Supermarkets have become home for the family pet.

Supermarkets have become home for the family pet. Long the primary source for pet food products, food stores are increasing their foothold in the $2 billion pet supplies business, simply by giving the category more room in their stores and pairing it with related food items.

The result is a pet care war between all sorts of retailers and online entities. Supermarkets, some say, are actually faring quite well in this struggle, particularly stores that carry more SKUs and make consumers aware of what they have to offer. Still, food stores trail mass merchandisers in this business. Wal-Mart, Kmart and Target each have made big commitments to pet care, helping the channel garner about $1.5 billion in annual sales.

"The supermarket industry has done a great job in many areas building their pet supplies business," notes Tony Buono, vice president of sales and marketing for industry leader Hartz Mountain, based in Secaucus, N.J. "Those supermarket retailers who are willing to give pet supplies the right amount of space and back it with support are reaping huge benefits in terms of sales and profits.

"This is a very healthy segment right now," he adds. "Today, the consumer has a lot more disposable income and it is a graying population with the aging of the baby boom generation. Those factors are geared toward greater pet ownership and more emphasis on purchasing high quality pet foods and pet care items."

Many supermarkets, aware of this trend, are expanding their pet care departments and upgrading their assortments, Buono adds. Segments within the pet supplies category have been productive during the past 12 months, with sales of pet food in the non-dog/cat business leaping 14.4 percent, and sales of pet needs for the non-dog/cat group growing by 8.6 percent. Dog/cat needs products posted similar gains of 8.4 percent, and rawhide dog chew sales grew 4.1 percent for mass merchants.

Retailers and suppliers expect supermarkets and mass merchandisers to become larger players in the pet business over the next six to 12 months. The impetus, many say, is the decision by Procter & Gamble to make its premium Iams pet food products available to mass market outlets. "That will create a lot of excitement in the grocery channel," says Joel Adamson, vice president of marketing for Sergeant's Pet Products, based in Omaha.

Mark Johnson, vice president-sales and marketing for T.F.H. Publications Inc., Neptune, N.J., says P&G's decision could encourage a new group of consumers to visit the supermarket for their pet care needs. "A lot of the business is related to impulse and this recent change by Iams has brought more people shopping in the stores," he says. "That activity has definitely impacted us in a positive way."

Buono says Iams availability in supermarkets will add another store format where many consumers purchase their pet care needs. "This is going to make it much easier for the consumer to justify buying pet care and pet food items in a mass-market outlet," he says. "Iams is a specialty product that suddenly is available in a multitude of locations."

Cecil Campbell, vice president-sales and marketing for F.M. Brown, based in Sinking Spring, Pa., thinks supermarkets have an excellent opportunity to play off the Iams move to build sales category-wide. "There has been a lot of emphasis and promotion on pet supplies in general. Perhaps that's due to the fact that a lot of the market is being focused so strongly on mass merchants and grocers," he says. "The decision by Iams will drive a new type of customer base for both of these stores. I think you will see expanded traffic because of Iams, and retailers are going to have to keep people interested by offering a positive shopping experience?not just have them leave the store with a bag of Iams."

Others agree. "Clearly, the mass market will benefit from increased traffic flow as a result of the Iams decision to go into the mass market. It's going to generate new customers and new volume for the category," says Susan McCann, marketing director for Ethical Products Inc., headquartered in Newark, N.J. "Several mass merchants have come to us to supplement the assortment they already have. They really want to wow their customers by offering them some of the pet products that were previously only available at pet specialty stores."

At the same time, supermarket retailers appear much more open to trying new products, particularly since consumers are also eager to experiment with new items. "Growth in the category is being driven by the higher levels of disposable income. People are spending more money on their pets and they are willing to pay more than in the past," adds Mark Hirschberg, president of Multipet International, Carlstadt, N.J., which specializes in pet toys such as the Pet Mouse Woolly Bully wool ball.

"I also think there is more creativity in the products themselves. They're more appealing and more sophisticated. That goes along with the greater sense of caring people have toward their animals. Lifestyles have changed. There are now more single people, and pets become almost like surrogate family members?and that's a broad-based pattern," he adds.

Joe Sporn, president of Yuppie Puppy Pet Products, based in New York, sees the same market drivers at work. "The economy is strong, people are adding more pets, and they are responding to the efforts of Wal-Mart and Target, which are adding products with a prestige image. And both of those chains have expanded their pet section," he says.

Yuppie Puppy is a perfect example of a company delving into alternative products. The company specializes in dog halters, the world's first totally adjustable leash for walking two or more dogs, and its new Pet Locker, which provides easy storage in one convenient place.

