How To Set Up A Profitable Pet Retail Store? [Case Studies]

There are currently 12,749 pet shops operating in the U.S.A. But even though the industry collectively earns $ 594 million each year, the majority of the pet shops take years to see their first profit. So, what’s the secret to setting up a pet retail store that will be profitable?

Before opening a pet retail store, carefully plan the business operations to ensure profitability. Select a profitable niche and register your business. Then, order products from a trusted supplier. Finally, obtain the necessary business license and insurance coverage.

I hope you understand that there’s no formula to build a successful business. Sometimes, it’s the right timing that elevates a business. However, after studying a lot of pet start-ups, I have found a familiar pattern. So, there’s a pretty good chance it will work for you as well. 

Key Takeaways

• It’s important to research the market and find a niche. Utilizing premium tools to analyze search trends can provide insights into profitable products.
• The location of the store should be chosen carefully, considering factors like proximity to animal rescue centers, vet clinics, and competition.
• A unique and memorable name is crucial for branding and recall. Ensure the domain for the name is available for online presence consistency.
• Protect the business name legally and choose the right organizational structure for tax purposes, such as an LLC for potential tax benefits.
• Find reliable suppliers, preferably those with verified seller status and reasonable shipping costs, to ensure a steady supply of products.

8 Easy Steps To Set Up A Profitable Pet Retail Store

1. Research The Market & Find Your Niche

Regardless of whether the shop is running online or offline, you need to find a niche for your business. And, to do that, you need information on market trends. I suggest you pay for premium tools that analyze search volume for specific products. Even if you are not getting 100% accurate data, it gives you a solid insight into what works.

Selling unique and low-competitive products is a massive headache for online businesses. But when you have a retail store, you can sell already available products that are relevant to your niche.

Get the full scoop on Pet Business—check out this must-read article! How To Disneyfy Your Pet Business? [Disney Blueprint]

2. Carefully Pick Your Store’s Location

Pick a location for your store. People usually open stores close to where they live. But I recommend considering opening your store close to animal rescue centers or vet clinics. It is easier that way to grab the attention of pet owners.

Nonetheless, you also have to consider your budget as well as where your competitors are. If you see that an area has lots of potential buyers but comparatively fewer pet shops, mark those places. You can quickly build a brand there.

3. Choose A Unique Name

Many traditional shop owners don’t give the naming process much thought. But the new trend says otherwise. They will come back only if they remember you!

Suppose you visited ten equally welcoming & authentic pet-bakeries today. The next time your dog craves a sweet treat, you might go for the brand with the catchiest name. That’s what pops up in your brain first. It’s a common thing every successful business follows.

The shop name must represent what you are selling as well as be unique. For example, Furry Fiesta or Purrfect treats sound like good names for a pet food business.

One, it instantly tells you the shop contains pet products. That’s what you want. If it’s a retail store, try names like Head-to-Tails Pet Shop or Posh Pets, etc. The next thing is checking the domain availability of the name. If it’s not available, find another name.

 Sooner or later, you will have to engage online to promote your store. And, if the website name is different from your store’s actual name, it will not look very trustworthy. Nonetheless, the name shouldn’t be too tricky to pronounce. You want something people can remember and easy to pronounce while referring to other people.

4. Register Your Business

Now that you have come up with a business name, it must be protected by law. Otherwise, you can’t stop any other shop from using that name for their shops as well. If you want to register manually, you can visit the official website of the state government. You have to pick an organizational structure and fill out the form accordingly.

For example, you can register your shop’s ownership under sole proprietorship, L.L.C., or Corporation. 

But don’t just pick one randomly. It dictates how your business will be taxed per year. You see, “sole proprietorship” or partnership businesses see profit as personal income and vice versa. On the L.L.C. structure, there is a blurred line between your personal and business assets or liabilities. On the other hand, a corporation is 100% separated from its owner and is taxed as a different entity. 

As a retail pet shop, the L.L.C. option seems more convincing by taking tax exemptions into consideration. Once you fill out the rest of the form with your company name, trademark, and details, you will receive an E.I.N. (employer identification number).

In case you have created a unique logo for your company, make sure you copyright it through a separate application. Simply registering the business name is not enough to stop it from being copied.

Discover more cool facts about Pet Business with this detailed post! 7 Essential Qualities Of A Top-Notch Pet Store [Checklist]

5. Find Yourself A Reliable Supplier

Finding a supplier is a crucial but manageable task. “Crucial” because he is the one delivering all the goods you sell. And it is easy because there are hundreds of online platforms where you can find a suitable business partner.

