Q&A: PIDA's Steve King
Steve King, president of the Pet Industry Distributors Association, discusses the impact of consolidation among the industry's distributors, the health of the supply chain and the launch of the Pet Industry Management Conference.
In January, PIDA held its annual Management Conference. How did it go? What were some of the highlights? Are there any changes coming for future editions of the conference?
Steve King: Attendance at the conference was as strong as ever, even with all of the consolidation that has gone on among the pet industry’s distributors. This leads me to believe that overall distributor health is still good.
There is no question that we’ve seen an increase in participation among smaller distributors over the past few years. They realize that their competition today isn’t just another distributor that is in their region. With the growth of the national distributors and all the other ways that pet supplies can go to market, it has become a tough competitive environment. So, every distributor has to figure out how to distinguish itself in order to remain an important part of the channel. One way to do that is to get out of your office from time to time, and attend events that are specifically designed to help you be smarter about the landscape around you—and certainly the PIDA Management Conference is built for that.
The theme of the conference this year was, “Evolution, Revolution, Transformation.” We chose that specifically because we felt like what we’re seeing in the industry is an acceleration of the pace of change. Whereas it used to be evolutionary change that we experienced in the pet industry in prior decades, we’ve really seen more revolutionary change recently with the rapidity of acquisitions that have taken place. This is really transforming the industry to be quite different than what it once was. As such, the question becomes how do we, as business people—some of whom have decades worth of experience working in the industry—adapt to that changing environment?
Speaking of the changing environment, at this year’s conference we announced that Jan. 18-21, 2016, at the Loews Ventana Canyon Resort in Tucson, Ariz., we—along with APPA [the American Pet Products Association]—will be launching the first annual Pet Industry Management Conference and Supplier Trade Show. For the first time in the 47-year history of the PIDA Management Conference, we have now joined forces with APPA to host a new kind of conference for the industry. It will bring some of the best elements of what we had with the PIDA event—some of the things that has made it a successful conference for so long—and add the size and scope of APPA to create a much larger event for the manufacturers and distributors in the industry. It’s still going to be primarily focused on that manufacturer/distributor relationship, but it should be a much bigger event, from the standpoint of tapping into a much larger and diverse audience.
What we’re looking to do with the supplier trade show portion of the event is provide a forum for those companies that today really don’t have an opportunity to approach pet industry manufacturers and distributors, specifically, about their needs in areas such as packaging, software and equipment. It’s a way to connect suppliers with manufacturers and distributors. We’re excited about it and think that it is something that will grow as the event matures.
How are the pet industry’s specialty distributors doing? What are some of the major opportunities and challenges they are facing?
King: As I mentioned, I think the health of the industry’s distributors remains strong. Of course, much of the success of distributors is closely tied to the health and success of independent pet retailers. Some of the consumer trends that have been strong in recent years—organic and natural pet foods, high-end services, those sorts of things within the broader pet parenting trend that continues to grow—have driven success for retailers that have tapped into them, and it has been the same for our distributor members. I do see those trends continuing to grow, although maybe somewhat less robustly than in the past.
The biggest change for our distributors right now is related to phase two of consolidation—line justification and SKU justification. This is really just a fancy way of saying that distributors only have room for so much product in their warehouses, and there is so much duplication in the lines that they carry, so there is a jockeying that is going on right now for lines. That has probably been felt most acutely with pet foods, but it also includes hard-good lines. There is probably going to be more movement in that area than we’ve seen in the past. Lines that may have been with a distributor for a long period of time may not be in the future. There may be a shift, based on the changing competitive environment in each region of the country.
That is a disruptive influence, and it isn’t always pretty for those involved. For anyone who feels like they helped to pioneer and build a brand in their area, losing that brand can be difficult to deal with—but that is part of the reality we’re seeing today.
