Companies Pledge Allegiance to Independent Retailers at SuperZoo
Michael Levy (left) of Pet Food Express and Michael DiTullio of Especially for Pets honor Charlie Nelson (center) of KLN Family Brands.
Several pet food manufacturers pledged their commitment to the specialty channel and trumpeted their decision to cease selling products on Chewy.com—the major e-commerce site purchased by PetSmart this spring—at a gathering of executives from more than 30 pet specialty retail operations representing approximately 1,400 stores at a meeting at the Mandalay Bay Convention Center in Las Vegas on July 24.
Representatives from three major product manufacturers, Fromm Family Foods, Champion Petfoods and KLN Family Brands, attended the meeting by invitation from retailers, who have been gathering informally during major trade shows since last year to discuss common concerns such as e-commerce pricing practices. The executives discussed their decision to pull products from Chewy.com—a move meant to give independent pet retailers a fair shot of competing at a time when mega-e-commerce sites are offering consumers discount pricing that brick-and-mortars cannot hope to match.
Charlie Nelson, president of KLN Family Brands in Perham, Minn., the maker of NutriSource, PureVita, Natural Planet and Tuffy’s brands, said the company is no stranger to making tough decisions in favor of its independent retail partners, having done so in the past by pulling product from retailers that Petco purchased. So when PetSmart announced its acquisition of Chewy.com, KLN was quick to respond, he said.
“Within 24 hours, we made our decision,” Nelson said about the company’s move to remove its products from the online seller. “We walked away from a lot of business.”
He further pledged that KLN would maintain its e-commerce pricing at 10 percent above its suggested retail pricing in an effort to help level the playing field for its brick-and-mortar partners.
“We are steering business in your direction,” he added.
Bryan Nieman, brand director of Mequon, Wis.-based Fromm Family Foods, expressed a similar sentiment to the room full of retailers.
“We’re 100 percent committed to independent pet,” Nieman said, adding that growth in the industry is rooted in the independent retail channel.
“Everything we do—all of it—is to support you guys,” he said.
Michelle Granger, director of marketing of Champion Petfoods—the Edmonton, Alberta, Canada-based maker of Orijen and Acana brands, which has U.S. headquarters in Auburn, Ky.—said she was there not only to reaffirm the company’s commitment to pet specialty stores, but also to solicit their support and encourage partnership.
“This is our channel,” Granger said. “This channel belongs to us. No one is going to defend it but us, and nobody will grow it but us.”
Many of the retailers present at the meeting applauded the manufacturers for taking strong measures to support the independent channel.
“They all made a decision to walk away from a tremendous amount of business for the right reasons,” said Michael Levy, founder and president of Pet Food Express, a 63-store chain in California.
Retailers at the meeting also lauded the companies for taking a strategic move based on the idea that the growth of pet product brands is dependent on the independent retailer channel.
“They know that brands are built from brick-and-mortar,” said Dino Fragaglia, president of Global Pet Foods, which has 172 stores throughout Canada, adding that the recommendations made at store level are “critical” to the success of pet brands.
“You won’t have that relationship with a computer online,” Fragaglia added. “[Manufacturers] know that [the independent channel] is where the growth is going to be, and manufacturers that truly believe in the integrity of their brand might have to make that decision to sustain [their businesses] in pet specialty.”
Similarly, Jim Castleberry, director of merchandising for Pet Food Express, predicted that other companies will follow suit as their contracts with the online retailer expire. However, he warned that independent retailers will be waiting to see which companies stand by their initial pledge.
“It’s about meaning what you say,” he said.
Michael DiTullio, president and owner of Especially for Pets, which has seven stores in Massachusetts, agreed, saying that companies such as Fromm and Champion might also set a precedent and an example that new manufacturers in the market could emulate.
Another sentiment prevalent among the meeting’s retailer attendees was that manufacturers would be able to make the difficult decision to walk away from selling on the mega site in part because they could count on the support of their independent retailer partners.
“[These manufacturers] have gone out on a ledge,” Castleberry said. “And we want to make sure they are rewarded for it—rewarded with product, sales and focus.”
Al Puntillo, chief merchandising officer for Mud Bay, which has stores in Washington and Oregon, said his company is reciprocating the commitment made by the NutriSource brand by re-evaluating its partnership with the company and finding additional opportunities to support and promote its products.
“We wanted them to feel immediately rewarded—it’s a reward and response situation,” Puntillo said.
Granger, too, pointed out the importance of a reciprocal and mutually beneficial relationship between independent retailers and product manufacturers in the pet industry.
“If retailers aren’t doing well, we aren’t doing well,” she said. “So the time is now to be more committed to talking more about partnerships.”
Retailer attendees also shared a sense of optimism that brick-and-mortar independents will not succumb to the online competition that has been threatening the channel in recent years.
“This is just one step—one step in the evolution,” said Scott Click, owner of Tomlinson’s, a Texas chain with 14 stores.
Recalling the sense of doom many independent retailers experienced in the early days of the advent of big-box pet specialty stores, Click added that this is simply another “evolution we have to get through,” noting that brick-and-mortar is still growing.
Levy concurred, estimating a rate of 90 percent growth of retailers represented in the meeting.
“No one is closing stores,” he said. “They’re actually adding stores.”
Lars Wulf, co-CEO of Mud Bay, on the other hand, said he views the current shifts in the market not simply as an evolution, but as a “sorting out.”
“Brand portfolios are continually evolving,” he said, adding that manufacturers that make “strategically informed decisions” that respond appropriately to the changing landscape of the market will be the ones to survive in the long run.
During the meeting, the manufacturers were also recognized by the retail attendees for their leadership and support of the independent channel, and presented with a “token of appreciation” by Levy and DiTullio.
“Sometimes, manufacturers just don’t get enough recognition, so we thought this was the right thing to do,” Levy said.