How COVID-19 is Affecting the Pet Products Supply Chain

Stay-at-home orders began swarming the country more than a month ago, forcing many businesses to close their doors due to the COVID-19 pandemic. Since pet retailers are deemed an "essential business" in a majority of U.S. states, most continue to welcome customers, but business isn’t as usual. Customer buying habits have changed, sales are offbeat and the availability of certain products have been scarce, according to industry insiders.

"At the beginning of the shutdown, sales sky rocketed because people were panicking and started hoarding pet food, just like toilet paper and paper towels," said Ray Holdwick, owner of Rocko’s Pet Stop, a pet store in Macomb, Mich. "While this was good for sales for a week or so, myself and other stores I talked with agreed that it was going to hurt bad in the future."

Since then, sales have dropped anywhere from 10 percent to 60 percent on any given day, Holdwick added.

Sales aren’t what they should be this time of year at Greentree Pet Center either, according to owner Brent Poyner. The Clarksville, Ind.-based store focuses mostly on aquatic goods.

"There are less impulse buys," Poyner said. "People come in and buy their filter cartridges and food. We don’t have people coming in and shopping around picking up stuff. They come, get what they need and get back out."

As customers packed their shopping carts full with pet food and other items, pet industry distributors tried to keep up with the demand.

"The last half of March we could not keep up, or catch up, as our customers had their shelves cleared by consumer panic buying," said Mark Smith, founder, owner and president of Oxford, Mich.-based Frontier Distributing Inc., which distributes pet food and supplies to stores in Michigan, Ohio, Indiana and Kentucky. "Most recently, sales have fallen off precipitously. The fall off was expected. How long it lasts will determine how severe the impact will be. Non-food items have seen a drop in demand from the beginning of the panic buying."

Smith pointed out, however, that the geographic location of a business has a noteworthy influence on the economic impact.

"Some areas totally shut down, others less so," Smith said. "What we are experiencing may be notably different than another area of the county."

Independent Pet Supply, a Snohomish, Wash.-based distributor that distributes natural pet foods and supplies to Washington State, Oregon and parts of Idaho and Montana as well as Alaska, has definitely felt the effects, said co-owner Neda Khorami. When asked if the trend of pet owners hoarding pet food at the beginning of the pandemic affected sales and shipments, she answered, "yes, tremendously."

"There was a huge uptick in pet food sales in the month of March, compared to the previous year’s numbers," Khorami said. "This caused a few problems with shortages on some SKUs, but we were quickly able to work with our vendors on replenishing the stock."

Animal Supply Co., a national distributor with headquarters in Irving, Texas, had a similar experience.

"A large initial pantry load drove strong March sales as consumers stocked-up, namely on food items," said Don McIntyre, CEO of Animal Supply Co. "This trend slowed in April as consumers continued to shelter-in-place and work down their pantry load. Because of the initial March spike, some manufacturers struggled in late March and early April to replenish supply, but that was temporary and has now normalized."

As distributors faced this unusual change of pace, pet retailers were left in a lurch, unable to fill their store shelves.

"Filters and cartridges have been harder to come by," Poyner said, noting that a lot of the products come from China. "We’re shifting to other brands and getting what is available, and trying to keep the shelves stocked that way."

In early April, Holdwick ordered $8,000 worth of products from a distributor, but said only $3,300 worth of products arrived.

"We scrambled about and bought from other distributors if we could," Holdwick said. "In many cases, we had to make substitution suggestions to people." 

Some customers took him up on the suggestions, while others tried elsewhere, only to find other outlets—both brick-and-mortar and online stores—were sold out, too, Holdwick said. 

"I’m back to about 90 percent in stock from normal," Holdwick said.

Lending A Hand

Retailers don’t have to forge this road alone, according to distributors. For example, Frontier Distributing officials remain in communication with its retailers, passing along any measures other retailers are taking to mitigate the impact and serve consumers safely, according to Smith.

"[We are] trying to keep them and our employees as safe as possible following the suggested best practices of the WHO [World Health Organization] and CDC [Center for Disease Control and Prevention], in addition to other practices that we learn of from our peers and various industry associations," Smith said.

