Pet Retailers Reveal Major Concerns
While pricing parity remains a huge concern within the independent pet channel, it is far from the only important issue on the minds of this embattled class of retailers. That’s the major point I took away from a large retailer gathering that took place recently.
The day before SuperZoo kicked off in Las Vegas a couple of weeks ago, I was lucky enough to be the only member of the press invited to sit through the entire two-hour meeting that brought together more than 30 retailers representing approximately 1,400 pet stores to discuss common issues and share ideas on how to improve conditions for a retail channel that faces increasing pressure from outside competitors, particularly on the internet.
Not surprisingly, a significant portion of the meeting focused on the pricing policies and channel strategies of key vendors—particularly in the pet food segment. Of course, Chewy.com was a big part of that conversation, with retailers applauding the decision that three pet food manufacturers—KLN Family Brands, Champion Pet Foods and Fromm Family Foods—made to pull their products off of the online deep-discounter in the wake of its sale to PetSmart.
But talk about predatory pricing and vendors’ role in stopping the practice did not end there. Retailers in the meeting stressed the importance of working with vendors that not only have well-designed MAP and MRP policies in place, but also strictly enforce those policies. Such partnerships have proven to be quite successful for everyone involved.
In fact, market research firm GfK gave a very interesting presentation that showed how pet food companies that have demonstrated a commitment to the independent pet specialty channel, including installing policies that prevent price erosion, have enjoyed above average growth compared to companies with broader channel strategies and less controls on pricing.
Still, while working with the right vendors can go a long way in keeping the playing field level for independent brick-and-mortar pet stores, the owner of one prominent independent chain noted that blanket discounts offered by internet retailers (like the one Amazon offers on purchases made with its Amazon Rewards Visa Signature Card) will continue to make it difficult—if not impossible—for even vendors with the best MAP/MRP policies and enforcement strategies to completely stop online price erosion.
Speaking of Amazon, there was also discussion about the increased number of Amazon Dash Buttons from pet product vendors, which essentially allow consumers to push a button and avoid shopping at brick-and-mortar pet stores. Some of the retailers felt that manufacturers who invested in these buttons were in effect helping Amazon to go around their independent customers.
Another big area of concern expressed during the meeting had to do with protecting customer data. In today’s world of electronic marketing, many retailers are casting a suspicious eye toward vendors that are looking to engage consumers directly, either by selling direct via the internet or by handling order fulfillment on behalf of brick-and-mortar retailers.
While some of these vendors have made assurances that their priority will always be to direct pet owners to local pet stores, as one retailer pointed out, circumstances can change very quickly in the pet industry and there are no guarantees that such assurances won’t expire with a change of ownership or some other unforeseen development or opportunity.
With this in mind, a number of retailers are understandably reluctant to see the customer-data genie come out of the bottle. After all, once this information has been collected, it can easily be used to cut the middlemen—i.e., retailers—out of the equation completely. And nobody at the meeting wants to sign up for that.