Building on its reputation as an upscale food retailer, Wegmans is fast becoming a preferred destination for pet food and supplies.
By Craig Levitt
When it comes to choosing a retailer for their pet food and supplies, pet owners can be just like their furry “children.” Some have the fierce loyalty of a dog, while others can be as finicky as a cat. While price certainly plays a role, retailers that exhibit a commitment to the category can win this very valuable consumer.
Pet care is a category that retailers ignore at their own peril. Observers estimate that more than 60% of U.S. households have at least one pet, with dogs in about 45.6 million homes and cats in 38.2 million. Consumers spent nearly $50 billion on pet products (food, supplies, toys, etc.), in 2010, according to industry data. According to a recent report from Chicago-based Mintel, pet food sales have grown 14.2% since 2005.
While the category is strong, supermarkets struggle to offer shoppers the variety or pricing advantages that are available at other channels. However, unlike most of its supermarket brethren, Rochester, N.Y.-based Wegmans Food Markets’ pet selection is quite expansive and competitively priced. Combined with the fact that, according to Mintel, since the onset of the recession supermarkets pet food sales have outpaced other outlets, with an increase of 8.4%. As nearly 40% of pet owners currently buy their pet food at supermarkets, Wegmans is quickly becoming a destination shop for pet food and supplies.
Grocery Headquarters recently visited the Wegmans in Manalapan, N.J., to take a closer look at the upscale food retailer’s pet department. Like any retailer, success is partially determined by location.
This Wegmans in central New Jersey is the anchor store in a high-end shopping center located on a heavily traveled local highway. The retailer essentially services three towns that encompass a little more than 100 square miles. U.S. Census Bureau data puts the population at about 125,000, consisting of approximately 33,000 families and 345 housing units per square mile. The Census Bureau further reports that the median family income for the area is just under $100,000 per year, with a per capita income of just under $35,000.
Many of the citizens in the towns that Wegmans services are affluent families who enjoy the store’s upscale feel yet appreciate the competitive prices, hard-to-find products and wide selection. The store is regularly filled with shoppers eager to choose from fresh and regularly sought products and is often a place where friends and neighbors run into each other in the produce, deli or natural foods aisle and discuss current events.
Along with Wegmans, the shopping center includes a Target, Marshalls and Home Goods. There are also three restaurants: an Applebee’s, an upscale brunch eatery and an Italian restaurant. Other stores located in the shopping center include an off-price department store, cell phone store, picture frame store, upscale eyewear store, hair salon, tanning salon and nail spa.
Wegmans’ primary competition in the pet category comes from Target, which is the other anchor of the shopping center, as well as a PetSmart located in the adjacent shopping center. There are several other supermarkets that service the area, including a Super Foodtown and ShopRite.
In this particular Wegmans, the pet section is nestled in a corner towards the back of the store, the section itself is quite large and has a significant presence. Like many other departments in Wegmans, the pet section is a store-within-a-store concept. The section is made up of five mini-aisles, located directly across from the paper goods and soup aisles and next to the self-serve candy bins.
“They treat the pet section like they treat any other section,” said one shopper. “Like the rest of the store, there is a large offering of private label products, popular brand name products and harder to find niche products, which includes higher-end natural items.”
For shoppers who are not familiar with the store’s layout, the pet section is clearly delineated with a bright, cheerful 40-foot long banner splayed high across the back wall which can be seen from a good distance away. The banner reads “Wegmans All for Pets” and features images of smiling children embracing their pets. Other signage, raised overhead, directs pet owners to the dog food aisle, cat food aisle or litter aisle within the section.
Unlike other retailers that aren’t exclusively focused on pet food and supplies, Wegmans’ pet section was fully stocked, prices were clearly marked and there was a wide array of offerings. The products in the section were primarily dedicated to dogs and cats, with the exception of two endcaps facing the back wall that displayed various types of bird seed. There were no fish foods, aquarium or reptile items available.
Dog food products ranged from puppy to adult dogs and came in sizes up to 40-pound bags. Major brands such as Iams and Purina ONE were stocked, along with a natural and organic offering from Newman’s Own (which the PetSmart in the adjacent shopping center didn’t have) and Harmony Farms, as well as Rachel Ray Nutrish. There were several shelves of canned and dry cat food, including brands such as 9 Lives and Meow Mix, along with various brands of kitty litter. Like products in the rest of the store, the Wegmans brand was prominently featured within the section.
