Wal-Mart's live pet biz: bye-bye birdie

Discount Store News, August 15, 1994 by Richard Halverson

BENTONVILLE, ARK. -- Citing high maintenance costs, Wal-Mart is abandoning the live pet business two years after it stopped putting birds, hamsters and gerbils into new stores.

Instead, Wal-Mart is focusing on tropical fish, a low-maintenance, high-margin category of live critters that about 80% of its stores carry.

Only around 600 out of 2,056 Wal-Mart stores still sell birds, hamsters and gerbils, and those that do are phasing them out.

A Wal-Mart store in St. Louis, for example, is down to a couple of species of hamsters and a few parakeets. But it isn't holding a closeout sale--yet.

Talk in the pet industry that Wal-Mart lost millions last year on the sale of live pets could not be readily confirmed.

But high maintenance costs can quickly result in losses, even though gross margins on birds, small animals and tropical fish typically run 50%.

As a rule of thumb, the cost of feeding and caring for a bird will result in a loss if the bird isn't sold within two weeks.

The decision to drop live pets was based solely on sales results and the high cost of maintenance, said Wal-Mart spokeswoman Jane Arend.

People for the Ethical Treatment of Animals, best known for its campaign against fur coats, claimed that its lobbying efforts prompted Wal-Mart's decision.

Arend denied that claim.

The decision to abandon live pet sales "is a two-year-old story," Arend said.

The public perception that birds and small animals at a discount store are poorly cared for is incorrect, said a former Wal-Mart store manager who handled live pets. "We had a parrot in stock, and every morning every associate in the store would come by to try to teach it a new word," the ex-manager said. "They almost didn't want to sell the bird."

Operating profits on fish, however, are higher, since Wal-Mart fish tanks are automated so that water pH balance, cleaning and feeding are properly controlled.

The main chore in fish sales, therefore, is scooping out fish for customers. Associates require little training, which Wal-Mart fish vendors Blue Springs and Hartz provides. Associates still have to know how to make spot checks, for instance, to ensure the automated systems are working properly, and make any necessary systems adjustments.

But it takes a well-trained associate to care for a small animal suffering, from, say, wet tail, a condition caused by naturally occurring bacteria that can kill an animal from a dehydrating form of diarrhea.

Where Wal-Mart is still selling birds and small animals, it guarantees them only for 72 hours.

Wal-Mart previously guaranteed fish for 48 hours, but no longer offers any guarantee.

Indicating that fish are profitable, Wal-Mart has contracted with habitat builders to design new aquatic displays for its stores.

In fish, Wal-Mart also benefits from an extraordinary agreement with Blue Springs and Hartz that it can return dead any fish that dies within 72 hours of delivery, regardless of what caused the loss. That compares with the industry standard of only 24 hours.

Like other merchandise categories, the prices Wal-Mart charges for fish are not necessarily lower than those of its competitors, in this case, the pet superstores--such as PETsMART, Phoenix, or Petstuff, Atlanta.

One recent price survey found feeder goldfish, used as food for the Cichlid family of South American tropical fish, which sell for 12 cents at Wal-Mart and eight cents at a pet superstore.

But customers customarily buy 10 or 12 fish at a time and don't quibble over a few pennies difference.