Participants:
Sean Murphy, operations manager for Preuss Pets in Lansing, Mich.
Chris Nelson, co-owner of Rutherford Pet Supply in Spindale, N.C.
Tom Herron, owner of Fins Feathers Paws & Claws in Harleysville, Pa.
Carol Hoover, owner of Carol’s Critters in Tallahassee, Fl.
Pet Product News: What’s your big picture, 30,000-foot view of the industry and the state of the independent pet retailer now?
Sean Murphy: Ever since COVID happened, we’re actually seeing a big uptick. People want to provide larger enclosures and more enrichment for their animals.
I help manage the reptile and small-animal sections. I’ve seen people realize that since they’re home more, they want to provide more space and more natural environments for their animals.
We’ve been doing really well with bioactive enclosures and live plants. We’re even doing that with our mammals. We’re actually setting up a bioactive hamster exhibit right now. It’s something we’ve done in the past and had really good success with.
Chris Nelson: As an independent, it’s getting more challenging trying to keep products [stocked]. It’s difficult to get products because the bigger buyers are getting first dibs on deliveries of foods and products. The internet doesn’t help, either, although quite honestly, the shortages at Chewy and Amazon have actually helped. If I have something, [online retailer shortages] have gotten me some new business.
It isn’t helpful that Ukraine is where most all of our safflower and sunflower seeds come from, because we’re not getting any bird feed right now. Most of my suppliers are out of it. [Also,] as independents, we have to be constantly alert for what our new demographic is because it changes on a daily, weekly and monthly basis.
Tom Herron: Exotics are still strong. We’re not seeing the crazy numbers we got during COVID, but they’re still strong. The dog and cat [product sales] just keep dwindling because you can get those products everywhere. My store is slowly becoming more focused on exotics, because you can’t get that everywhere. I see the whole exotics trade, small mammal and reptile, being very strong. Bird is good.
Carol Hoover: On the larger scale, I just need reptiles. I have to go look for them. I’m really disappointed in how expensive birds have become. I don’t really see the reason for it. I’m hoping [prices will] drop. We’re focusing more on reptiles, birds and fish.
The past couple years were huge, business wise. With us being essential here in Florida, we were very busy because a lot of other places closed. In the last probably few months, with inflation and gas going up, people aren’t feeling as secure in this economy. Things have slowed down quite a bit for us. We’re not in danger of closing our doors, but it’s definitely a trend downward in the last few months. The beginning of the year was pretty hopeful, but it has not been quite as good here lately.
PPN: How are the two big trends—product availability issues and price increases—impacting your business now?
Murphy: It feels like the shipping issues are finally starting to get back on track. We’re getting orders in more consistently at this point. The back stock of orders that was stuck on shipping docks has finally started coming in. That has made sales a lot easier, because now all the things that I recommend are in-store.
Inflation has been really interesting. We get emails weekly from different companies. The price of this food is going up, or the price of this substrate is going up. Everybody that we buy tanks from, the price went up because glass went up.
So, from our end, we’re trying to adjust accordingly so that customers are still getting a good deal, while at the same time making sure we’re hitting a profit margin that is attainable and doesn’t hurt us long-term. There’s product in the store that we have very low markup on, because it might be a harder sell. So, we want to make sure that we’re keeping things within a range that customers feel comfortable and we feel comfortable with.
Nelson: Exotics are getting more difficult to get from anyone, and the prices are going through the roof because availability affects price. It’s supply and demand. I raise most of our own birds. I don’t have a huge selection, but I do cockatiels, macaws and some smaller birds. I raise guinea pigs, rabbits and hamsters.
Inflation is relevant. It’s causing people to drop down the price scale. I’m seeing a good portion of my customers lowering their expectations on how much they can afford to spend. They’re still trying to spend as much as they can, but they’re having to cut their budgets.
Bird [prices] have been especially crazy.
Herron: The whole supply chain thing has pretty much corrected itself. I used to have an invoice of let’s say 120 items, and 70 of them wouldn’t come in. We’re pretty much back to normal, where a very small percentage isn’t coming. There are certain things, like plant coconut fiber, that have been hard to get. But other than minor things like that, I would say that the supply chain is back to normal mostly.
