Is There Room for Your Small Biz in the Rapidly Consolidating Pet Industry?
Last year saw big changes for small pet businesses. Although it was once cited that the industry was ‘recession-proof’, the rapid growth of an industry also creates issues which need to be addressed. The theme of last year seems to have been ‘buy-outs’ as big name chains began swallowing local businesses in the name of consolidation.
One major voice has recently lent his opinion to the issue. Steve King has been President of the Pet Industry Distributors Association (PIDA) for the last 26 years, and as such, has seen the market through many changes. “King’s work—whether it relates to trade shows, retailer education or shaping the next generation of pet owners—can be felt at every level of the pet world,” writes Mark Kalaygian of Pet Business.
With more than a quarter century under his belt as an industry leader, King predicts these buyouts are par for the course for an industry experiencing such quick growth – an industry which, according to a recent widespread study, is accountable for $221 billion of economic impact.
He cites the growth of now mega-brand Petco two decades ago as an example of what’s taking place in the current market. “When you look at the growth of Petco… it was largely by buying up regional chains rather than adding new stores,” King said. It’s true, a ‘buying rather than building’ strategy can be a good business decision for growth companies, but what does it mean for your small pet business?
Collaboration and consolidation can co-exist in a market
Many big name pet supply distributors have focused on buying those smaller than themselves to create huge conglomerates; the three main companies of which are Central Garden & Pet Co., Phillips Pet Food and Supplies, and Animal Supply Co.
But there’s still room in the market for regional brands, retailers and distributors, says King. “In those same markets, there is still at least one, if not more, regional distributors that continue to compete and provide service to the retailers in that market,” he said.
The fact remains that regardless of the undercurrent sweeping the back-end of the industry, shoppers will remain in one of two schools of thought:
The first bases their decisions on price and convenience. These shoppers are who major retailers like PetSmart and Petco target. A ‘one-stop shop’ for all your pet needs – you can pick up a bag of (also larger brand name) dog food and then grab a plastic squeaky toy on clearance. This group is also more likely to buy on impulse, making door-crashers and other sales days particularly successful.
The second consumer group focusses on quality and specialty. If you’re a small specialty brand or retailer, this is the group that is rooting for you. They want you around because you give them something a big box store never will – a personalized experience.
In an interview with Entrepreneur last year, pet food brand The Honest Kitchen explains why they’ll never sell their company to a massive retailer like Petsmart. “Our product takes a bit of explaining, so we rely on the specialty pet store owner, manager, or well-trained employee to do it. I don’t think the environment you find in a typical PetSmart or Petco store, which is generally staffed by teenage kids who don’t care what you walk out with, is a good home for my brand.”
Brands like yours have built your reputation on care for animals rather than their bottom line. That’s special. And so long as people care about their pets, there will be space for your small business in the seemingly crowded market.