I got this working by following code
getImgUrl(pet) {
var images = require.context('../assets/', false, /\.png$/)
return images('./' + pet + ".png")
}
and in HTML:
<div class="col-lg-2" v-for="pic in pics">
<img :src="https://stackoverflow.com/questions/40491506/getImgUrl(pic)" v-bind:alt="pic">
</div>
But not sure why my earlier approach did not work.