Did You Hear the News About Chewy.com?

As one would expect from an estimated $62.75 billion industry, there’s a lot going on in pet.

Petco is making big changes from the top down and hired a senior vice president of retail market expansion. PetSmart opened another 11 new stores in Q2 in a race to achieve its goal of 80 new stores in 2016.

Tractor Supply Co. acquired Petsense in a $116 million deal, meaning the farm-and-ranch chain plans to make a big impact through the latter’s 136 stores in 25 states.

Bentley’s Pet Stuff recently acquired Moochie & Co., 11 small-format pet specialty stores in Ohio, Indiana and Kentucky. Pet Food Zoom, a web-based pet retailer that delivers, also joined its portfolio.

What you might not know, though, is that Chewy.com reportedly is planning to sell raw frozen pet foods. According to B.C. Henschen, owner of Platinum Paws in Carmel, Ind., Chewy.com currently is installing a freezer in Indiana for Midwest distribution.* He was unsure if it was in preparation for a nationwide rollout or a trial. What’s interesting is that he said Chewy.com had the category open on its website but removed it.

"I think that’s because I questioned a few distributors, and it got back to them that retailers were complaining … retailers being me!" Henschen said.

"My first concern is the pets," he said. "Feeding frozen or raw takes a real conversation with the pet owner to ensure their pet gets exactly what it needs and the owner gets the steps required for feeding frozen. Without that, the pet owner may not see the benefits and condemn the category."

Henschen’s other concern is something that every micro independent suffers—"first-bag syndrome," or assisting a pet owner in selecting the best product only to have that owner reorder online.

Other retailers were not thrilled.

"All the more reason to offer a circuslike atmosphere to make your store a superfun place to visit," said Sally Trufant, general manager of B&B Pet Stop in Mobile, Ala. "We put animals into customer’s hands as often as we can. We sit with kids so they can hold a bunny in their lap. Whatever it takes, we offer an experience you can’t get online.

"Thing is, even with that atmosphere, live animals and terrific customer service, sales are still down, and we are struggling," she added.

"I don’t know how Chewy.com can do it," said Sherry Redwine, co-owner of Odyssey Pets in Dallas. "They already ship heavy bags of food—at a profit of $1 over my cost—for free to the customer! How are they not losing money? No one I’ve spoken to has a good answer."

But Redwine doesn’t believe her business rides on frozen pet food sales.

"It does help bring certain people into the store, but if I lost all my frozen sales, I don’t believe my business would suffer much," she said.

AdreAnne Tesene, co-owner of Two Bostons in the Chicago suburbs, isn’t sold on the idea.

"I have significant concerns about the cold chain being broken during the shipping and harming the integrity of the foods," she said. "I hope frozen food manufacturers who take their brands seriously will take the necessary steps to protect not only their brand quality, but also the stores that provide the time and education to the customers who, in the end, purchase their foods."

According to raw pet food company Allprovide, its survey of 1,826 pet owners found that 37 percent of pet owners are interested in a raw diet. A 2015 Fortune article reported that sales jumped 64 percent for freeze-dried pet food and 32 percent for raw frozen pet food.

Because of those climbing numbers, Jusak Yang Bernhard, co-owner of TailsSpin Pet Food & Accessories, which has stores in Georgia, said it’s time to face facts and strategize.

"Of course companies like Chewy.com, DarwinsPet.com and OnlyNaturalPet.com are going to sell raw pet food; they already have strong presences in freeze-dried," he said. "Independents must understand that competition will only continue to grow. The industry will continue to create paths for head-to-head competition; manufacturers and vendors will continue to flood the industry."

What independents must focus on now, he added, is crafting their story to counteract online encroachment.

"If customers end up with thawed raw dog or cat food, they must handle and dispose of it, and get a refund from Chewy.com," he said. "The cost of Chewy.com’s ‘free shipping’ ($49 minimum order) paired with consumers’ primary concerns about safe handling and product freshness play to the advantage of independent raw sales."

Frozen raw food sales are perhaps the least of independent retailers’ worries, Bernhard added.

Ultimately, he said, fair competition with online retailers will involve regulation from the Federal Trade Commission and imposing a reasonable price or minimum advertised pricing policy established through manufacturer and independent retailer cooperation. Carrying different brands, improving customer service experiences, and increasing store incentives and community outreach also must play into building independent customer counts and sales, he added.

 

*Inquiry to Chewy.com’s PR department was not returned.

 

Ellyce Rothrock is the editor-in-chief for Pet Product News.