Nonfoods Talk: A pet story

The pet category offers retailers the potential for huge sales and profits, but they have to be willing to get into the game.

The numbers are staggering. According to the U.S. Census Bureau, more than 43 million American households own a dog and about 37 million households own a cat. And, according to the federal government, the pet industry—ranging from pet food to pet supplies—accounts for nearly $70 billion in revenue at retail each year.

That is only the half of it. Industry information shows that consumers who own a pet visit a mass retailer more often and are much more likely to spend more money at the retail stores they visit.

So what are you doing to make sure that you reach out to those people who own a cat or dog, or even both? More importantly, how are you making sure that enough of those billions are finding their way into your company’s coffers?

Unfortunately, a number of grocery retailers have either not reviewed their pet strategy in recent years or have failed to update their pet aisle in years or even decades. Yes, virtually every supermarket carries pet food and usually places the segment near the middle of their center store section and most supermarket merchants have a decent assortment of pet supplies and toys. But most grocery retailers still trail the major pet chains such as Petco and PetSmart as well as Walmart and Target in the emphasis they place on the pet category.

That is not to say that merchandising the pet segment is easy. Suppliers, sensing the growing popularity of the pet section, have proliferated in recent years, with some industry observers pointing out that dozens of new companies, featuring scores of new products and brands, have invaded the marketplace. A trend toward natural and upscale merchandise has only forced the more savvy retailers to search for new ways to include the number of products needed to properly stock a pet section. “Just stocking products from the five largest pet food companies and the two largest pet supplies companies can take up an entire aisle,” one retailer quipped, just half in jest.

But the pet category is worth the trouble. While the pet food segment may not provide the best margins, its turn rate is so strong that it makes up for any low margins that might be offered. Pet supplies present retailers with the opposite dilemma; strong margins but a relatively slow turn rate. Still, there are enough segments out in the market, including flea and tick items during the spring selling season, shampoos and some pet toys, that retailers can create a pet supplies department that will substantially benefit their bottom line.

The key, of course, is getting the right products on the shelves. In pet food, Iams and Purina are must-have brands. In pet supplies, the same can be said for Hartz Mountain, Nylabone and Sergeant’s. But there are other companies as well that are producing unique merchandise that can spur incremental spending by a consumer hungry to give their pets the products that will make them happy; or at least make the consumer happy thinking that their pet is happy.

Retailers, working with suppliers, must determine what those products are and they must figure out a pet section that meets the needs of their shoppers in each store. That obviously also means having the right products at the right price-points for their individual store demographics.

It also means creating a pet department that stands out in a crowd. Retailers must ensure that the entire department has a visible place in the retail footprint and that it is supported by strong in-store promotional efforts.

Seth Mendelson can be reached at  646-274-3507, or smendelson@groceryheadquarters.com.

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