speed with a few phone calls.

Conclusion

Independent pet retailers have proven to be resilient in the face of fierce competition. While some consumers prefer the affordability and convenience of shopping online or at their nearest chain, others prefer supporting their local independent pet store that provides individual service or carries their pet’s favorite brand of treats or chew toys. Providing consumers with a wide variety of retail options is good for pet product manufacturers, distributors and retailers, and for pet parents caring for their finned, feathered or furred friends that enrich their lives every day.