Dogs and cats are still the pets of choice, with various industry estimates putting registered pet populations in the U.S. at 52 million dogs and 51 million cats. However, the actual totals, including unregistered pets, could be double or even triple that number for dogs, and perhaps also for cats. Regardless of the choice of pet, nearly seven out of 10 U.S. households confer part of their affection and their income on a pet, according to one industry executive.



Glamor Puss

Harvest Ventures is another company playing off the trend to upscale merchandise, even with a category as unglamorous as cat litter. The St. Bonifacius, Minn.-based company, which has done well with its Crystal Clear Litter Pearls in specialty stores, is shipping Ultra Pearls to mass retailers, including supermarkets, this spring. The product, made from silica sand?which is said to absorb liquid faster than more traditional forms of litter?retails for $9.99 for a 3.8-liter bag, about $2 less than Crystal Clear.

"Our product is designed to take the smell completely away and it lasts for an entire month," says Dan Schlueter, co-founder of Harvest Ventures. "When it was first introduced, many retailers put us into the alternative cat litter group. Now, we are viewed as a completely different category, in addition to clay and clumping."

Perhaps more importantly, Schlueter says his brands offer retailers more profits than traditional cat litters, which are notorious for offering very low margins while taking up a great deal of space on retail shelves. "We think this brings a great deal of attention back to the cat litter category and can serve to get consumers excited about the segment again," he adds.

The product is backed by consumer advertising in cat publications, an in-store merchandiser holding 48 units and a demo kit. Additional SKUs, including a 7.2-liter size, should become available by the end of the summer.

Sergeant's has added a new item to its PreTect Squeeze-On Flea and Tick control product and is repackaging the entire line later this year. In addition, the company is continuing to place an emphasis on its treat line with new plastic packaging, instead of mesh, for the Old West brand of treats. The Uncle Sam's line of treats has been expanded to include two items, a 4-ounce Tender Chips and a 10-ounce Pig Ear Strips. Uncle Sam's Shrimp-Purr cat treats have been re-introduced after a number of months because supply was unreliable at first.

Sergeant's is also placing a huge effort behind its health care items. The company has just introduced two SKUs of pet treats for overweight dogs and cats, and is also promoting its Vetscription Feline Uri-Health urinary health maintenance product.

"We remain very active in assisting retailers with category management, planogram development, marketing alliances with other pet products suppliers and participation in industry activities," says Adamson. "We are playing a leading role in the industry effort, for example, to develop and standardize our manufacturing methods that assure consumers that pet treats are safe and free of microbial contamination such as salmonella."

OurPet's, based in Fairport Harbor, Ohio, is emphasizing products geared toward the health and wellness of pets. The company offers a line of cat, dog, and wild bird feeders and interactive toys. "Our goal is to be a leader in innovative pet care products for the health, comfort and safety and enjoyment of pets," says Glenn Godley, executive vice president of sales and marketing. "We have a health advisory board to determine what pet needs might be filled with specific product development."

OurPet's price points range from $1.99 to $59.99 for a deluxe deli dome, an interactive talking cat feeder. The Store 'N Feed is a feeder that adjusts in height from eight to 12 inches and stores up to 20 pounds of food. It has a suggested retail price of $19.99 to $29.99.

SageKing, based in Bradford, Pa., is offering CattyCorner, a covered, sifting cat litter box that was revamped from an older model to include more color options, better packaging and a new name. The covered box is designed to contain odor and litter scatter. Its triangular design allows consumers to fit the box into a corner. It retails between $34 and $39. "We have come out with fresh colors that are geared toward today's decor," says Amy Sage, the company's vendor relations director. "We did research to see what is current in household products."

Ethical Products is a full-line manufacturer and importer with more than 2,000 SKUs, ranging from dog and cat toys, to canine fashions and feeding dishes. The company is introducing about 70 SKUs, says McCann. The company is also promoting its Cy-purr Mouse, Fashion Pet Best Vest, its Tennis Ball endcap and both its Quickdraw McPaw and Fashion Pet power wing, she says.

"We have won many awards for best new product introduction over the years. In fact, we were voted best new cat toy by the [American Pet Products Manufacturers Association] for the past four years in a row?which is unprecedented. This year, we're introducing toys that will have chip technology, with light, motion and sound. It's a very novel introduction; nothing like it has ever been done before," McCann asserts.

PetAg Inc., headquartered in Hampshire, Ill., will introduce up to 25 new USA Rawhide items this year, says Ray Zamora, director of product development and marketing. "We have a new manufacturing plant we opened in Chicago, so while others may say their beef hides are American?even when they're shipped off to Taiwan to be processed?ours is bought here, made here, and processed here from start to finish. Ours is a thicker, fresher hide, and we have a USDA-certified facility," he notes.