At least from my perspective, the cost of shipping is what’s driving inflation. You have to ship everything. It’s more expensive now, and that has to come from somewhere. Every cost is going up.
I get all my small, fuzzy animals from a local distributor. I really haven’t had any trouble, even during COVID, getting the things I needed. For reptiles, I deal with some big distributors. The selection is probably better now than it was. I’ve got local breeders and I never had tons of trouble with the herps or the mammals.
Hoover: Product availability has been better in every area of exotics. A couple years ago, we couldn’t get glass [for enclosures], and then we couldn’t get wire, and now we can get it. It’s just, can you afford it? It’s gotten ridiculously expensive. Inflation is up across the board. It hasn’t been one giant incremental jump. It is literally weekly. We price from an invoice. We are not computerized. We’re as old school as it gets. We can track that really easily. I don’t think the distributors are doing it to us on purpose. I’m sure it’s going up for them, too.
PPN: Have you seen a demographic shift in the exotics segments? Are people switching away from dog and cat, and purchasing small mammals, herps and birds instead?
Murphy: Our store has always been kind of an enigma in that our customer base has always been very wide. From a buying perspective, there are probably more millennials. I’m 40, and I’m seeing a lot of people my age buying animals. But I’m also just seeing a general interest in the 28- to 45-year-old age range.
I’m seeing a shift in how people are viewing animals. It’s not just about the animals being cool. People are honestly seeing them as family members and as comfort animals and comfort setups. Because of that, I think that’s why I’m seeing more people spend that extra money on larger enclosures and better enrichment. A lot of that comes with the younger base of people coming in to buy stuff.
A lot of it has to do with people’s housing. Being that we’re in a college town that’s kind of a blue collar, working class area, a lot of people don’t have the space or their landlords don’t allow them to have cats and dogs. And so for that reason, yes, they come more towards small animals and exotics.
Nelson: What ended up happening during the pandemic was, a lot of people that may not have bought a pet got one and showed their new pets to a whole different demographic that may never have been inclined to get that particular animal. That encouraged people to get pets without homework and caused a lot more purchases that probably wouldn’t have happened had the pandemic not occurred.
Herron: The younger kids, the generations that grew up with Discovery and Animal Planet, where they see all these cool reptiles, they are the ones driving it. The younger kids, probably 30 and under, are the backbone of the herp [category], but there is a segment of older people, probably 40 and up, who are also getting into the hobby.
Dog and cat product sales just keep falling. I see herp doing especially well. Exotics is strong overall. Dog and cat are everywhere, but we have stuff for exotics no one else has.
Hoover: We’re not really seeing demographic changes. We’re located right between two schools. So college students are a large part of our clientele. But, really we get people from all over. We don’t do dogs and cats. There’s no way really for me to be competitive.
PPN: How have you grown and changed your business model to continue to have success in the exotics segment? Are you leveraging technology and social media to help drive sales?
Murphy: We have dabbled a little bit with online sales, mainly with our bulk foods. We were doing curbside ordering during COVID, and we still offer that, although we don’t do nearly as much of it as we used to. For some people, that is an added bonus, to be able to just order online, and then they can just come pick it up or they can call ahead.
From an outside perspective looking at it, I’ve seen every department have an uptick. I know from talking to our bird management, they’ve been selling more birds and cages than they had before. In my department alone, we’ve been selling more reptiles and small mammals than ever.
Nelson: For my store, it is in having education and making sure that we educate our customers. I often have customers coming in who just bought a bearded dragon from a big-box store, and they don’t have a clue what a UV lamp is. Education is our focus as far as selling.
Herron: We tried to do online [sales]. I spent $20,000 and made like $1,500. So that was a big flop. Social media I don’t do a lot with. I wish I had time, but I don’t. We’ve been here forever. We opened in 1985, and it’s word-of-mouth. People just hear about us. I’ve tried many different advertising things, and I might as well just throw my money out the window.
