NEW YORK — Chewy is leaning on healthcare to fuel future growth.
“Animal health is the next frontier. That much has been clear,” Chewy CEO Sumit Singh said during a Tuesday discussion at the National Retail Federation’s Big Show in New York.
Vet health is a $40 billion market-size opportunity, he said, adding that “it’s growing much faster than pet food, supplies or retail.”
Last month, the online pet retailer announced it would open its first veterinary clinic with the launch of Chewy Vet Care. Chewy will open vet practices throughout 2024, offering services like surgery, urgent care and routine appointments. The company is powering its vet clinics through Chewy’s open platform, which can be used for Chewy Vet Care or third-party partner practices.
“Over the next five to seven years, the demand for veterinarians is going to outweigh the relevant supply for veterinarians,” Singh said. “You need a forward-looking, tech-integrated player such as ourselves, who has both the promise on customer experience, as well as tech and product innovation, to be able to bring these two together and say, ‘How do we design solutions that allow us — by the use of technology, use of good retail principles, and service orientation — to bridge these gaps?’”
The vet practices, Singh said, are intended to alleviate pain points associated with traditional vet visits, like not being able to schedule appointments after hours or on holidays. Chewy also sought to remove the less desirable aspects of traditional vet clinics — like the smell and sterile appearance.
“More than the humans, pets immediately recognize that,” Singh said.
The Chewy Vet Care clinics follow other healthcare moves from the retailer, like its Connect with a Vet telehealth service and its veterinarian-only marketplace Practice Hub.
The growing humanization of pets is driving the increased demand for health and wellness offerings, according to Singh. “We would trade our health sometimes for the needs of our pet,” he said.
Healthcare has become a focus area for other pet retailers in recent years. Petco in 2020 announced it was repositioning itself as a health and wellness company, offering better-for-you food choices, rolling out pet hospitals and introducing Vital Care, its paid annual membership program. And PetSmart in 2021 launched an online pharmacy for pet medications.
The pet category — particularly pet health — remains relatively strong even as consumers pull back on discretionary spending in the face of economic uncertainty.
In its most recent quarter, Chewy reported third-quarter net sales increased 8.2% year over year to $2.7 billion. However, the retailer swung to a net loss of $35.8 million from a profit of $2.3 million the year prior, while its operating loss was $10.2 million, up from $434,000 in the year-ago quarter. The pet retailer’s active customer base also shrank 1.3% year over year to 20.3 million. The introduction of more health and wellness offerings, like Chewy Vet Care, could offer another entry point for potential customers to enter Chewy’s ecosystem.
“From a caring-for-the-pet point of view, pet parents are still very resilient. They’re spending robustly on pet health,” Singh said. “We’ve remained fairly resilient.”
