If consolidation in pet stores is a trend then this is something I need to be aware of as I'm seriously considering opening a pet store franchise as my next career.
It seems to me that the commodity pet stores might merge, but there may still be a market for niche players. Pet Valu here in Canada has just launched their Caesar Milan line and also are profiling grain-free products.
I think there is a space, at least from what I see here. There are a lot of independent holistic pet stores in the Chicago area and they also seem pretty full. Petsmart and Petco carry cheaper, more low-quality merchandise and food, while the small pet stores cater to a more affluent crowd that really cares about what their dogs eat. It seems to me like there's a space in the middle, or for a store that carries a bit of both, as well as space for mass-market holistic products. A friend of mine has visited over 80 independent pet stores, so this is actually a reasonably educated guess.

I'd suggest doing similar market research if you're serious about this.
I like going to both. I get some things, like treats and food, at the holistic pet store. Smaller pet stores tend to have owners who, while slightly crazy, really know their stuff. But there are some things, like the dental chews, Merricks, or Kongs, where there's no reason to pay the markup so I get them at Petsmart. I really like Pet Supplies Plus, which is a bit of a hike but has everything under the sun, including products I only have otherwise heard about here.
As for this thread: I think Petsmart is slightly better than Petco. The one by me is bigger and has a grooming area where I can get Buffy's nails cut, so thumbs up. Never heard of this PetMart place.