Independent Pet Supply is doing its part by closely monitoring its inventory to ensure retailers have the stock they need. Specifically, maintaining fair and continuous supply by monitoring all orders to avoid excessive buy-ins, Khorami said. This is in addition to maintaining regular business hours to provide customer service and to accommodate retailers with their adjusted delivery hours, Khorami added.

Southeast Pet also began reducing some order quantities to ensure all retailers had access to high demand foods, said Ryan Judge, president of the Austell, Ga.-based distributor, which distributes pet products to Georgia, Florida, Alabama, Tennessee, North Carolina and South Carolina. Virtual meetings with retailers became a vital component of their work, too, Judge added.

"This enabled us to better understand how they were adapting and how we could best help them," Judge said. "As a result, we began providing media content to help them promote curbside pickup and delivery. We worked with some of our manufacturing partners to provide retailers with free product (chews, treats, toys, etc.) for them to give to their consumers as a ‘thank you for shopping local.’ In other cases, we worked with our manufacturing partners and our retailers to provide free pet food for military bases, shelters, first responders, health care workers, restaurant workers, etc."

Animal Supply Co. has been directing customers to its Animal Supply Connect, which helps retailers set up an online storefront with the ability to fulfill and ship orders directly to pet owners, McIntyre said.

"Consumers want a way to continue supporting small and local retailers that are pillars of our communities," McIntyre added. "Having an online storefront is an important way retailers can reach their customers at this time."

Policy Changes

Regardless of industry, companies across the United States have had to implement various policy changes to follow CDC and WHO practices.

Pet retailers, for example, are now offering curbside pickup, placing in-store signage reminding customers of the 6-foot social distancing rule, implementing standing grids throughout the store, not accepting returns to cut down on the chance of contamination, etc. Some retailers, like Rocko’s Pet Stop, have also added delivery services for those customers who can’t come out due to illness or health concerns.

Frontier Distributing has implemented its own policy changes, and it is a very long list, Smith said, which includes, "no returns, drop product and go, no driver assisted put-away, no customer signing of delivery receipts, few to no promotions, and the list goes on."  

However, he believes very few of the changes will stay in place after the threat passes.

"They can be brought back if another threat emerges, but I think few of them will make our systems better or more efficient," Smith said. "They are necessary and appropriate for today, and in the attempt to prevent transmission of the virus."

Southeast Pet, Independent Pet Supply and Animal Supply Co. have also implemented various policy changes in an effort to ensure the safety of its employees, customers and others they work with. This includes, but is not limited to, following social distancing measures, moving to curbside pickups and following hygiene best practices.

"Many of our new policies and procedures were developed to help ensure the health and safety of our retailers at this unprecedented time," McIntyre said. "Examples include contactless ordering and returns with the ASC app; driver procedures that include pallet drops, masks, waiving customer signatures and more to minimize contact with retail staff; and remote customer service support, including increased electronic video communications and customer experience representatives working remotely from home."

Moving Forward

Looking toward the future, Poyner remains somewhat optimistic.

"Hopefully we can get things opened up before too long," Poyner said. "Once the major part of this is over and people are getting out more, I think it will bounce right back, but it’s not going to be as quick as everyone is wanting."

That seems like a fair estimate, according to Judge’s predictions.

"We believe we’ll be dealing with COVID-19 and its effects for at least the next 18 months," Judge said. "We’re starting to see some recovery in sales over the past two weeks. We’re hopeful sales will hit 90 percent of pre-COVID-19 levels by the close of second quarter."

In the face of past recessions and challenges, the independent pet industry has proven to be resilient, and will be so again, said McIntyre.

"The industry is defined by a strong supply chain, infrastructure and people dedicated to always doing what’s best for pets," McIntyre said. "While e-commerce has become a larger part of the pet channel’s revenues, innovative and personalized services—and the ability to quickly adapt during this current crisis—have enabled independent retailers to remain an important part of pet parents’ lives."

Still, there is reason to be cautious, Smith said when asked about his thoughts regarding the future.

"I am afraid to speculate," Smith said. "It is too early in the economic shutdown to know how deep the effects are, and if the government will step in with additional help. Pets, like humans, have to eat, but how and where that food is acquired may change. … In any economy there are businesses that teeter on the edge. How many more than normal will collapse under the strain of this situation? The ripple effects are immense, this answer could become very long."