In the Doghouse

T.F.H. Publications has had sweet success with its Nylabone and Flexibone brands edibles, ranging from strawberry, peach, banana and watermelon fruit-flavored dog chews to spinach potato-puff and corn dog chews. Now the company is introducing the Nylabone collapsible dog house. In all, there are three doghouses, each intended for a different size pet. "The doghouses were designed after extensive consumer research. Each of them can be set up in seconds, without tools, and can be knocked down for easy transport," Johnson says.

F.M. Brown will unveil more than 30 new items, reflecting another active year in new product development, but still less than half the number it unveiled last year. Key items are Fruit Bites and Veggie Bites, treat bars and treat sticks. Campbell says the company focuses much of its efforts on consumables for bird and small animals, as well as a product line for wild birds.

The company caters to those 83 million people who feed wild birds, and the 50 million-plus who buy field glasses to use in bird watching. There is also a strong correlation between bird owners and bird watchers, Campbell says: 53 percent of those who own a domestic bird will feed wild birds.

"The small animal and bird area is a huge, growing category, and we are seeing a lot of growth during the last two years in pet stores and the mass channel. These products are commanding a greater amount of space because of the turns and the sales they deliver. In some pet stores, 25 percent of the product assortment could be for birds and small animals, with about 10 to 15 percent in the mass market. Our products help retailers achieve their goals because the products themselves are consumable?they are eaten and must be replaced, which drives repeat sales and repeat business," says Campbell.

Multipet International is one of the rare companies to have succeeded in creating toys that appeal to both children and pets. "We won an award for the best-selling pet toy at the show, the Wiggly Giggly ball, and what's interesting is that this product is also in the toy market as well," says Hirschberg. This year, he says Multipet is introducing a line of footwear for dogs called Look Who's Walking. It's a plush toy that resembles cowboy boots, slippers and penny loafers, and is priced at $6.99.

For those moments when the family pet seems less cute, as with the damage and the mess dogs and cats can cause from accidents, Leo Malantis, president of Millennium Lawns, has some solutions.

"We have a product called Dogonit! that will take care of dog urine burns on the lawn," he explains. "It's a soil treatment that takes the salts out, and repairs the grass without resodding. And for pet odors, he offers G-Whiz Naturalizer, an intestinal deodorizer that is administered in the pet's food or water. In case of wetting accidents on carpets, Malantis says the G-Whiz product will prevent the stain because it takes care of the ammonia.

Millennium Lawns, headquartered in Bedford Park, Ill., offers Trash Guard and Keep Away, trash can liners with a mild mint scent that deter family pets and raccoons from scavenging through garbage cans. While declining to provide details of some new products in development, Malantis describes some organic-based products which rely on "beneficial organisms" that he says will offer some dramatic benefits to large consumer groups.

As the company name implies, Lassie Pet Products, a division of Carter Wallace Inc., in Princeton, N.J., specializes in products for dogs. "We have more than 30 SKUs primarily in training aids such as house-breaking pads, grooming products like shampoos and brushes, and nail trimmers," says a spokesman. The company has no plans to launch new products under the Lassie brand at this year's show, the spokesman adds.



Retailer Support

Pet supply companies support the sales goals of their retail customers in a variety of ways?everything from the traditional point of purchase signage, self-contained, free-standing displays, attractive packaging, and occasionally advertising.

Ethical Products creates special in-store displays that focus shopper attention on key products, without stressing store-level resources. "We are big on endcap displays. We recently used 30 different items on our tennis endcap. We packaged all the components in one carton so that all the store had to do was unpack the package to have a fully merchandised display," says McCann.

"We also use a lot of themes, for spring, winter and Christmas. Winter could be apparel and clothing, for example. We provide the signage and display and the reorder tags. All we need is an endcap," she observes.

PetAg, meantime, supports retailers' goals with a full signage, full POP program. "We are very progressive in our displays," says Zamora. "We partner with retailers so that if they are successful, then we are."

F.M Brown's strategy of promotional support for their products and their retail partners includes a yearlong calendar of events. "We promote specific items each month that work in conjunction with each other to attract attention, whether it's in birds or small animals categories," says Campbell. "We try to sell shoppers a major item and then give them a reason to make another purchase down the road, such as 'buy this food and get this treat free.'

"It's been very successful and we are bringing people into the bird and small animal categories. We also advertise in some of the consumer related magazines, and all of our products have consumer help lines, which can also direct shoppers to stores."