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2016 Pet Product News Roundtable

10 of the pet industry’s top professionals discuss trends, challenges and the advice they would give every retailer.



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2016: THE CHARGE, THE CHALLENGE

Mike Bober: Increased communication and collaboration among the various groups that represent the industry’s interests will lead to smarter, more effective representation. Feel-good laws and regulations that seek to improve the health and well-being of companion animals carry the very real possibility of doing more harm than good and jeopardizing access to healthy, responsibly raised dogs, birds, reptiles and even fish, which in turn will hurt the entire pet industry.

Jon Duclos and Terry Sullivan: What excites us is the revival of independent pet stores and national pet food companies refocusing their support of independent retailers.

Barry Berman: It’s an exciting industry because more and more people are crazy about their pets and continue to be willing to spend money on them. This is becoming increasingly true of everyone, not just the affluent.

Bob Vetere: The passion and true caring of the industry as a whole is the most exciting thing I have learned about the pet industry over my 13 years in this job. The fact that we continue to make that our best-kept secret worries the heck out of me.

Debbie Phillips-Donaldson: I’m excited that innovation is continuing in our market and that new companies and faces are entering the market all the time.

Doug Poindexter: At the end of the day, knowing that we as an industry are enhancing the lives of countless people and families through healthy, happy pets is what drives me the most. It excites me to see the pet industry’s continued efforts to provide more products and services that are devoted to pets’ improved well-being. I’ve always believed that if you aren’t growing, you’re doing something wrong, and I have applied this thinking to the way we push initiatives through the WPA; we want to always work to improve our industry and simultaneously do what is best for pets, pet owners and pet retailers.   

Lorin Grow: The continued trend in the better nutrition options and all-natural and holistic remedies are most exciting for us, especially because it’s also what we’re about. What concerns me most is that it not be treated as “this year’s trend.” It might not completely change the marketplace as a whole, but it’s definitely here to stay. Wherever (and if) it actually caps out, it will continue to have a place for those people who have made changes and learned more and who will never go back [to lower-quality products]. 

"I hope that as we grow we remember why we started in the first place (our passion and love for pets), and to remember to be humble, helpful and kind to each other."

Nancy E. Hassel: What excites me is how the pet industry continues to grow and be recognized more and more as the professional industry it is. Traditional and mainstream media is taking notice more and more, and companies and the general public are realizing we are professionals.

I love to meet new pet professionals with just amazing ideas, products and concepts and [seeing] how they are helping our industry grow, how they give back to animal rescues and so forth.  

I hope that as we grow we remember why we started in the first place (our passion and love for pets), and to remember to be humble, helpful and kind to each other.

Steven King: The American public’s love for pets, and their desire to provide them with the best food, treats, toys and accessories to keep them happy and healthy continues to grow. Millennials are proving to be just as pet obsessed as baby boomers, which bodes well for the industry’s future as these consumers enter their prime spending years. Innovative products that closely mirror trends in human nutrition, fashion and technology will drive sales throughout the channel.

Jusak Yang Bernhard: We are seeing more and more competition. It certainly is getting harder and harder for independent retailers to survive. For TailsSpin last year and this year, we are dealing with three PetSmart stores, two of which opened about a year and a half ago near two of our locations, and four Woof Gang Bakery stores. In a town with only about 150,000 people, surviving in Savannah, Ga., presents quite a challenge.

Don’t blame them though, as we believe this is an amazing industry, as we are entering the $60 billion mark. And because of this, we see so much movement within our industry … pet food manufacturers are merging or are being bought out.

Whether you are Mars, Delmonte or Smuckers, getting a piece of the pet industry pie seems to be a “must” in their investment portfolios.

In the pet food arena, supermarkets and discount giants, such as Costco and Sam’s Club, are carrying food that consists of better ingredients in addition to their typical offerings. Big-name brands of pet food, such as Hill’s Science Diet and Purina, have grain-free versions. Independent pet food manufacturers also are being wooed by big-box stores. Brands, such as Natural Balance Pet Foods, Nulo, Solid Gold, Wellness and Blue Buffalo can be purchased easily at Pet Supermarket, Petco or PetSmart.