Nowadays, all you have to do is search for products on alibaba.com. It contains a huge number of pet accessories at a cheap price from various suppliers. You can compare the price of different suppliers as well as their credibility. Alibaba.com is not the only platform, though.

You can also navigate Pet Whole Sale U.S.A., Haisen Pet Food, etc. Make sure you turn on the filter for verified sellers with trade certificates. 

Another tip I have for you is to track their original factory. The address of their manufacturing facility should be given on the website. Pick a supplier who can ship products to you without a hefty shipping charge. Sometimes, the product is affordable, but the factory is in another country. So, you end up paying more than you expected through international shipping fees. 

6. Get A Business License 

You only need a “resale license” if your plan is to run a retail store. It is no different than any other retail store. As long as you are not keeping animals inside the store, you can avoid all the complexities of getting a business license. Just contact your local clerk’s office or search {www. (your state). gov}. You will find the necessary instructions for collecting a resale certificate from the federal government.

Here is the information you will need to fill out to get a reseller license.

1. Your & your supplier’s name
2. Business registration number (E.I.N.).
3. Description of the product you will resell
4. Explain the structure of your organization.
5. Justify why your purchase should be tax-free.
6. Date & Signature.

As you can see, the process is pretty self-explanatory. You can do it for free using online platforms. This certificate allows you to buy wholesale products from vendors without paying any taxes. You can save a vast amount of money that way. Also, a reputable supplier will ask for your resale certificate before allowing you to sell his goods. 

The key to getting your license quickly is explaining your business structure well. The authorities have to be assured that you are not purchasing products to consume. For example, you have a store selling office stationaries. That means you will buy bulk stationaries from a supplier to resell it in a branded “office essential” store.

However, if you have a candy shop and you are ordering office stationaries from a supplier, the authorities will assume it’s for personal use. You will have to pay “consumer tax” on such purchases. I hope that makes everything clear to you.

In case you have planned to have some live animals or birds in your retail store, the process will be more complicated. I have explained further in this article.

Explore the fascinating world of Pet Business—this post has everything you need! How To Invest In A Pet Shop? [12 Actionable Tips]

7. Secure An Insurance

Any business needs to be covered by sufficient insurance. And, it becomes more crucial for a brick & mortar store. What if there’s a fire in the building?

Thankfully, insurance policies are not too expensive.

You can pay as little as $29 per month, depending on the insurance coverage. The more risks your policy covers, the higher the premium per month.

As a new business, buy insurance that protects you against property damage caused by fire and robbery. In case the product you are selling is consumable, it’s wiser to get liability insurance as well. In case your business has to face lawsuits, the cost will be covered by your insurance company.

8. Make A Business Plan & Get Funding

Funding shouldn’t be your primary concern if you have enough resources. But if you don’t, you will have to get a loan or receive investment from venture capitalists. Either way, you need to make a business plan first. It’s a written copy of how you plan to run your business and earn profit.

The business plan should include your product mix, pricing strategy, supply chain, vision for the next five years, profit distribution strategy, etc.

How easily you get an investment or loan depends on the plan. 

Do I Need Permit To Keep Pets In My Pet Store?

Keeping live pets in a retail store is already banned in states like New York, California, Illinois, Maryland, Maine & Washington DC. So, don’t bother looking for shop locations in these cities.

Apart from these 6 big cities, 15 other states have banned the sale of exotic pets (not including dogs and cats) in any store.

And the rest of the states imply heavy regulations on shop-owners who want to keep live animals.

So, apart from the ordinary reseller certificate, you also have to acquire a permit from the state authorities. For that, you need to abide by specific rules, including accommodation conditions & areas, quarantine rooms, emergency vet care, restrictions on exporting animals, having a fire-exit plan, providing clean food & water, etc. Plus, the license has an expiry date of 1 year(exactly till December 31st.

You have to renew it every year by resubmitting all the proof and documents. Moreover, expect periodic inspections of your shop. Some states are more strict. So, do proper research before choosing a particular state or location.

I think it’s a lot of hassle to carry animals in a pet shop. Apart from all the guidelines I just mentioned, there is a zoning requirement as well. It implies that if you keep exotic pets, the shop must not be part of or too near to a residential building.

Hungry for knowledge about Pet Business? We’ve got you covered in this article. Beginner’s Guide To Selling Pet Accessories [Hidden Blueprint]

How Do You Attract Customers To A Pet Store?

