What if Petco and PetSmart Merged?

There are two main giants in the pet supplies industry when it comes to stores.  I am sure it does not take too much thought to figure out the names.  Theses would be Petco and PetSmart.  Rumors have surfaced in the past about these two industry giants merging together to form one large firm, and it is definitely still a possibility today.  So, what impact would this have on the industry?  What would this mean for smaller competitors?  Well, I hope to provide a bit of insight into these what-ifs in this hypothetical blog post today. 

If these two giants were to merge, implications would be seen affecting all players in the industry.  One player that would be greatly impacted would be product manufacturers.  These manufacturers almost always sell to either one or the other or both of Petco or PetSmart.  If these two companies merged into one, the benefit of negotiations and being able to gain the highest amount of revenue from a sale would go out the window, as there would only be one major purchaser of the supplier’s product.  Additionally, a merger like this could have a negative impact on the investors of the product manufacturers.  If a manufacturer has stake in both Petco and PetSmart, once the companies combine the supplier would have a large stake in the combined company. Posing a large risk on investors if that combined entity were to fail.

Only time will tell if this merger may come to be, but one this is for certain…the combination of Petco and PetSmart would definitely rock the pet supplies industry.