Grocery Headquarters paid three separate visits to Wegmans. The first, Monday afternoon, one of the retailer’s busiest times as the store is filled predominantly with housewives stocking up for the week, a Thursday evening after work hours, and early Saturday afternoon.
On Monday we spent about 20 minutes in the section, and while the section could not be classified as crowded, it did receive a constant flow of shoppers. Though Wegmans is known for its superior customer service, no store associates seemed assigned to the pet section and no help was offered during the Monday visit.
During the Thursday visit, there were more men in the pet section, most of which were purchasing dog food, likely a stop on the way home from work. On Thursday, when store associates were approached for help they answered all questions, providing information and demonstrating knowledge about the various brands offered and the differences among the products. For the Saturday visit, the store was once again crowded and the pet section enjoyed a steady stream of shoppers.
As customers roamed the pet aisles, Grocery Headquarters inquired about their shopping experience in the pet section. One female customer with her young son said that they shop weekly at Wegmans specifically for food for their dog, a 5-year-old black lab. The woman said that Wegmans is convenient, the prices are competitive with other pet food retailers and the selection provides them with what their pet needs. When asked if she also purchases non-food products, the woman said, “We get her bones and chew toys from Wegmans as well as shampoo and grooming supplies.”
Another customer, an older woman, was shopping for her two cats. She said that since Wegmans opened in the area she does not find the need to shop at other stores for her pet food and supplies. The woman also said that although some of the other stores carry similar products, her experience with Wegmans has been positive and she likes the small-store feel of the pet section.
While the majority of shoppers purchased either dog or cat foods and treats, there were a few shoppers perusing the aisles that contained various pet accessories. There was a wide array of leash and collars in different sizes and colors, bones and training supplies for dogs. Litter boxes and cat nip were also on display. Grooming products and accessories, vitamins, remedies, flea and tick treatments, food and water dishes and toys were offered for both cats and dogs. House cleaning treatments specifically designed to remove pet stains and pet odors were also prominently displayed.
While Wegmans cannot compete with PetSmart as far as selection, the food retailer was on par—if not better— with the pet superstore when it came to price. Perhaps even more surprising, Wegmans’ pet section was equal in size to that of Target, though Target did offer a larger array of exotic pet food. However, where Wegmans was fully stocked on each visit, there were a few low-stocked shelves throughout Target’s pet section on a Saturday afternoon. Wegmans prices were generally better than Target’s as well.
Charting a new course
These may be the best of times for the pet industry. According to The American Pet Products Association, dollar sales in the category have nearly doubled since 2001 to more than $50 billion in total sales.
However, changing consumer demographics may be threatening to upset the apple cart.
Most industry observers agree that the surge in pet care sales over the past 10 years has largely been driven by Baby Boomers who have watched their children leave the nest and have focused their attention, and discretionary spending, on their pets. As this generation begins their golden years, many observers expect this consumer segment’s pet ownership to dwindle.
Coupled with the fact that subsequent generations, as well as many of this country’s fastest-growing demographics—Hispanics, African Americans and Asians—are less likely to own pets and often spend less on the pets that they do own, it becomes apparent that fundamental changes may be needed in the way the pet care category is promoted to these consumers.
Another eye-opening trend is the variation in how much different age groups spend on their pets. According to a study conducted by The Nielsen Co., based in New York, last year pet-owning Baby Boomers significantly outspent pet owners categorized as Gen Xers or Millennials. For example, Baby Boomers spent an average of 80% more on pet food than Millennials did in 2010 (38% more than Gen X pet owners) and 22% more on pet care items (9% more than Gen X pet owners).
Observers say that although their spending trends well behind the Baby Boomers’, younger generations will become an increasingly important audience for the pet care market—particularly the Millennials, who have yet to reach their full potential, in terms of disposable income.
“With the current [state of the economy], Millennials don’t have as much disposable money as they would in a more robust economy,” says Jim Bilello, president and founder of US Marketing, Inc., a Chicago-based niche-marketing firm. “But as the economy comes back, we’re going to see Millennials with this disposable income that results in the type of upscale lifestyle that we’ve seen in the past.”