RBC survey shows rising popularity of Chewy among pet owners

RBC Capital Markets' recent survey indicates online pet retailer Chewy (CHWY) is gaining market share, with 48% of pet owners shopping there in the past year, positioning it as the third most popular overall and second online behind Amazon. While overall pet ownership saw a slight decrease and pet food spending growth moderated, high-income consumers are increasing their expenditures in the category. RBC remains confident in stable pet household formation, suggesting continued growth potential for Chewy within the online pet supply market despite competitive pressures.

Analysis

A recent RBC Capital Markets survey indicates Chewy (CHWY) is strengthening its market position, with usage among pet owners growing to 48% over the past year. This solidifies its standing as the third-largest pet retailer, trailing only Amazon (74%) and Walmart (51%), and maintains its rank as the second most popular online destination at 54%, behind Amazon's 82%. The data points to a stable online retail environment, with 88% of pet owners consistently purchasing supplies online. However, the report highlights potential headwinds, including a slight moderation in spending growth on pet food and a marginal decrease in overall pet ownership among survey respondents from 84% to 81%. Critically, spending patterns are bifurcating; high-income consumers are increasing expenditures while middle and low-income groups are becoming more cautious. Despite the dip in surveyed ownership, RBC's channel research suggests underlying pet household formation remains stable, mitigating concerns of a structural market decline.

Key Decisions for Investors

• Investors should view Chewy's growing market share as a key positive, demonstrating its ability to compete effectively and gain ground on larger rivals in the resilient online pet supply market.
• It is crucial to monitor consumer spending data closely, as the bifurcation in spending between high-income and other consumer groups could impact Chewy's near-term growth trajectory and average order value.
• Despite a minor dip in surveyed pet ownership, RBC's assessment of stable household formation suggests the long-term addressable market remains robust, supporting a constructive view for investors with a longer time horizon.