Part I in a two-part series on the recession’s effect on local pet food and product businesses and on local animal shelters and rescue groups
The global pet food and product industry appears to be riding out the recession and reaping increased sales. Locally, it’s been more challenging, with merchants seeing more sales in consumables—pet food and treats—than in the past when hardgoods (products) were strong sellers. It looks like Puddles better save her jeweled dresses and rhinestone studded collars for special occasions and not mess in her miniature sofa—it will have to last a while.
With 62% of U.S. households owning a pet, the pet food and product industry sees these households as a reliable market with a growing demand for high quality products. See 2009-2010 APPA National Pet Owners Survey. Almost $28 billion was spent in 2009 in the U.S. on pet food and supplies.
Pet Food Trends
“The strong showing for pet food overall in 2007 and 2008 reflects the switch to higher priced products including natural and organic varieties, according to Packaged Facts’ January 2009 report, … Despite their small size, all of these “alternative” pet food types are growing significantly faster than the 5%-6% annual rate of sales increase in the pet food market as a whole. Of the various types of alternative petfoods, organics enjoyed the fastest gains from 2003 to 2007, posting a 48% compound annual growth rate.” www.petfoodindustry.com/ViewArticle.aspx
Chairman of the Interzoo Exhibition Committee (an international product expo), Hans-Jochen Büngener, expects two main trends: “Dependable quality at prices geared to target groups in all segments and many new products in the health and fitness segment.”
Other analysts corroborate these trends, noting that consumers who exuded fear in 2009 are recovering, choosing to make value-based purchases for their pets. The so-called green market is sweeping the pet industry, just like others, as pet product consumers become more educated and selective about where their pets’ products are made and how.
Small businesses in the St. Charles area have been hit by the recession’s punch. Those businesses specializing in pet food and pet products are no exception—some succeed and others fail. Those businesses that continue to succeed, or even exist, offer unique products and services.
The High-End Challenge
Wet Nose, with locations in both Geneva and Oak Brook, Illinois, is a high-end pet boutique. Wet Nose offers high quality food and products which are cruelty-free, eco-responsible and organic, when possible. Owner Sheila Spitzer says, “In the past, “consumables might have been 45% (of our sales); now (they’re) 70% of our sales. … More people are buying natural products … profit margins are not as high. … We’re still carrying t-shirts and dresses (that are) price-point conscious and we have tripled our collar and harness selection.”
In considering whether she agrees that the pet industry is recession resilient, Spitzer says, “I think it depends on where in the pet industry you’re at. … We’re a little more of an upper-end boutique that sells natural products. We’ve definitely seen our clients have difficulties. A handful have lost their jobs and are looking for ways to cut back. For us, people are still doing natural foods, natural supplements, but they might not be doing as much of the fun things. We don’t see as many people buying cute little dresses or t-shirts maybe. They’ll skip on a toy and decide on what’s important—spending money on their pets—but they’re choosy where they are spending it.”
Spitzer says they don’t need to jump on the green bandwagon, since “We have always been green.” Owners Sheila and Joe Spitzer commit to researching each product they sell, including the store’s own cleaning products. In an effort to scale back and be true to their green nature, the Spitzers researched and redesigned a more economical, recyclable shopping bag in place of the beautiful, high-end—but non-recyclable—bags their customers had come to love. The new bags should be in stores in the next two months, Sheila Spitzer says. Spitzer says it didn’t make good business sense to keep spending money on expensive bags when profit margins were narrowing.
Wet Nose aims to be a resource for its customers by researching and maintaining a list of recommended businesses for various pet-related needs, such as trainers, chiropractors and holistic veterinarians. Pet service providers often drop off their business cards seeking an alliance with Wet Nose. But the Spitzers don’t just rubber stamp these business owners; Joe Spitzer personally researches each business by checking references before deciding to recommend it to their customers. “We pride ourselves on being a resource for our client,” Sheila Spitzer says.
“The economy has been demoralizing, depressing … we’re kind of sick of it. We want our clients to feel inspired and feel there is hope and promise.” Sheila Spitzer adds, “We’re actually developing some Wet Nose products …with ingredients that are great for dogs with allergies. It’s still in the prototype stage. We have a lot of things up our sleeves.”
Sheila Spitzer says they have very high purchasing standards and do not carry products imported from China. “We’ve said no to some products … if we feel it’s not good for your pet, we won’t carry it,” Sheila Spitzer says.