You have your pet store. But when will it start making sales? Well, not as long as you adopt these marketing tricks I listed here. Take a quick peek to attract visitors and convert them into loyal customers.

1. Regular Discount Offers

Pet owners prefer online products due to a lower price tag. The thing is, online sellers can afford to sell a little below the average listed price. It’s because they don’t have to pay regular employees, rent, or other operation fees. But as a newcomer, you have to be comfortable with a lower profit margin.

Where other retail stores are strict with a 40%-50% profit margin, you should price your products slightly lower.

It doesn’t matter if you are selling high-quality products if no one knows about them. 

In 2022, 93% of retail consumers have confessed to using discount codes at least once. 

Imagine, why would a customer buy the same $30 pet food from you when he can get it from your established competitors? But they will if you are selling it for $27.

Now, don’t get overwhelmed while discounting prices. The final price has to make up for your buying & shipping costs and other operational costs. While your competitors are securing a 30% profit margin, make sure you are at least getting 10%. Otherwise, it will be difficult for you to run the store long-term.

Note: discounting works if you have confidence in your product’s quality. Otherwise, the buyers will switch back to another store as soon as you pause the sales offers.

2. Reward Loyal Customers

Many pet retail stores find it old-fashioned to offer general discounts during the first week or month. It also makes you look a little “desperate” if you continue giving sales. A more up-to-date formula is introducing a referral program. In this strategy, you will not offer discount prices to everyone.

Only the buyers who send you another customer are considered eligible. You will then send a coupon to the original customer, which allows him to pay less for the next purchase. It’s a pretty effective way to market your store and increase your customer base.

Plus, the fact that only a specific group of buyers get the discount offer makes them feel special. It drives them to be more loyal to your brand.

Get the full scoop on Pet Business—check out this must-read article! How Can I Expand My Pet Care Business? [Practical Examples]

3. Exceptional Sales Team

How do you make a buyer remember your store? It’s either through highly exceptional product quality or cordial customer interaction. Considering you are not the manufacturer (only a retail store owner), you have to rely on the second method. Hire employees for the sales team with excellent communication skills. It will make sure the buyer will have a good time visiting your store. 

Even though the products are average, customers will come back due to the shopping experience you provide. 

4. Run Targeted Ads

Social media ads are not just for online stores. Even if you don’t sell online, you can promote your store through ads. One of the best parts of Facebook ads is that you get to pick an audience group. In case the majority of your buyers are Gen-Z, you can specify the age range as well. 

“The more they see it, the more likely they will buy it.”

Depending on your budget, you can reach a particular number of social media users. That’s an excellent way to make people aware of your store and the type of products you sell. If you want your marketing campaign to be more effective, make sure you use pictures or videos of real pets using your products.

If you sell pet clothes, hire a pet model and get some photographs. It will definitely boost the conversion rate.

5. Sponsor Local Events

Any neighborhood will have a designated animal shelter. Be a member of your community’s pet welfare association. Join events; in fact, sponsor some of them. It will put the name in front of potential customers. This marketing strategy can be more expensive, but it works.

Nowadays, nobody buys puppies from local pet stores anymore. In fact, it is considered unethical by many young & aware pet lovers.

They prefer rescuing animals from the streets or at least donating money for such activities. Now that you are sponsoring these rescue missions in your local communities and paying for the animals’ treatments, the new parents will definitely prefer your shop over your competitors.

How To Make Your Pet Store More Profitable?

Setting up a pet retail store is no big deal. Almost anyone with enough resources can do it. Then, why is there a 60% drop in profit every year for the majority of retail stores? Well, it seems like just setting a store the right way is not enough. You have to run it the right way as well. 

Here are the tricks successful pet stores follow to boost their profitability. I have listed all of them down below.

1. Categorize Your Customers

A Netherland-based pet retail store, Pets-Place, increased its sales using this method. They started out with almost 67 stores across the whole country. But people still preferred ordering essential pet accessories from Amazon. Here’s how the said company battled this issue.

The pet store’s website was able to save customer’s search history. This new configuration helped the website to suggest products relevant to customer’s needs. The result was outstanding. 

Pets-Place generated 18% more revenue per user due to this category-wise product recommendation.

You can implement this strategy in your pet store as well. Make sure you categorize your products like food for cats & dogs, accessories for cats & dogs, aquarium maintenance tools, etc. I understand that it’s way easier to achieve if you have an online store. Nonetheless, there are still ways to use this technique in a brick-and-mortar pet store.

