How does the shrinking number of independent pet shops hold off the onslaught of big-box pet supply chains?

At Belmont Pets & LaunderPet, a Long Beach shop within four miles of both Petco and PetsMart stores, it’s with a self-service dog and cat wash. For Animal Crackers, a 1,300-square-foot store in a strip mall on Beverly Boulevard, and within two miles of two Petco stores, it’s having training services.

“A lot of people tell us they’d rather come here because they get personal attention, even if they pay a little more,” Ron Gittelson, co-owner of Pet Spot in Brentwood, which offers supplies, food and grooming.

While there has been consolidation in the industry, many smaller operators are surviving in the face of the explosion of pet superstores that started in the late 1980s and early ’90s. In some cases, the independents have thrived by riding their bigger competitor’s coattails.

The advent of Petco Animal Supplies Inc. and PetsMart Inc., which made their national expansion push in the last two decades, has streamlined the lines of distribution, winnowing out middlemen that couldn’t deliver quickly or cheaply enough. It’s a change in the landscape that small shops have been able to use to their advantage.

“The distributors that exist today tend to be larger, more professional organizations than existed 10 years ago,” said Steven King, executive vice president of the Pet Industry Distributors Association in Bel Air, Md. “In terms of the type of support a wholesaler can provide to retailers everything from assisting to merchandise their stores, to a broader array of products from more manufacturers larger distributors are in a better position to provide that assistance.”

King said distributors operate on smaller margins than they once did in the face of downward pressure on pricing from the likes of Wal-Mart Stores Inc. and Target Corp.

Pampered pets

The pet care business had been the domain of small, independent shops until the late 1980s, when PetsMart, now the nation’s largest chain ranked by sales, was launched in Phoenix as PetFood Warehouse.

The chain entered California in 1991 and went public in 1993. As of last October, it had 702 retail stores, including 15 in L.A. County. Two additional stores are slated for development this year in Downey and Culver City.

Petco, which opened in San Diego in 1965 as Upco, a veterinary supply store, began selling consumer pet supplies in the late 1970s. By 1988, after changing its name and expanding to 40 stores, it was rolled up with two other pet supply chains by an investor group, more than doubling its unit count. It went public in 1994, and then was acquired in 2000 by Leonard Green & Partners and Texas Pacific Group.

Petco went public again in 2002 and now has more than 720 stores, including 38 in Los Angeles County.

As these chains grew, the number of pet stores shrunk. There were 7,629 pet and pet supply stores in the United States in 2002, the most recent data available from the U.S. Census Bureau, compared with 8,318 in 1997, an 8.3 percent decline.

At the same time, U.S. pet industry sales were projected to hit $34.3 billion in 2004, twice the level of a decade earlier as more consumers were drawn to high-end pet food, pet attire and grooming products, according to the American Pet Products Manufacturers Association Inc.

Small regional shops have seen a fair share of the uptick.

Kevin Ryan, co-owner of Animal Crackers, said the shop’s revenues increased 20 percent in 2004, its best year ever, thanks in part to business generated through its history of training 5,000 dogs over the years.