PET BUSINESS: How did you get started in the pet industry?
JIM FLIPP: I got my first pet retail job in 1983, when I started working the counter at Twin Cities Pet Supply, which was basically a distributor that had a store open to the public. Over the years, I graduated up from counter help; and in 1985, I took on a purchasing role that allowed me to develop contacts in the industry. Then in 1989, Twin Cities became a distributor for Bil Jac when it first entered the Minnesota market, and I became a regional sales rep for the company.
PB: You started with Chuck & Don’s in 1991, when it was a single-store operation. How has your role evolved, along with the company?
FLIPP: When I started with Chuck & Don’s, I would help Chuck [Anderson] and Don [Tauer] whenever and however they needed me. Then, when they opened a second store, I went over there and basically ran it for them. It kind of just took off from there. When they opened a new store, I would get it started and build the staff, and then I moved on to the next store opening.
Early on, we didn’t have a corporate office; Chuck would just come by [each store] in his car with a briefcase, drop off paperwork and pick up invoices for payment.
Eventually, after we had about three or four locations, we finally set up a little corner in of one of the stores where we could do things like input data into the system. Before that, we didn’t have a POS system, so we really had no way to track what we were selling, and we couldn’t track customers. I remember when we first started working with UPC codes in the mid-90s, and all of the information had to be hand-entered into the system. It was quite a task.
PB: How has going from a handful of stores to over 20 changed your approach to pet food buying? How do you accommodate variations between the different stores?
FLIPP: Our stores come in such different sizes—we range anywhere from 2,200 to 4,500 square feet—so different locations carry a different selection.
In addition, we have some stores in rural areas, while others are in cities, so that differentiates the product mix. For example, it might be more of a challenge to get a customer in a rural area to buy $70 or $80 bag of dog food; they tend to be interested in more affordable brands.
Overall, we try to give customers a good mix of products. We allow the store managers to basically adjust their own inventory levels, because they know what sells in their locations.
PB: Over your career, you’ve had a front-row seat to the rise of the super-premium pet food category. Did the success of super-premium foods surprise you?
FLIPP: I never thought I’d see the day when there would be $80 and $90 bags of dog food. I come from a time when even $19.95 or $24.95 seemed outrageous.
When I first got into the pet industry, we probably had five brands of food at Twin Cities. Over the past 20 to 30 years, [the pet food category] has just exploded. Now, at Chuck & Don’s, we probably carry about 30 to 40 brands.
It’s hard to believe how far pet food has come. There are so many different categories of food today—you have super premium, freeze dried, frozen, grain free—it just seems limitless.
And I am regularly approached by new dog food companies that want to get into our stores, but often we either just don’t have the space or they don’t have the wherewithal to do the advertising and other things that it takes for us to be successful with a new line. It takes a lot of time and effort to build a brand these days.
It’s tough to handle [all of the new products coming out], because of the space constraints we have. We average about 3,200 square feet of sales space in each store, and it’s a struggle to find space for new products. Eventually, something has to give. Of course, some of it depends on which products you’re making good margins on and which companies support you the best.
PB: How has Chuck & Don’s been doing with the newer pet food categories (e.g., raw and frozen)?
FLIPP: We’re committed to those new food categories. We’re up in the neighborhood of 82 freezers in our stores, so we’re fully invested in that market. We handle numerous brands now, and we’re looking at a lot more on the horizon. We have a lot of raw feeders, and those customers tend to be loyal to concept; there’s not a lot of switching back.
PB: Many pet retailers report that price increases have been squeezing their margins in the food category. Is this something that you’ve experienced? If so, how are you dealing with it?
FLIPP: It has been something that we’ve had to deal with. Of course, you raise prices when you have to. But that’s why you focus on providing great customer service, because then your customers might be willing to pay another dollar or two.
Petco and PetSmart are part of the [margin] problem; they get a low price, and sometimes we can’t come down and match them on the foods we carry in common. It’s something we have to deal with, and we do that by treating the customers better.
PB: What pet food trend would you say is having the biggest impact on Chuck & Don’s stores today?
FLIPP: It would definitely have to be the grain-free [trend]. Grain-free products have taken off over the past few years, seeing phenomenal growth.
Frozen foods have also grown steadily, although not quite at the rate of grain free, and so have freeze-dried foods.
PB: What would your advice be to someone who is just getting started in pet retailing, particularly in regards to selling pet food?
FLIPP: The most important thing is, don’t be afraid to try new products. The next biggest thing might be just around the bend, and you might be able to ride the growth of that trend. There will be cases where you might be skeptical about a new product or trend, but you try it and it works.
Also, don’t be afraid to compete with the big-box pet stores. You don’t need to match their prices, you just need to treat the customers who come into your store better.
PB: What do think the future holds for the pet food category?
FLIPP: I think that you’ll see more food companies being acquired by investment groups. I also think more smaller brands will be scooped up by larger brands.
In terms of specific trends, I think you’ll see the grain-free trend continue to grow for a while. I also expect that frozen will continue to grow into a big market moving forward.