PetSmart came out with an interesting piece of news this month: a 22% incremental lift in grooming salon bookings resulting from its new AI-driven marketing strategy. It’s refreshing to finally see a tangible success story behind all the AI hype.

PetSmart has been putting its massive Treats Rewards database to work, using AI to determine which customers, offers and timing are most likely to generate a transaction. The result is a 22% incremental lift in grooming salon bookings and a 13% lift in Autoship transactions (automated online repeat orders). Unlike a bag of dog food, you can’t ship a haircut to someone’s front door. Grooming requires the customer—and the pet—to physically visit the store. That 22% lift therefore represents something more important to a real estate investor than additional revenue: measurable evidence that PetSmart can use its digital ecosystem to drive customers BACK into its physical locations.

It also reinforces our thesis on PetSmart: they are not simply a retailer for pet products, but a service-driven operator whose grooming, training, veterinary, pet hotel and other in-store service offerings create recurring reasons for customers to visit.

What This Means for NNN Investors?

Lease term. Rent. Credit. Location. Sales. Those fundamentals still matter. But we believe PetSmart investors should increasingly ask another question: How deeply is this particular location integrated into PetSmart’s service ecosystem? A store with a productive grooming salon, training operation, veterinary presence or PetsHotel may have a stronger physical moat than one dependent primarily on merchandise sales. That distinction could become increasingly relevant when evaluating renewal probability and long-term residual value.

There is another side to the data. AI also increased Autoship transactions by 13%—good for PetSmart’s recurring revenue, but potentially one fewer reason to visit a store for routine consumables. And that’s precisely why services matter. As commodity purchases increasingly migrate toward automatic delivery, the locations offering services that require a physical visit may become more important—not less.

ZEBRA TAKEAWAY: Not every PetSmart should necessarily trade like every other PetSmart. In an omnichannel world, investors should consider not only how much merchandise a retailer sells—but how many reasons its customers have to keep coming back to the physical location.