The Broad-based Approach
One major competitor is pet industry giant, PetSmart, which has four stores within a half-hour’s ride from Wet Nose in Geneva: South Elgin, Geneva, Bloomingdale and Wheaton. With 1,149 stores through the U.S. and Canada, PetSmart has saturated the pet product market. Able to offer competitive pricing on pet food, treats, collars, crates, services and the like, PetSmart continues to dominate the industry, realizing increasing profits since 2007, while other merchants have suffered or remained flat.
PetSmart’s sales statistics for 2009 reveal an increase in sales of consumables for the last three years: “Consumables merchandise sales comprised 53%, 52% and 50% of our net sales in 2009, 2008 and 2007, respectively. … Hardgoods merchandise sales comprised 34%, 36% and 38% of our net sales in 2009, 2008 and 2007.” See PetSmart’s 2009 Corporate Annual Report.
PetSmart attributes part of its success in its ability to locate its stores in areas “at sites co-anchored by strong destination mass merchandisers and typically are in or near major regional shopping centers.” See PetSmart’s 2009 Corporate Annual Report.
PetSmart President and Chief Executive Officer Robert F. Moran states in the 2009 Corporate Annual Report, “Our strategy is to attract and keep these customers by becoming the preferred provider for the Total Lifetime CareSM of pets.” PetSmart stores offer approximately 10,000 distinct different brands, including nationally recognized brands and their own proprietary and private label brands. They bolster their sales by offering pet services on site, such as boarding, grooming, training, daycamp and veterinary services through affiliate Banfield Animal Hospital.
The Personal Touch
Lucky Dog in St. Charles—now known as Lucky Paws—hasn’t been so lucky. Owner Dan Gleason said he chose a downtown St. Charles location for Lucky Dog after careful consideration. Modeling his store after his aunt’s natural pet food store in Crystal Lake, Gleason expected success to follow. Soon after opening, however, the St. Charles First Street redevelopment project began and the demolition was right next door to his Lucky Dog Main Street store. Gleason says, “it was supposed to have been completed a lot sooner,” but the recession seemed to slow down the building progress which made him decide to close.
Lucky Paws—Gleason’s new-and-improved venture—allows him to still provide high quality pet food and treats to his customers with the added benefit of free home delivery—all for the same prices they paid at Lucky Dog. “The upside is great—on a personal level, with having a new baby, it has allowed me to work from home during the day and go out a few nights a week (for deliveries) and still be able to provide the good healthy natural food at the same costs at the store,” Gleason says.
Gleason has developed relationships with his customers and is able to help them with pet health and behavior concerns. Gleason says, “I’m always available to answer any questions. If I don’t know, I know where to go to get the best information … for alternative ways to go about things.”
Gleason sees his business model capitalizing on the ease of home delivery with customers being on a set schedule so they don’t run out of pet food. Another benefit, Gleason says, is that “I order on a weekly basis. Food is always fresh. … it hasn’t been sitting on shelves … and it’s of the highest quality.” Gleason delivers to customers in St. Charles, South Elgin, Elgin, Geneva, Aurora, Wayne and Carol Stream.
Focusing on the home-delivery pet food business eliminated Gleason’s overhead and need to have shelves filled with product—that may or may not get purchased. It’s difficult to carry enough products to cater to the consumer’s broad tastes, Gleason says. He still offers natural and organic pet food, treats and supplements through his Lucky Paws home-delivery service and anything that any of his distributers might have, he can get.
Dan Gleason of Lucky Paws says, “In a store, you bring in a new product, you’ve heard it’s very good, (but you) don’t really know if it will move or not. There’s a lot of pressure to sell or … it’s a waste financially. … You have to pick and choose what you offer. Now, I can offer a full array of anything that any of my distributers carry. I’m able to meet a lot more needs for folks.”
Gleason doesn’t try to compete with the PetSmarts of the world—he’s more interested in meeting the specific needs of his customers where customers call him—tell him what they want—and he gets it.
Today, pet owners still want to spend money on their pets—and it’s up to pet food and product merchants to help them spend it by making high quality products available at competitive prices and offering services to harried consumers.
Lucky Paws owner Dan Gleason may be reached at: email@example.com
Wet Nose locations:
Geneva Commons Drive
Geneva, IL 60134
Oak Brook Promenade
3041 Butterfield Road
Oak Brook, IL 60523