The Pet Market Is Growing... But Major Retailers' 'Pet Business' Performance Declines

[Asia Economy Reporter Seungjin Lee] The distribution industry has ventured into the pet market while seeking business diversification, but it continues to struggle. Both online and offline sectors face fierce competition, and even the 'brand power' of large corporations seems ineffective.

According to the industry on the 25th, GS Retail's 'Petsbee' recorded a net loss of 3 billion KRW last year. Although sales increased compared to the previous year, the deficit widened. Petsbee, established in 2012, is a pet supplies distribution company that gained attention by selling products selected by experts such as veterinarians for each type of pet.

In 2018, GS Retail acquired shares and made it a subsidiary. The reason Petsbee is struggling is that the pet market is growing mainly online. Additionally, offline purchases often occur when visiting animal hospitals, so despite GS Retail utilizing various channels, it has not been profitable. GS Retail even introduced a dawn delivery system for Petsbee, but it reportedly did not receive much response.

In response, GS Retail is continuously seeking new ways to survive in the pet market. Last year, GS Home Shopping invested 5 billion KRW in 'Pet Friends,' a venture company operating a pet specialty mall, and recently GS25 partnered with Hyundai Marine & Fire Insurance to launch pet insurance products, focusing on business diversification.

The situation is similar for E-Mart's specialty store 'Molly's Pet Shop.' Molly's Pet Shop is a 'one-stop multi-shop' integrating related services such as pet adoption, hospital, hotel, and shopping. Especially since Molly's Pet Shop is named after the pet dog 'Molly' of Shin Yong-jin, Vice Chairman of the Shinsegae Group, it is a business filled with affection, but recent growth has significantly slowed.

Since opening its first store at the end of 2010, the number of stores steadily expanded to 36 by 2018. However, after withdrawing underperforming stores recently, 33 stores remain nationwide. Sales also declined, recording 47 billion KRW in 2018, about 7% less than the previous year. It is known that the proportion of Molly's Pet Shop in E-Mart's total sales has been decreasing annually.

Most Molly's Pet Shop locations are inside E-Mart stores, but the recent growth of online shopping has greatly reduced the number of visitors to the stores. Last year, there was a movement to designate 'retail of pets and related products' as a small and medium-sized enterprise (SME) suitable industry, which posed challenges. Although the SME suitable industry designation was avoided, the industry still faces claims of encroaching on local small businesses.

An industry official said, "The pet market itself is growing every year, so giving up the business is not an option," adding, "We are exploring various measures, but the reality is not easy."