At the same time, there is no question that it will also create opportunities for both distributors and manufacturers. It’s not simply a matter of the rich getting richer; we’re going to see opportunities for brands that maybe hadn’t gotten the attention they hoped for in a particular region to have a distributor that can really focus on them and help them to grow in that area. It also has to be an exciting time for retailers, whose success depends—at least in part—on their ability to identify and bring in new products to keep their customers engaged. They will likely see more access to brands that weren’t available in their area before.
Do you expect more consolidation moving forward? Now that the industry’s three biggest distributors basically have a national reach, might we see some mergers between some of the smaller, regional players trying to stay competitive?
King: That remains to be seen. It really comes down to the funds available for that sort of activity. If the capital markets decide that the pet industry—and distribution, in particular—continues to be a place where opportunity exists to be successful, then yes, we’re probably likely to see it. But if most of the air has been sucked out of that by all of the activity that has taken place so far, it may be that ship has sailed to a certain degree, and we’re not going to see much more consolidation in the near future.
Speaking of the health of pet industry distributors, are falling fuel prices significantly helping them right now?
King: The short answer is yes. With all of the trucks that our members have on the road today, anytime you have a 40- to 50-percent drop in the price of fuel, it’s going to impact their bottom line. How that is going to translate to the cost of products remains to be seen. There are, of course, a lot of other factors that go into it.
Have there been any notable developments with PIDA’s Pet Store Pro free online retailer training program?
King: The biggest change that retailers are going to see with the program this year is some new content presented in a little different format than we have in the past. The first 24 chapters that we’ve had as part of Pet Store Pro are pretty comprehensive—in some cases, taking hours to complete. But what we’ve found through focus groups and surveys is that users would like more short chapters that expose their employees to a specific concept that they can learn in a 15- to 20-minute bite, as supplemental training.
The first module, which we’re introducing here at Global Pet Expo, focuses on suggestive selling. It’s intended for that salesperson on the floor working with customers, to help them generate add-on sales based on suggestions that they make for products that would supplement what the customer has already selected. It’s an exciting addition to the already comprehensive platform that we have and just one more reason for pet stores to use Pet Store Pro as part of their employee training.
In your opinion, what makes Global Pet Expo such a great platform for vendors, distributors and retail buyers?
King: To me, it’s kind of like the Consumer Electronics Show that descends on Las Vegas every year. Like CES, Global Pet Expo has become the place that everyone in its industry feels like they have to be because they’re going to see everyone they need to see, and they’re going to be exposed to every new product that is being launched into the industry. It is hard to find anyone in the industry, at any level, who would not benefit from being at this show.
Each year, PIDA organizes the educational track at Global Pet Expo. Can you tell us a bit about what we can expect this year?
King: We’ve really pulled out all the stops this year. We’ve tried to make Global Pet Expo Academy more accessible than ever to anyone who comes to the show. So, the first thing we did was make all of the sessions free to preregistered attendees. We do still have a modest onsite charge.
Another thing that we tried to do this year is expand the number of sessions that we offer and provide attendees with more choice. So, we have concurrent sessions running throughout the first two days of the show, and the morning of day three. And it’s not just a bunch of repetitive sessions; each seminar stands on its own as a new and distinct topic, so it will give attendees more choice than ever.
We’re also bringing back the mini-sessions that we debuted last year. They are these little 15-minute, single-topic segments that were really popular at the 2014 show.
Each year, we try to feature a mixture of experts from within the pet industry, as well as those from outside the industry—to see how their stories might translate into our world. Jay Goltz is one example of that and a new speaker for us. Jay owns a picture-framing store in Chicago and became one of the most successful retailers in that very specialized area. He has become a very accomplished speaker by relating to a broad audience some of the lessons learned through his business.
Jim McCann is another speaker that I would like to point out. We introduced his company, Spader Business Management, to the industry a couple of years ago when we identified them as an organization that helps retailers join together in these 20 groups to do benchmarking and peer review with non-competitors. We thought it would be great if they could do a seminar for retailers that aren’t familiar with the 20 Group concept and some of the insights these groups can provide.