We also have noticed that online manufacturers, such as PetEdge, are developing relationships with pet boarding services, rescue agencies and veterinary offices. These facilities are being developed as retail stores where some carry a full line of accessories and pet food. 

Online retailers, such as Chewy.com and Amazon.com, have become bigger players in the pet industry. Because of the volume they sell, they are more than capable of offering lower prices than the independent retail stores. Some even offer free deliveries as part of their services.


THE BIGGEST TRENDS THAT WILL CONTINUE TO MATTER

Mike Bober: We have seen a significant increase in companion animal legislative activity at the local level—individual activists and national organizations alike are turning to city councils and county commissions to achieve their policy goals with increasing frequency.

Jon Duclos and Terry Sullivan: Continuation of distributor acquisition/consolidation, departure from independently/family owned and operated distribution, retail chain acquisition and consolidation and large-format stores entering the pet food and supply channels (Menards; Bed, Bath & Beyond, etc.).

Bob Vetere: We finally are seeing millennials become more of a force in the pet marketplace. What had been reluctance on their part to continue their family tradition of having a pet appears to have turned the corner. As the oldest baby boomers begin to approach 70, we are beginning to see a drop off in their levels of pet ownership. The millennials are in an excellent position to pick up that slack.

"The local pet shop is in the community, respected and trusted. We need to make better use of this whole network."—Bob Vetere, President and CEO of the American Pet Products Association in Greenwich, Conn.

Debbie Phillips-Donaldson: From a pet food perspective, market and category trends such as growing sales of freeze-dried pet food and treats seem to be having an impact. With freeze-dried—which can be linked to the popularity of raw pet food—you’re now seeing more mainstream pet food brands, like Merrick and Wellness, add “raw” (freeze-dried) bits to their dry foods. That allows them to capitalize on the trend without having to stray too far from their core product categories, and, probably more important, it allows consumers to sample a different format of pet food without having to spend quite as much as freeze-dried and raw tend to command.

That also seems to be true for another emerging category: baked dry food or “gently cooked” food.

Treats are a category that pet owners seem to continue to want to indulge in, and pet food companies seem to consider it an opportunity to innovate and introduce new concepts.

In terms of the market overall, mergers and acquisitions (M&A) continue to increase, with some big deals announced this year in pet food alone (J.M. Smucker buying Big Heart Pet Brands, Nestlé Purina PetCare Co. buying Merrick Pet Care, etc.). And of course, there are the rumors about a Petco-PetSmart merger that make things really interesting.

Doug Poindexter: Two prominent trends are impacting the pet industry. One is the movement toward natural pet products, like organic or gluten-free foods and treats. This section of the SuperZoo show floor has grown tremendously, and even with the larger space it sells out almost instantly each year.

The second influential trend is the increase in pet services like grooming, spas and animal day care. Demand from pet owners, together with the rise of pet humanization, has prompted more options and services to become available to customers who are eager to take advantage of these offerings.

Lorin Grow: There are many noticeable trends growing in profile and exposure. That which is most evident for us because of what we do is the growing demand for better nutrition options and the shift toward all-natural and holistic remedies for any health and maintenance issues. 

We get six to seven food deliveries a week and still can’t keep up with the demand. We are adding more freezers constantly and continually expanding our freeze-dried/dehydrated foods sections. 

Pet parents who have exhausted conventional pet care options (along with their bank accounts) to no avail now are seeking alternative health care remedies. In addition to specific ailment remedies, they look for alternatives to the standard chemical monthly applications that were always the norm. Thanks to social media and the Internet, people in even the most remote areas are self-educating and subsequently purchasing better foods and natural remedies that are chemical free and have no residual negative affects.

Nancy E. Hassel: Pet tech companies with pet gadgets such as toys for both dogs and cats’ play (maybe while you’re not there), GPS trackers, health monitors, emotional trackers, etc., seem to be more and more on the market now. There are some similar types of new products in the pet tech world and app world on our phones for our pets and their care. I don’t see that slowing down in the gadget-obsessed and -reliant world we now live in, and some are really incredibly helpful for our pets’ health.  

