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Natural Pet Food Remains a Hot Niche


From the Pages of Natural Pet Product MerchandiserKnowledge and insight move more natural pet foods from store shelves to pet owners’ homes.
By Kathleen M. Mangan

With new product introductions in natural pet food at a record pace, and micro-trends leading to extensive segmentation of the category, retailers are faced with the challenge of making natural food converts of their existing and new customers in order to increase sales, profits and customer loyalty. It’s a tall order considering the number of products touting various ingredients included and excluded and following different nutritional philosophies.

Natural Pet Food Remains a Hot Niche
Selling natural dog and cat foods requires that retailers understand the products and pet health, and pass that knowledge on to their customers.

Products that are organic, raw, wheat-free, gluten-free, byproduct-free, locally sourced, free-range, human-grade and more all fall into the natural food category. Selling these foods requires knowledge and insight. There is confusion in the market, a price differential to overcome and a resistance to change, notably among dog owners who have long heard messages about not switching dog foods.

Americans were already enamored with using more natural products in their own lives with spillover for their pets when the pet food recall hit in 2007, said Bob Vetere, president of the Greenwich, Conn.-based American Pet Products Association (APPA). Pet owners started asking better questions, and many retailers made carrying natural food and offering advice about it a marketable point of differentiation. As a result, the natural market segment is booming, he said.

New Natural Products
“The craze from a manufacturer’s point of view is hot,” said Vetere, adding that the space for the natural section in the 2013 Global Pet Expo is already 20 percent bigger than last year.

“Whether sales will justify all the product offerings is another story,” he said. “But the trend is consumer-driven, especially since it follows the human trends to healthier foods.”

The APPA National Pet Owners Survey 2011-2012 shows that 21 percent of dog owners purchased natural, organic or raw food in 2010, up 2 percent over 2008. The trends were going the opposite direction for cats, down 5 percent in the same 2-year period to 17 percent of cat owners in 2010. Natural food stores report seeing no difference between cat and dog sales.

Certainly room remains in the market for brands that can tell a convincing story and demonstrate that their food is different and healthier. Take, for instance, Hound & Gatos, a line of canned cat and dog food that is 98 percent human-grade meat with water, vitamins and minerals making up the balance, according to the manufacturer. CEO Will Post launched Hound & Gatos in 2010 and reported that sales have exploded, far exceeding his business goals. The company is based in Atlanta, the products are made in South Dakota and distributors sell only to independent pet retailers in the United States, Canada, Europe and Asia.

Post had another pet food company, Life4K9, but, as he listened to pet owners, he decided to sell the company and start a new one with a different approach.

“Consumers are tired of seeing their pets suffer with allergy, stomach and bowel problems,” he said. “They’re tired of paying vet bills, and they’re tired of paying for fillers. I based the new food on ancient times when dogs and cats ate pure meat.”

Another example of how far the market has come in terms of product innovation and philosophical acceptance is with raw pet food, now in safe and easy freeze-dried, dehydrated, canned and frozen formulations, said Terri Grow, owner of PetSage in Alexandria, Va. One-third of her business is raw food sales, and she sources raw food from a local farm in addition to commercial brands. Grow has doubled the number of freezers in the last year-and-a-half to 11 and is considering another.

“I believe in this segment, especially in the cat market,” Grow said.

Natural Pet Food Remains a Hot Niche
With the increase in raw frozen diets, retailers can allocate more freezer space.
The Dog and Cat in Essex Junction and Stowe, Vt., carries raw food from 20 different companies, and it accounts for half of the food sales, said April Wright, co-owner. From the Essex store she sells 30 cases of frozen food a week, with nine freezers to handle the volume. Holistic veterinarians in the area recommend raw food to their clients, and the stores carry several single protein products for isolation diets, allergies and other health issues, she added.

Micro-Trends Growing
With the number of micro-trends in the natural food category, Vetere admitted it can be difficult for consumers to figure out the right foods for their animals. He said marketing drives product segmentation. Manufacturers want to keep customers within their own brand line, so as an animal’s needs change they have a product available, from puppy to overweight, joint, allergy and senior formulas, he added.

Grow, who consults with veterinarians on diets for problematic cases, said natural product segmentation is about consumer behavior and shelf space, not necessarily proper nutrition. She looks at the nutritional expertise of the manufacturer; the bio-availability, quality and sourcing of the ingredients; the way the food is produced and the quality of the packaging.

