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Fido's dream: PetSmart to open two stores in Philly

PetSmart enters the last frontier -- Center City Philadelphia -- chasing the surge of millennials and empty nesters.

What the new PetSmart store on 1122 Chestnut Street in Center City will look like.
What the new PetSmart store on 1122 Chestnut Street in Center City will look like.Read moreMetro Commercial Inc.

Fido never had it so good.

In its continued chase for urbanites and their pets, national retailer PetSmart will open two stores in heavily urban parts of Philadelphia over the next year and a half.

It is following a growth strategy similar to that of Target Corp., which has opened or will open six stores within Philly proper over a year and a half, and crafts chain A.C. Moore, which just opened its first urban location last month at  Broad and Chestnut Streets.

For PetSmart, the influx of millennials and empty nesters into the urban core is simply too attractive to resist.

Experts say the city is "the last frontier" for these national brands and they are forging ahead aggressively with urban expansion plans.

"There are a lot of pets in the Philly urban market and we are excited to serve those pets and their pet parents," said Brian Amkraut, executive vice president of real estate, strategy, store operations, and services, who discussed the company's plans for Center City and another location in South Philly for the first time last week.

The first of the new city PetSmarts will open in early July inside the Collins, a luxury apartment building at 1122 Chestnut St. The store will be 20,000 square feet with a grooming salon, doggie day camp services, and a Banfield pet hospital.

However, it won't have PetsHotel, as 204 PetSmart locations do in the 1,524-store chain.

The South Philly PetSmart will be part of Lincoln Square, a mixed-use development at Broad Street and Washington Avenue that will feature apartments and a grocery store, and is due to open in late 2018.

Both stores will have something else in common: They will be next to a smaller-format Target. Amkraut said that was by design, as both retailers are chasing the same demographic.

Besides the two new stores here, PetSmart has plans to open a pair in New York City.

PetSmart is targeting high-density, high-traffic areas in hot neighborhoods, said Brian Goodwin, senior vice president for Metro Commercial, who brokered all four deals. "These locations offer built-in residential and office traffic, plus ample parking, making them ideal for a market leader like PetSmart."

Big-box retailers such as PetSmart and Target have realized the need for a new business model, said Catherine Timko, CEO of the Riddle Co., which advises the Center City District on attracting retailers. "Their opportunities for growth today are in urban locations with strong and growing residential populations. Many of their customers do not have cars, and will not shop at more traditional locations."

The urban move is nothing new, but it's an intensifying trend among retailers, said Craig Johnson of Customer Growth Partners, a retail consulting firm based in New Canaan, Conn.

"Like good fishermen, good retailers like to fish where the fish are biting.  With the growth of millennials living downtown -- or empty nesters returning to the city from the suburbs -- retailers like Target and West Elm are finding new customers in center cities," Johnson said.

"Retailers are moving into urban locations to tap a new market; improve sales per square foot, as they are oftentimes double its legacy stores; and offer pickup locations for online sales,"  said John Brick, equity analyst at Morningstar. "Offering pickup locations in areas inhabited predominantly by millennials really makes sense, as that is their target demographic."

PetSmart had revenue of $7.2 billion  in fiscal 2016, up from $6.96 billion the previous year. In December 2014, the company was acquired by London-based BC Partners for $8.7 billion in the largest private equity deal that year.

Its products include pet beds, apparel, accessories, collars and leashes, feeding bowls, treats and toys, and pet food and supplements. The company recently announced a collaboration with Ellen DeGeneres on a comprehensive collection – the talk-show host's first-ever for pets.

Two key trends are driving the pet industry's growth: the "humanization" of pets and the "premiumization" of pets, Amkraut said.

"Humanization is really about pet parents treating their pets like true members of the family and offering them more human items they themselves enjoy. Premiumization is really about giving pets a more high-end experience, such as feeding them superior food like organic and natural products, or treating them to high-end salon or grooming services," Amkraut said.

PetSmart has 56 stores across Pennsylvania, 48 stores in New Jersey, and a total of 1,524 stores in the mainland U.S., Puerto Rico, and Canada as of the end of fiscal 2016.

Amkraut said PetSmart opened more than 70 stores last year and expects to open even more than that for fiscal year 2017.

After the Chestnut Street store opens in July, there will be five PetSmarts in Philly proper.