You just have to process the sales electronically. While a customer checks out, scan the products they purchase and collect their email addresses for a membership card. The new contact information allows you to notify the customer about the arrival of new products as well as discount codes.

For example, if someone buys dog food from the store, you should send them emails every month as a reminder to refill the food.

 Plus, you can tell them about any new addition in the food & supplement category. The key is suggesting relevant items based on the purchase history. 

2. Cut Overhead Costs

It’s common knowledge that you can keep more of the profit by cutting costs. Did you know that Bike Tow Leash only has four active employees behind the successful website? It’s an online e-commerce platform that sells athletic accessories for dogs.

Despite its million-dollar revenue, the company outsources most of its website-related tasks through remote workers.

The workers are hired contractually, & only paid for the project (not a fixed monthly salary). It also saves them the rent of a bigger & well-furnished office space. I would suggest you stop hiring too many employees. Paying each of them a fixed salary could shrink the actual cash flow in your business.

Suppose your pet store earns $1000 from online sales and $1000 from the retail store. For online sales, you can keep the profit and invest in your business.

However, the offline revenue will be revenue once you start paying utility bills, employee salaries, rent, etc. 

Reportedly, you lose almost 20% -30% of profit due to extreme operational costs.

You see, at the end of the day, online sellers have more cash in hand to reinvest in the business. If you want your retail store to be as successful as the online competitors, you have to find a way to reduce the overhead cost. 

3. Choose Products With High Margin

Of course, you have to be very disciplined while researching for products that allow high-profit margins. Now, it might sound a little contradictory to our “niche” guideline. What I mean is, stick with your niche and find relevant products that are the most profitable.

If you haven’t settled on a product category yet, here’s a little chart to help you along the way. It explains how high the margin is for certain product types.

Categories	Average Buying Cost	Average Selling Cost	Profit Margin
Pet Toy	$2-$5	$13-$19	70%
Pet Food & Supplement	$21.99 – $24	$30	20%
Customized Accessories	–	$50- $200	70%
Daily Essentials like litter box, bows, etc.	$3- $4	$8- $10	20%

Don’t get swayed by the high margins of pet toys. It’s true that you can keep even more than 70% of the margin for certain toys (anti-anxiety ones). But pet owners only pay so much when the toy is durable. You can’t earn the same selling cheap quality fetch toys for dogs. These are already listed at $2 on Amazon.

On the contrary, a 20% margin looks boring. But on the bright side, pet food is a product type that requires frequent refills.

So, if you can provide high-quality and more variety of flavors to your customers, you will have a recurrent sale every few weeks. Isn’t that great? To learn more about what sells best in a typical pet shop, check out this article.

Pet Store giants like PetCo & PetSmart rely on their repeat customers for almost 80%-90% of their monthly revenue. 

So, follow the same path and include subscription-based products that will bring you repeat customers. Moreover, I won’t suggest you take up the customized product category unless you have genuine expertise & experience. That’s the most crucial point. It would be a terrible idea to rely on someone to be the creative mind of your business.

4. Choose Low-Maintenance Products 

Another important tip is to always avoid products that are high-maintenance. You have to be more careful with product selection than an online seller. The latter can order the product directly from the factory and ask them to ship it to the customer. He doesn’t have to store the fragile product himself. But, in the case of a physical store, you have to pay for the maintenance and also the warehouse rent.

So, to cut costs, make sure you only choose low-maintenance products. Some examples are fish aquariums, live fish, live animals, etc. Even though you can earn a lot of money when people adopt pets, it’s still a lousy investment. Sometimes, you even need to hire an extra employee to take care of the pets and make sure they are in good condition. 

5. Partner With Vets & Local Shelters

The most effective way to bring in more customers is by simply partnering with local vets. Offer the clinic owner a fair share of your profit. This will automatically promote your store to every local pet owner. There’s no other way you could target only pet parents for advertising.

Or, you could sponsor local pet rescue and pet welfare events. Such social activities will build your profile as a reliable seller. Oftentimes, reliability and authenticity is the only thing that can push pet lovers to be your loyal customers. 

Before You Leave!

There’s no way you would want to stay in the launching phase forever. After a while, you will look for ways to expand your existing pet businesses. And, I can tell from experience that expanding a business either works for you or you encounter your first loss since opening. Check out this article to see how to expand your pet business safely & successfully.