Also, I see more and more companies with Made in the USA on their packaging. While this has been growing the past couple of years, it’s definitely a trend that is not slowing down, and pet consumers are starting to look for that flag.  

Steven King: A trend that could have a profound impact on pet ownership is the increasing body of evidence that pets are good for our physical and mental well-being. Thanks to the work of the Human Animal Bond Research Initiative Foundation (HABRI), research documenting the beneficial nature of pets is receiving greater attention in the media and among health care professionals. HABRI Central has collected a comprehensive online repository of human-animal bond information, with more than 25,000 resources. And HABRI annually funds new research projects studying evidence-based health benefits of animals through pet ownership and animal-assisted activity or therapy.

In addition to HABRI, the Pet Care Trust is impacting a whole new generation by placing thousands of pets in classrooms throughout North America. Nearly 17,000 Pets in the Classroom grants were awarded to teachers in grades pre-K through eighth during the most recent school year, bringing the total number of grants to more than 60,000 since the program began. More than 2.5 million children have daily exposure to small animals, reptiles, aquarium fish and birds thanks to this program.

A recent study of the Pets in the Classroom program conducted by the American Humane Association revealed that having a class pet can teach children important values like compassion, empathy, respect and responsibility for other living things, as well as give them much-needed leadership skills and stress relief.

The work of HABRI and Pets in the Classroom could lead to doctors prescribing pets as part of a healthful lifestyle and teachers utilizing classroom pets as essential teaching tools.


WHAT ARE YOUR BIGGEST CONCERNS GOING FORWARD

Barry Berman: Trends of concern include the continuing migration of sales to Internet, especially in categories that formerly were not that prominent on the Internet like pet food, fish, etc. 

Also, more retail companies are expanding with additional locations, reducing the distance between competing stores. In the past independents worried, or should have worried, about Petco or PetSmart opening near them. Now the newest nearby competitor could be a regional chain that has access to new sources of capital.

Consolidation of distributors is leading to difficulty getting access to a great variety of products and trending toward standardization of assortments. This is especially true in accessories, more so than in pet foods.

There is a proliferation of pet food brands and new items from existing brands. This puts pressure on shelf space and inventory turns. A retailer could find they are stocking more items, each with lower average sales.

Doug Poindexter: There is an important issue that, though not new to the industry, certainly has ramped up in the past year or so and has implications for the pet world as a whole. This issue is the movement among some local legislators to ban pet stores from selling pets of all kinds. This has become an issue and one in which the local retailers must get involved.

"We are dropping the ball by not banding together as an industry to dispel much of this misguided effort and to support alternate—and effective—ways to accomplish the supposed goals of the meaningless proposals."

Bob Vetere: Animal rights activist groups are continuing to build momentum in pushing legislation and regulations that sound good but are anything but good passed one location at a time. We are dropping the ball by not banding together as an industry to dispel much of this misguided effort and to support alternate—and effective—ways to accomplish the supposed goals of the meaningless proposals.

Debbie Phillips-Donaldson: In terms of issues, the lawsuits directed at big pet food companies are seeming to become the norm. Part of that is just our litigious society, but some in the pet food industry will say (off the record) that this also is consumers’ way of demanding transparency on the part of pet food companies. Which, by the way, has improved since the melamine-related recalls of 2007, but probably not enough.

Litigation aside, as regulations under the Food Safety Modernization Act (FSMA) go into effect over the next year or two, we’ll likely see more transparency anyway, because it will be mandated by law, as several components of some of the key regulations cover supply chains in the food, feed and pet food industries.

That is, if U.S. Food and Drug Administration is funded by Congress to fully implement FSMA.

Steven King: The emergence of the Pet Leadership Council (PLC) as a powerful coalition of the pet industry’s largest trade associations and businesses represents a new approach to solving some of the industry’s most pressing challenges. There are a handful of big issues that the existing trade associations—American Pet Products Association, Pet Industry Distributors Association, Pet Industry Joint Advisory Council and World Pet Association—cannot effectively take on individually. Issues such as ensuring a sustainable supply of humanely raised pets demand a multi-pronged approach involving stakeholders as diverse as breeders, retailers, veterinarians and animal welfare organizations.

