Walmart Opens Five More Veterinary and Pet Grooming Centers

Walmart closed its doctors’ offices to people. But the nation’s largest retailer is growing its pet care business.

On Tuesday, the company announced it would open five more pet services. centers in October and early November. New locations in Arizona and Georgia will include veterinary care and grooming. Walmart opened its first pet service center last year in the Atlanta area.

Walmart’s pet category presents an attractive growth opportunity because it drives frequent purchases, resonates with customers across all age groups, and tends to hold up even when customer budgets are strained, a said Kaitlyn Shadiow, vice president of pet merchandising at Walmart USA.

Walmart’s pet service centers will have their own dedicated entrance next to a store. They will be named after Walmart, but will be staffed by employees of the veterinary care and pet products company PetIQ. The centers will offer routine veterinary care, such as wellness exams, vaccinations and minor medical services, as well as grooming for cats and dogs.

Shadiow said Walmart decided to expand after seeing strong visits and repeat rates at its first pet services location. About 25% of customers had never purchased pet supplies at Walmart before, she said. And when shoppers came to the store for veterinary or grooming services, Shadiow said it created a “halo effect” that also increased sales of pet food and other supplies.

“If you think about pet services, the business case is there,” she said. “We’re already meeting the needs of so many pet parents today, and this is a great opportunity for us to help do that in a convenient location or trip.”

Other factors could motivate Walmart. Soft And Petco have also expanded into pet services, with specialty retailer Petco using its stores to become a major provider of veterinary services. The services generate a higher margin than pet food, but are needed more often than other supplies like leashes, beds, and pet crates.

Pet ownership has increased during the Covid pandemic, leading to increased household spending on dogs, cats and other animals, as well as an increased need for veterinarians. Annual household spending on pets is expected to reach $1,445 per pet by 2026 and $1,733 by 2030, according to a recent survey from Morgan Stanley Research. That would represent a 113% increase in total industry spending, from $122 billion in 2019 to $261 billion by 2030, the company found.

Walmart has seen other signs of strong demand. A subscription to veterinary telehealth provider Pawp was used more than any other limited-time offer for Walmart+, the retailer’s membership program and answer to Amazon Prime, according to Venessa Yates, senior vice president and general manager of Walmart+. Starting next week, this limited-time offer will be transformed into a permanent benefit.

The pets category also has has been a way to reach younger, more affluent shoppers, Shadiow said. Generation Z is the fastest-growing segment for Walmart’s pet category, as the group ages and becomes pet owners, she said. The number of customers shopping in the pet category with a household income of more than $100,000 increased 36% year over year as of the end of July, she said.

Walmart announced earlier this year that it would close all 51 of its consumer health care clinics – a stark turnaround for the company, which it blamed on the “challenging reimbursement environment and ‘escalating operating costs’. The clinics offered doctor visits, dentist appointments, and therapy sessions at a lower cost.

Walmart also shuttered its human telehealth provider, which it acquired for an undisclosed amount in 2021. It tested the concept of pet services in Dallas, Georgia, where it opened its first health clinic for people in 2019.

Still, Shadiow says pet care is a simpler, more profitable business. Fewer people pay for their pets’ care through insurance and the centers themselves may be smaller, she said. People want transparent prices because they often pay out of pocket. Additionally, she said, Walmart is a one-stop shop for customers who need related products, such as prescriptions or pet food.

“We are much more confident in this project’s ability to succeed in the long term,” she said.

—CNBC Gabrielle Fonrouge contributed to this report.