Crowning Times for Pet Products: Owners shell out $63B a year

If PetSmart is any indication, Springfield-area consumers have a penchant for purchasing pet products.

PetSmart corporate officials say its store in Primrose Marketplace finished in the top 10 performing stores among nearly 1,500 nationwide this past year. The sales activity prompted PetSmart to build a second location in town, a $2 million store that opened in the fall.

“We are seeing a trend in humanization and ‘premiumization’ of pets, which is fueling the pet industry overall,” said PetSmart spokeswoman Sarah Huether via email. “Pet parents want to treat their pets as true members of the family.”

A private company, PetSmart has around $7 billion in annual revenue, according to Forbes, and its expansion echoes national trends.

Pet products companies report steady growth of about 5 percent a year for the past few decades, according to American Pet Products Association. U.S. pet industry sales were estimated at $62.8 billion for 2016 and $60.3 billion in 2015. That’s up from $17 billion in 1994. Industry experts don’t expect growth to slow down, particularly with a robust millennial market of pet owners set on pet pampering.

According to a PetFoodIndustry.com survey, nearly two-thirds of millennials are pet owners and among those who aren’t, 43 percent hope to have a pet in the future. Sixty-four percent of those surveyed plan to spend more on pet products than they did last year. Also, 52 percent of millennials claim they would rather spend money on pet products than buy things for themselves, compared with 39 percent for older pet owners.

The pull of pets
Large corporations have seen the dollar signs in the pet industry. With forays by such companies as Nestle, Mars, J.M. Smucker Co. and Colgate, The Washington Post describes the moves as “the McDonaldization of American pet food.”

The J.M. Smucker Co. (NYSE: SJM) made its big play with a $5.8 billion acquisition of Big Heart Pet Brands in February 2015. The price tag included $2.6 billion of net debt, and Smucker’s now owns such brands as Meow Mix, and Kibbles ‘n Bits.

Smucker Co. stock has ridden the wave: Shares were around $22.25 in September 2000 and now post a 52-week range of $117.36 to $157.31.

Then there is candy maker Mars Inc. – a $33 billion company ranked seventh on Forbes’ America’s Largest Private Companies list – that created a pet care division and now has five billion-dollar brands including Pedigree, Iams and Whiskas.

Even with the big dogs in the fight, smaller local companies are making inroads.

Dave Hayford, co-owner of the Tether Tug dog toy, said there’s room in the market for unique products. The local invention, for instance, is anchored in the ground and consists of a rope on a flexible fiberglass stick capable of bending more than 90 degrees.

The Tether Tug is now sold in around 200 retailers nationwide, he said.

“It’s a lot harder for people who are coming in there with a boutique idea or a cottage idea: ‘I want to make clothes for the dog.’ Well, there are 50 other companies out there making clothes for dogs,” Hayford said.

Key to Tether Tug’s advancement, he said, was partnering with the right companies early on. The top one was Coupaw, what he described as the Groupon of the pet industry.

“Coupaw generally will run a promotion for about two weeks, and we’ve been on with them now for about 18 months because we keep performing for them,” he said.

The product then gets in front of other wholesalers, distributors and online accounts that want to start selling Tether Tug.

“They opened up a lot of doors for us,” he said.

Healthy sales
Now 4 years old, the company is beginning to close some of those doors. Amazon, which initially helped Tether Tug, began hurting the brand because its wasn’t able to consistently sell at the minimum advertised price.

“The way Amazon is set up everyone can hide and that’s a problem,” Hayford said.

Hayford and company recently emailed 30 sellers on Amazon asking them to remove Tether Tug from their websites. Tether Tug now is the only company selling the product on Amazon. But when one sales avenue dropped off, another picked up.

Tether Tug was on the shelves at Springfield Sam’s Club over the holidays. Through Sam’s Road Show program, Tether Tug didn’t sell out locally but fared well enough to extend the relationship.

“They bring in products for two weeks that aren’t going to be in-line, things they aren’t going to carry regularly,” Hayford said. “They have 500 stores and we are probably going into 150 of them, but in two-week spurts.

Also, local shopping trends indicate pet parents are more aware of healthy options.

“Overall, there is a push for higher quality,” said Claire York, store manager for locally owned PetsWay on Battlefield Road.

York said there is more of a push for locally made products – not only because pet owners want to support the local economy, but also because they are scared to feed their pets foreign products.

“People will make sure their dog eats something way more nutritious than what they are putting in their own mouths,” Hayford added.


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