The PLC is effectively garnering support from all of these stakeholders in crafting solutions to this and other issues facing the industry. By bringing all parties to the table and eliciting their input, we are beginning to make headway toward finding a solution that is economically feasible and sustainable over the long term.


WHAT'S YOUR BEST ADVICE FOR RETAILERS?

Mike Bober: Remember that trust is granted, not just earned.  We have hands-on expertise and experience in caring FOR animals, not just about them. Tell your story early and often and then allow your customers and the broader public to develop comfort and trust based on consistency and transparency. 

Jon Duclos and Terry Sullivan: Don’t let personal bias and emotions dictate what you carry in your store. Just because you don’t like it doesn’t mean there isn’t high customer demand.

Offer better service than corporate retailers and expand your product offering to include all product types and qualities so the consumer doesn’t need to purchase any pet products anywhere else.

Invest in training for your employees so they become the experts that consumers rely/depend upon for the best care for their pets.

Always look for ways to make your store one that consumers want to visit regularly. 

Debbie Phillips-Donaldson: Pay attention to market trends, product trends and—probably most important—the reasons behind those trends. It’s not enough to know that a particular category or type of product is selling well; you also have to understand why.

"Stay active in the pet industry; make yourself available at the next city council meeting, and help legislators see the positive impact our industry can and does have on communities across the country."—Doug Poindexter, president of the World Pet Association in Monrovia, Calif.

Doug Poindexter: Success takes intention and dedication. You’ve got to get your head out of your storefront and get involved in the wider world around you! Stay on top of your business and educate yourself on new trends by attending trade shows and educational opportunities like SuperZoo and Atlanta Pet Fair & Conference. Stay immersed in local events and developments to keep your business relevant. And lastly, stay active in the pet industry; make yourself available at the next city council meeting, and help legislators see the positive impact our industry can and does have on communities across the country.

Lorin Grow: Decide what works for you, but also listen and watch what’s happening around you. Those most immediate to you are most likely your constant customers. Without a doubt, a store can manipulate the mindset of their customer base and create what’s “good” as the norm in their area. 

On the other hand, if you aren’t paying attention and your customer base around you is evolving, you will be left behind if you don’t evolve with them. Make changes from time to time. Change is good. It’s refreshing, invigorating and creates interest and excitement.

Nancy E. Hassel: For independent retailers: Remember to set goals, have fantastic customer service, host educational events in your store for your customers, have a very knowledgeable staff and go above and beyond for your customers—they will come back. Make sure your store is inviting, clean and organized, and switch up your endcaps to make it interesting and seasonal.

For pet services professionals, stay up-to-date on your own education, i.e., get certified in your service area by doing continuing education, and be abreast of the latest products, guidelines/rules and regulations set forth by your town/city/state if that is applicable. Do the best you can for your clients’ pets in all situations—and your customers will remember that and refer you, and your business will continue to grow.  

Steven King: Independent retailers who are not yet using Pet Store Pro to provide training for store associates are missing out on the most cost effective tool available to ensure that customers receive the highest level of service when they walk through their door. This free service of the Pet Industry Distributors Association (PIDA) requires only the investment of time in allowing employees to study any of the 25 chapters on animal care, customer service, sales, nutrition, merchandising and many other topics. Nearly 24,000 store associates in over 5,000 independent pet stores have used Pet Store Pro. It is a proven way to improve any store’s competitive edge. 

Jusak Yang Bernhard: Know the true meaning of being grateful and serving. Personal relationships need to be developed between you and your customers. Spend those extra five minutes with each of your customers. Get on the sales floor—spend as much time as you can on the sales floor. Get to know your customers and your staff.  Make sure you are well versed with merchandising and the products that you carry. Get involved with your community. Volunteer. Be a mentor. Love what you do.


 


HOW CAN INDEPENDENTS TAKE ACTION?