Hoover: I’ve had people ask: How are things so busy right now? I don’t know. It’s a lot of different things. We do not do any online sales. I do not ship anything. It’s all I can do to keep my regular dry goods and everything else ordered.
PPN: What challenges and opportunities do you see ahead?
Murphy: Because of supply chain issues and the cost of materials going up, being able to find the enclosures and supplies that we recommend at a reasonable price has been a challenge. We’re still trying to keep our prices at a point where the average customer, especially a first-time buyer, can afford it. It can be a little hard on our end to be able to say, this is the cage we recommend, but here’s the price on it, which is why we try to not do as high of a markup on certain products, just so that people don’t feel so overwhelmed.
I don’t know the exact numbers, but it’s something like for every dollar spent at a local business, 70 cents or 80 cents of it recycles back into the community. That’s why a lot of our bird toys are made by local people. Our cages are made locally. We try to do as many things in house or as close to in house as we can to help offset rising costs.
Nelson: We had a 9,000-square-foot store and we had a fire two years ago, so we’ve been functioning crammed into 1,200 square feet of space. We actually won PPN’s Retailer of the Year Resiliency Award this last SuperZoo. It means we were too stupid to quit.
I’m seeing more pet humanization. I’ve been doing this for 40 years. I see more of that than I remember in the past. Even in my rural industry, there’s that market. People are paying more attention to what they’re eating and what their animal is eating, and how they’re caring for their animal. It’s happening a lot more.
Herron: In the herp category, bioactive setups are huge. We’ve been doing that now about two years. That’s just doing really well. That is an area that is going to continue to increase. Early on, I made the decision not to try to reinvent the wheel, so I brought the Bio Dude’s line in. I use him as a resource and to educate customers above and beyond what we do. That’s worked well for me. I see that as a big opportunity.
With small mammals, we sell a lot of Oxbow and all the enrichment [products]. That’s the buzzword in small animal. With birds, it’s the same. People are focusing on interaction and enrichment.
Hoover: We have had issues here lately with staffing. We were very fortunate the last couple of years in that we had a well-seasoned staff. But a few have moved away or graduated college. That’s been a critical issue. It is difficult to find people who are knowledgeable with animals and patient, who know the right questions to ask people. Fortunately, I have an amazing manager who’s been with me for 20 years. So between him and me, we manage.
PPN: What’s your prediction for 2023?
Murphy: We’re probably going to see more of a leveling out, because during the pandemic, people were buying more animals. They were at home and they wanted the companionship. I don’t think we’re going to see a huge dip. It’s just going to plateau a little bit. People who still have animals will still buy more products, better products, more enrichment products and more bioactive stuff.
Overall, it’s going to come down to rising inflation costs, which, if the Fed can offset that with interest rate hikes or whatever they’re going to do, we may be able to see a better outcome. Overall though, our store is still doing really well. On a good weekend day, we’ll still see a couple thousand people walk through here.
Nelson: There’s still going to be strong interest from the public next year, so I think there will still be a strong market. Our challenge is going to be acquiring inventory at a [competitive] price or at all. More so than in the past, that’s going to be the predominant challenge. We’re also up against the fact that there are more avenues now than there were for the exotic [segment]. There’s going to be market for supplies for exotics, even if we’re not selling that many exotics. There is a lot more opportunity for growth and add-on sales by having a large selection of product. My business plan is to offer variety.
Herron: The industry is going to continue with slow growth. During COVID, my sales were more than doubled in that period. Having that fresh in my memory, I’m down obviously from last year, but I’m up from pre-COVID. That’s what I’m using as a barometer, and not the anomaly that was COVID. I expect to see a steady increase in the exotics areas—nothing crazy, but an increase. If bird breeders bring their prices down to something more reasonable, I think that category will continue to grow. But right now, it’s stagnating.
Hoover: We do what works for us. We’re concentrating more on small pets that are easier to take care of and easier to find. We’re doing a lot with reptiles because that’s something we do well and are knowledgeable about and can breed on our own. We don’t have to rely on someone else. The national trends aren’t necessarily going to be the trends for us. We’re going to do what works for us in our little corner of the pet industry. We’re focused on streamlining and sticking with what works best for us here.