Pet gets longer leash at retail - Pet Products Category Update

Discount Store News, June 19, 1995

When Ames Department Stores unveiled its new prototype last year in Mt. Pocono, Pa., one of the well-stocked departments was a full pet supply section. Ames president and ceo Joe Ettore called pet an important category for Ames because it draws customers, increasing store traffic.

Ettore's comment exemplifies the thinking of many mass market executives.

Pet supplies have also long been a core category at Wal-Mart, commanding a perimeter location in the front of the store. Caldor offers a full array of higher-margin supplies, such as dog houses and animal toys, in addition to pet food.

Discounters are going in-depth in the category to establish themselves as headquarters locations as they attempt to fight off encroachment by category killers. Expanded offerings also serve as much-needed margin builders to augment the slim profits most stores generate from pet food sales.

Pet owners are important customers to cultivate. According to research from the American Pet Products Manufacturers Association in conjunction with NFO Research, more than 56% of U.S. households currently have pets. Dogs alone number 54 million in the United States

The number of pets owned per household is on the rise. Today Americans own a total of 236 million dogs, cats, birds, small animals, fish and reptiles.

Those who own pets are also likely to be the kind of customers mass marketers are coveting. The average pet owner is married, lives in a house and is under 50. On average, annual household income exceeds $30,000.

Pet sales hit $1.8 billion in all mass outlets last year, up from $1.4 billion in 1993. Pet food sales rose in the nation's discount stores by almost 2%, according to IRI. Growth outpaced such categories as lawn & garden and housewares.

Discount stores enjoy strong sales in all pet categories. They account for 25% of dog food sales, up from 17% in '93. Discounters ring up 47% of pet toy sales. Discount store share amounts to 47% in the pet brush and grooming categories.

While pet food may be the item that draws customers into stores on a regular basis, many purchase accessories as well.

More than 62% of dog owners say they buy gifts for their pets--especially at Christmas. Forty-five percent of cat owners and 37% of bird owners say they do the same.

These customers are in the market for everything from dry dog food to rawhide chews and traveling cages.

Accessories are pulling 30% to 35% margins at discount stores, almost twice that of pet foods.

Manufacturers of pet toys and rawhide products have narrowed their price structure, focusing on best-selling items at entry and higher level tickets. There's a real shifting of pricing going on. Consumers are either willing to pay more for premium products or are shopping on price only," says Mark Johnson, vice president of marketing at Hartz Mountain. "The middle ground is dropping out," he says.

Among the pet items typically purchased are:

* Dry dog food, 85%

* Semi-moist dog food, 10%

* Flea/tick products, 70%

* Toys, 43%

* Wormers, 31%

* Vitamins, 9%

* Leashes, 91%

*Brushes/grooming, 84%

* Books/pamphlets, 42%

* Rawhide chews, 51%

* Beds, 45%

* Cage/traveling crates, 24%

And to get these items into the stores, manufacturers are developing merchandising vehicles, such as clip strips, which allow retailers to make the most of their limited floor space.

Discount stores that carry high-end niche items may attract those customers who are willing to pay a bit more to avoid the crowds at pet superstores. "I think there's a real opportunity in the marketplace for high-end niche products, whether it's in super-premium foods or natural, botanical products for pets," says Doug Jones, brand manager for Mr. Christal's Inc., a company that makes a natural-based flea shampoo. Jones says he also sees tremendous growth in skin and coat conditioning products, a trend that is trickling down from pet stores and veterinarians.

Hartz Mountain also recently launched a flea and tick control product this summer that is the first line of this type available at mass merchants. It takes a systematic approach to insect control and includes insect growth regulators, a hormone previously available only through vet's offices.

Michelle Meister, marketing manager at Doskocil Manufacturing Co., also has seen a trend toward "top-shelf" merchandise in discount stores. "These items are providing them with opportunities for greater profit margins as well as responding to their consumers' demands for such products."

Among Doskocil's products are the Vari-Kennel, a family of high-impact plastic carriers. The firm is also introducing this month the BarkHouse dog house. It features thick insulated walls, adjustable rear ventilation and an easy to clean interior.

Finding Space for Pet Carriers

As retailers expand their pet product assortments, they have come up with innovative displays that assist in getting more product onto the floor. Products such as pet travel cases are being merchandised on top of gondolas to make use of dead air space.

Manufacturers such as Doskocil are assisting by offering products that can "nest" inside of each other.