Mike Bober: Ongoing civic engagement is the key. Get to know your elected officials as soon as possible—preferably even before they’re elected. Help them understand who you are and what you do before you’re faced with a legislative threat so their first impression of you is not shaped by your opponents. Consider joining broad-based business organizations like the chamber of commerce and retail federations. And get involved with PIJAC and other national industry-specific organizations—you represent our eyes, ears and voice at the local level, and we, in turn, can help you prepare and engage.

Jon Duclos and Terry Sullivan: Support independently operated distributors. It’s a win-win for all parties.

"Retailers must make the shopping experience so special that customers would not think of buying anywhere else. It’s time to go beyond the comforting refrain 'we have better service' to introducing appealing gimmicks that no other store has."

Barry Berman: Retailers should respond to the continuing migration of sales to the Internet and the proliferation of pet food brands and new items from existing brands by training and incentivizing staff to steer customers to the most important—and most profitable—brands and items. Locate items that are not widely sold on the Internet. Some retailers who complain about Internet competition don’t combat it by attending trade shows to look for new brands.

Retailers must make the shopping experience so special that customers would not think of buying anywhere else. It’s time to go beyond the comforting refrain “we have better service” to introducing appealing gimmicks that no other store has.

Select and train staff to develop personal relationships with customers by hiring hyper-friendly people and giving special training in conducting conversations. Empower them to use random acts of generosity to engender customer loyalty.

They also need to ensure their store is very convenient to do business with, e.g., match competitors’ store hours, have a generous return policy, and enhance their visibility from the highway.

In the face of consolidating distributors, retailers should attend SuperZoo and Global Pet Expo and even local consumer shows to seek out vendors that are different, and be willing to buy more of their assortment direct. For their distributor purchases, I suggest they support new accessories vendors when they appear at distributors to support them when they do take risks.

With well-known brands—for example, Kong—retailers should stock only the core items so they can say they carry the brands. Retailers can surround these common items with less widely distributed products that they should be making more margin on.

Bob Vetere: One of the things much of the industry continues to miss is that local independent retailers are one of our more effective voices to the consuming public. Industry ads do some good, but when it comes to defining the industry to people and legislators, the local pet shop is in the community, respected and trusted. We need to make better use of this whole network.

Debbie Phillips-Donaldson: Become educated and informed—and don’t believe everything you read on the Internet, especially pet food rating sites. (Some of those actually do a decent job, and some are complete bunk and/or wacky. But how is anyone to know?) Also, don’t believe everything you read on a pet food package or hear from a pet food rep; some of the myths that retailers and consumers have bought into—all byproducts are bad, all grain-based ingredients are bad—have been perpetuated, even started, by competing pet food companies.

Doug Poindexter: Take the time to get to know your local, state and county legislators, and become familiar with the issues impacting the industry. This proactive approach gives a face to the pet industry in your town and provides an avenue for discussion should local issues arise. Even more important, joining community discussions can help promote legislation that is in the best interests of the animals and the general public.

I understand and take to heart the daily struggles pet store owners face. It seems like there are never enough hours in a day to take care of an incessant stream of tasks. That said, those in the pet retail industry must work together to support its well-being. I firmly believe that this investment in our industry will be well worth it if we all contribute our fair share.

Lorin Grow: Education is key when it comes to pet nutrition and natural remedies for health. The more that customers are educated, and the more informed they become, the more they will direct their dollars toward these areas. You see it in human marketing more and more. It used to be that, if you wanted a variety of good, organic and alternative choices, you needed to find a Whole Foods or some other specialty market, and they were few and far between. Now, your neighborhood market or grocery store chain not only carries a variety of selections, but I see them continue to expand those sections.

Steven King: Independent pet retailers must get more involved with their local governments, because that is where the biggest threat to their businesses is coming from today. More than 80 cities and counties across the country have passed bans on the sale of dogs, cats and rabbits in pet stores in the past two years. Often, animal rights activists garner the support of city council members before a bill is even introduced. By the time local pet stores become aware of pending legislation, it is too late. The time to let elected officials know who you are and of the value your business brings to the community is before harmful legislation is introduced.


 


This article originally appeared in the December 2015 issue of Pet Product News.

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