The retailer also recommends regular rotation of brands and foods, a concept that is picking up traction. A steady diet of a single brand sets up nutritional imbalances, food intolerances and allergies, Grow said. Each manufacturer has a standard mix of vitamin and mineral additives, so if pet owners only switch flavors within one brand, their animals could be missing something they need or become unable to absorb certain additives.

Wright carries a huge selection of natural food--more than 30 companies--and recommends brand rotation to balance out the different amino acid complexes between proteins and the vitamin/mineral mix between manufacturers.

“It’s really about educating clients to steer them in the best direction,” she said.

Education is Essential
Educating customers was so important to Julia O’Kelley, co-owner of Sedona Pet Supply in Sedona, Ariz., that she became a licensed animal nutritionist.

“A lot of pet health issues can be solved with diet,” she said, adding that better health saves money on vet bills.

O’Kelley carries all human-grade products from 15 manufacturers, recommends brand rotation and has seen raw food sales triple this year. Knowledge is the key to getting dog owners to change food, she said, while cat owners are more open to variety.

Industry Voices
Do you find social media marketing a useful business marketing tool?

“I Tweet about events, news and product recalls, and I offer Twitter specials that auto-update onto my Facebook page. I post customer pet photos and shots after we finish grooming a dog on Facebook, and they friend me, see our page information and send their pet photo link to their friends. It illustrates how we care for our customers; they’re our friends.”
—Tazz Latifi, owner of Petropolis in New York City

“I’d like to do more with social media—it’s not an expensive tactic, but it’s so time-consuming. It’s not driving sales, but it’s driving awareness, and that starts to add up. Pet owners develop a network to support their pets with their vet, friends, trainer, dog sitter, pet store and more, so creating awareness within that network strengthens bonds and makes your shop the first stop for products. It has potential.”
— Terri Grow, owner of PetSage in Alexandria, Va.

“Social media offers an inexpensive way to hit a broad cross section of people, and it’s immediate and more interactive. It’s the way of the future; all the new corporate campaigns have a social media component. You can get millions of hits on a good YouTube video.”
—Bob Vetere, president of American Pet Products Association

“My store cat hosts my Facebook page, and he’s popular. I use it to alert people about sales and events and link to articles on nutrition topics. I don’t use it as much as I could; it’s hard to keep up, but it is beneficial.”
—Julia O’Kelley, co-owner of Sedona Pet Supply in Sedona, Ariz.

In New York City, Tazz Latifi, owner of Petropolis, also is finishing her training to become a licensed animal nutritionist. She consults with veterinarians on nutrition for pets with serious illnesses, such as stomach, spleen or oral cancer, and with customers dealing with their pets’ food intolerances. Latifi offers customers regular educational seminars with expert speakers.

To get the word out about the seminars, Latifi posts them on specific Meet-Up sites, the shop website and its Facebook page. She also sends out e-blasts to customers and Tweets about events.

For store marketing, Latifi invests in search engine optimization for the website, develops vet relationships for referrals, sends special sales alerts out on Twitter and relies on social marketing to develop word-of-mouth promotion. She also offers free home delivery seven days a week for all purchases over $10 within a certain area.

“People love the personal service,” Latifi said. “Half my customers take advantage of it.”

PetSage’s Grow keeps her website informative with articles on various topics. She hosts day-long events with seminars and demos where customers can mingle and share information. She also sets up appointments to do nutrition talks at veterinary offices to develop consulting relationships and referrals.

Shop Loyalty Programs
To ensure customer retention, frequent buyer and loyalty programs are common at independent retailers. Some food producers offer loyalty programs that are store-specific. If not, Grow encouraged retailers to approach them with sales volume numbers and ask them to support a program for the store.

O’Kelley honors all manufacturer loyalty cards, but asks customers to track the sales and clip UPC codes, sending it all in to the manufacturer for them when they’ve got all the evidence for money back. She also offers customers a store punch card—for every $20 spent they get a punch, and when they reach 10 punches, they get $10 off their purchase.

“People really use their cards,” O’Kelley said. “They’re looking for coupons and discounts.”

The sales registers at Petropolis track sales by customer. When they’ve bought $1,000 worth of food, they get an automatic 10 percent off their next purchase.

For retailers wanting to carve out a niche, O’Kelley and Vetere recommended focusing on food.

“People always need food, so keep them coming back with quality brands, combined with your knowledge and advice,” Vetere said. “You might not make as much on food margins, but they’ll buy other products while in the shop.”

Vetere added: “Know your core clients and what sells to them.”

This article originally appeared in the December 2012 issue of Natural Pet Product Merchandiser.

 


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