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I think the topic digressed from the original topic into a very interesting discussion of dog food.
Back to Laura's initial topic. I am in GA. Laura so I am not really familiar with Colorado. Initially I did not feel comfortable offering advice on proximity to Petsmart. They do offer good products at good prices. However they offer the same products and services they you are proposing.
In the community I am in which is a bedroom community of Atlanta there is a small company offering the same type of service you are planning. She is located 5.5 miles from the Petsmart but has nearly 7500 single family homes with in a 4 mile radius. That equates to nearly 12k dogs within that radius based on some industry statistics.
Her business is a self serve dog wash as well as drop off grooming. Her business is in a strip mall with a Publix grocery as the anchor. From discussions with her and casual observation, the grooming does well Mon-Fri and the self serve does very well on the weekends.
I hope this helps as you launch your dream.
If you have not already done so I may suggest you join the Pet Care Services Association. Very good organization with members from all areas of the pet care industry.

Chuck