Pet stores fetching profits in economy of extremes

SACRAMENTO — It's been a long time since pet supply stores stocked only food, water bowls and cat litter.

But a full bathtub set waist high where you can wash your dog with fluffy towels and organic shampoo? Welcome to Pet Extreme.

Based in Turlock, Pet Extreme opened its first store in Sacramento in November. Next month in Woodland, its eighth store will open. The family-owned business is combining traditional pet inventory with an array of new features in an attempt to capture a piece of a growing $52 billion industry.

Analysts think pet spending will continue to buck the recession, expanding by up to 7 percent annually in the next few years. Fueled by owners' deepening attachment to pets, pet stores and services in the region are swimming strongly through the downturn.

When Pet Extreme opened on Sutterville Road across from Sacramento City College four months ago, it was its first new venture since 2003. The Sacramento store is a third smaller than the 17,800-square-foot Woodland store set to open April 18.

The Sutterville Road store offers shelf after shelf of pet food, cat litter boxes that self-clean and deodorize, leashes, toys and clothes. Blue betta fish flutter energetically in ready-to-go containers.

On a recent evening, a dog owner cooed to his big, dark German shepherd-type dog as he bathed it in one of the tubs off the main floor. Like a high-priced health club, two separated tubs, raised high for owner comfort, provide space for a quick pet wash.

The price: $10, including use of a dryer.

Feed store spawned chain

Matthew Swanson's family ran a Turlock livestock feed store when he noticed the few pet items they stocked seemed to fly out the door, said Joe Perkins, Pet Extreme's general manager. That led Swanson to buy Discount Pet Stores, a three-store chain. He followed that up by launching Pet Extreme in Livermore in 2001.

Perkins is acutely aware of the pet boom — six out of 10 Americans own a dog or cat, according to a 2007 Gallup poll — and its seemingly recession-resistant track rec- ord. Dog owners alone offer a lucrative opportunity: The American Kennel Club says there are 71 million canines in the country's homes.

"People aren't traveling, and they're treating their animals like children," he said.

Capitalizing on that devotion means cultivating a different customer base than the one sought by big-box giants such as PetSmart (1,000 stores) and Petco (900 stores), said Michael Dillon of Dillon Media, a Berkeley pet-industry analyst.

Pet food is the primary lure for customers, Dillon said.

An array of foods combined with services such as grooming or low-cost immunization clinics will draw a base of people with a household income of at least $150,000, he said. Those are the folks largely responsible for the expanding industry, Dillon said.

The big-box stores have about 60 percent of the business, he said, leaving independent retailers of all types plenty of room for small inroads.

Jodie Chavious, 36, was a Sacramento pastry chef when, in December 2007, she created a line of healthy dog biscuits. The biscuits, shaped like dog bones or wineglasses, are $3 for two or three.

As the economy slumped, her business — Give the Dog a Bone — took off. In the past four months, Chavious has doubled her number of accounts, adding 50 stores in the past six weeks alone, she said, some in the Bay Area.

Dog care facility a success

In February, Robert Espinosa opened A Grateful Dog — a dog day care and boarding facility — in midtown Sacramento. His business plan forecast a sluggish start, but on a recent day, at least 10 dogs poked their noses out of the huge play yard. Their owners pay from $32 a day to more than $400 a month.

Bob Vetere, president of the 1,000-member American Pet Products Association, feels he knows why these companies are surviving in tough economic times. Pets, he said, are a "recession antidote."

The reason why entrepreneurs like Chavious or stores like Pet Extreme do well can be traced partly to changing shopping habits: Just 20 years ago, 75 percent of pet owners bought their pet supplies at the grocery store, he said. Now, only 35 percent do.

Perkins would not say how the Sacramento Pet Extreme store is performing, but he said the company expects the region's locations to do well.

More area stores are expected to follow, though he could not say where or when.

Along with the dog wash, Pet Extreme's Woodland store will have room enough for a shark tank, a popular feature at its Turlock location where a blacktip reef shark entertains shoppers.

"We treat that thing like a baby," Perkins said.

It's not for sale.