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Catch the Trend

Posted: July 27, 2011, 3 p.m., EDT

When planning inventory, retailers look to a variety of sources for ideas and strategies.

By Alison Bour

When Jennifer Fadal opened her pet store Wag in Tampa, Fla., she admitted she over-stocked high-end clothes a bit. A trend at the time, sales of these products have decreased in the past few years.

“I look back at pictures [of the store] and think it’s rather funny,” Fadal said. “I should have taken them out faster than I did.”

However, in recent years her prediction that holistic foods and treats would remain a hot trend was right on target. Fadal said she now specializes in such items; a decision fueled by her study of the benefits to animals fed holistic ingredients.

People Watching

Statistics to Watch

* According to the America Pet Products Association (APPA) website, predicted pet industry expenditures for 2011 are estimated at $50.84 billion, an increase from 2010’s actual spending figure of $48.35 billion.

* An average of three dog toys are purchased every year per dog. There has been a significant increase in dog owners purchasing hard or solid rubber toys, according to the APPA National Pet Owners Survey 2011-2012.

* According to Best Customers, published by Ithaca, N.Y.-based New Strategist Publications, Inc., in 2010, the age group that spent the most on pet purchases, supplies and medicines was 45- to 54-year olds. Married couples spent about 30 percent more than non-married couples.

* The APPA reported that live animal purchases held steady in 2010 at $2.2 billion, while food purchases grew from $17.6 billion in 2009 to $18.3 billion last year. The organization also predicts the health and wellness segment of pet purchases will grow by 6 percent this year. --AB
A reliable way to determine potential pet product trends is watching what humans buy, said Roz Applebaum, co-founder of Pet Industry Advisory LLC in Wells, Maine. As human longevity increases--in part due to products aimed at eliminating or preventing disease--pet owners now demand the same treatment options for their animals.

Applebaum said this trend sparks the introduction of similar pet supplies, such as those that ease the pain of osteoarthritis and other ailments.

“The pharmaceuticals are pushing to keep up,” she reported. “We’ve only nipped at the beginning of it.”

Retailers have noted the correlation between human product development and demand in the pet marketplace. Terri Grow, owner of PetSage in Alexandria, Va., said she firmly believes human products drive pet sales.

“We have to look at cosmetics, home products and similar industries,” she said.
When stocking her freezers with raw foods, Grow looks to local farms to supply meat and ingredients. She said the trend of people desiring locally grown products affects pet food sales—even if the price points are higher.

“They will purchase [these products] before anything else,” she said.

As the focus on obesity in American intensifies, pet product suppliers now offer not only weight-management foods, but treadmills and ‘gerbil wheels’ for dogs, Applebaum said.

Functional toys represent another current pet product trend, Fadal said. Consumers seek toys with durability guarantees and interactive features that offer food inside. Also, Fadal stated that, rather than high-end rhinestone collars, her customers desire collars that are waterproof and clean up easily.

Where to Look

Paying attention to investment trends may yield dividends for pet product retailers, too. Fadal said she looks to commodity trades and stock prices to help identify trends. Specifically, she said she watches how trading affects stock prices.

“What happens on a larger scale affects us eventually,” said Fadal. “There’s a trickle-down effect. If corn oil is going up, you know your prices will go up. That might affect your customers’ ability to pay.”

Tuning in to disclosures from publicly traded companies and competing retailers may benefit store owners in the long run, too. Fadal said she also listens online to PetSmart conference calls, a public broadcast similar to an annual report and is closely monitoring the company’s increased interest in holistic food.

Access to information proves to be a vital resource for retailers. Kimberly Hessong, owner of Mud Puppies Self Serve Dog Wash, Grooming, Goodies and Canine Education Center in Erie, Pa., said she relies on trade magazines to help predict future sales.

“I go online and see what they [showcased] last year, and compare it to how well it’s done this year,” Hessong said.

By reading trade publications, Hessong also learns of suppliers that support independent retailers, noting that’s how she found out about deer antler dog chews by Hidalgo, Ill.-based Crooked Creek Antler Art.

On occasion, retailers have to actually go out and gather their own information. To predict trends, Carlotta Mast, editor in chief of Natural Foods Merchandiser magazine, owned by Penton Media Inc. in New York, recommended creating a formal poll of customers. Berkeley, Calif.-based Annie’s, a company that specializes in natural food products, relies on a consumer panel of long-term customers, she said.

“You can start small, with only five customers,” Mast said. “Both retailers and manufacturers don’t do enough consumer panels.”

Gathering information is crucial for retailers, especially customer feedback, noted David Lummis, senior pet market analyst for Rockville, Md.-based Packaged Facts.

“Individual stores have to rely on their own understanding of their market, clientele and geography,” Lummis said. “What could be a fad in one area could be a long-lasting trend in another.”

David Lummis, senior pet market analyst with Rockville, Md.-based Packaged Facts, and a regular contributor to PPNI, offered the following as trends to watch in upcoming months:

* Consumers currently have pent-up demand due to recent cutbacks as a result of the recession. Guilt drives some of their demand as they want to make up for lost time pampering their pets. This demand may translate into an increase in 2011 holiday sales, including both functional and indulgence products.

* Cause marketing will be strong the rest of this year as consumers seek to participate in goodwill purchases fueled by their desire to justify expenditures during a difficult economic period.

* Even though it’s expected that consumers will loosen their budgets this year, they will likely still seek value-added criteria. Those retailers that combine money-saving opportunities with additional product benefits will likely fair better as the economy continues to slowly recover.
One-Stop Shop

While industry participants reported current trend watching in the pet industry centers around food, Hessong said she believes her business model of one-stop shopping is making a comeback.
A 40-year veteran of the pet industry, Hessong said she pays attention to her gut when making key trend-watching decisions. She thinks the time is ripe to move back to offering a variety of services in one location versus specializing in one key area. Others in the industry agreed.
“One-stop shopping has kept some retailers alive,” Applebaum said.

When considering new products, Hessong added that she relies on her groomers for information.
“As [they are] dog owners, I pick their brains,” she stated.

Avoiding Pitfalls

“If it sounds too good to be true, it probably is,” still applies in the pet industry. Bill Bookout, president of National Animal Supplement Council (NASC) in Valley Center, Calif., said that as worn out as the adage is, stores get into trouble without it.

“Cheap products are cheap for a reason,” he said. “You should stop and ask yourself why.”
To date, there’s no legal statutes that police pet dietary supplements, he stated, so retailers must conduct due diligence before bringing them into their stores.

NASC offers its own audit program and seal designation aimed at helping retailers determine quality nutritional products, according to Bookout.

Since predicting what customers want represents a risk, Hessong said she opted for a minimum order complete with samples and literature when she brought in a product called Liquid Health, made by a company of the same name in Murrieta, Calif.

Customer feedback proved Liquid Health would do well in her store.

“Now I buy a dozen quart bottles per week,” Hessong said. “It was like a blast off for me.”


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