Will Wal-Mart Put PetSmart in the Dog House?

It must be true that dog is man’s best friend as man continues to spend on his furry friends. Consumer spending on pets and pet supplies is up 14% since January 2008. Although analysts have been critical of PetSmart (NASDAQ:PETM) lately, their customer spending grew 6.51% from $50.67 in January 2008 to $53.97 in October, according to the new Main Street Spending Index (MSSI) compiled by Geezeo. 

PetSmart’s biggest competitor, privately-held Petco, is an even bigger winner, with a consumer spending gain of 22.71% from January to October of this year. The average customer at Petco spent $44.61 in January 2008 compared to $54.74 in October 2008. These stats are also from Geezeo’s MSSI. 

These positive growth and spending trends may not last, however. Wal-Mart (NYSE: WMT) is making a big push into pet food and pet supplies. Jim Cramer predicted earlier this week that Wal-Mart’s focus on pets will hurt PetSmart. 

Some pet owners disagree. 

Pet owners who have special-needs pets tend to spend more on specialty food and other pet items. Wal-Mart will likely provide less-expensive pet food and smaller range of specialty items. Small savings offered by Wal-Mart may not be a compelling enough reason for dedicated pet owners to switch retailers. 

Will PetSmart continue it’s growth once Wal-Mart invades the space? It’s a dog-eat-dog world. Time will tell.

Disclosure: no positions