When it comes to sales of pet food, Wal-Mart is top dog.
Its push last year to gain a greater share of the recession-proof category not only catapulted pet food to Wal-Mart's top-selling food and beverage category, but the retailer's Ol' Roy store brand outsells all national brands.
“Wal-Mart owns the No. 1 dog food in the world,” Spencer Blaker, a consultant with Willard Bishop, Barrington, Ill., told SN.
Helping to solidify the bare-bones retailer's position is its attractive price point. Pet owners aren't scaling back on the volume they feed their furry friends, but many have been hard hit by dog food price inflation, which, at 11%, is among the steepest of all categories, according to Information Resources, Inc., Chicago. Wal-Mart's pet products are also garnering greater attention thanks to increased shopping trips for people food.
“Wal-Mart controls about 25% of the pet business in the U.S. right now, and they'd like to pick up another five [percentage] points,” said Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill.
Not surprisingly, supermarkets aren't among the fans of Wal-Mart's plan. At one time, members of the channel owned 90% of the pet business, but their share has since been eaten away by members of specialty chains like Petco and PetSmart, to the point where it is now well below 50%, Wisner said. The developments are especially hard to swallow since, with a growth rate of 8% per year, pet food sales are increasing faster than average grocery sales. But traditional supermarkets are by no means playing dead. Many are making concerted efforts to draw pet-owner shoppers back to their store.
While low price is the name of Wal-Mart's game, traditional chains are wooing pet owners with services that play on the emotional connection they share with their animals. Many are also tying practical tips in with discounts obtained through pet loyalty clubs.
Among them is Food Lion, which, through its Pet Partners program, positions itself as a one-stop shop for pet care essentials.
“Pet households account for more than 3 million of our shoppers, and we want to be their destination for pet products,” chain spokeswoman Karen Peterson told SN.
The Salisbury, N.C.-based chain hosts both cat- and dog-specific Web pages that feature tips on nutrition, training, grooming and playtime.
Providing news they can use is an effective way to drive incremental sales for things pet owners didn't even know they needed, said Paul Cooke, vice president and director of industry relations for Nestlé Purina PetCare, St. Louis.
Printable coupons and “unadvertised pet MVP specials,” which can be obtained when a shopper uses her Food Lion MVP loyalty card, are available on the site. Recent deals included Food Lion 13.2-ounce cans of dog food, 10 for $6; Fancy Feast cat food, 3-ounce cans, 10 for $6; and Beneful Snackin dog treats, two packages for $8.
“Based on our customers' purchase history, we can also customize special offers to MVP cardholders,” Peterson said.
In addition to drawing pet owners with savings, the chain has carved a unique niche in the area of homeless animal advocacy.
Last year, Food Lion teamed with local animal rescue groups and the Pedigree brand to host pet adoption events in store parking lots. Such events not only win retailers a halo for doing a good deed, they also help grow their pet-owner shopper base.
“We're seeing an increase of animals being brought to us because people can't afford them, or they're in need of veterinary care, and people can't afford that,” said Paulette Dean, director of the Danville Area Humane Society, a Food Lion partner.
Each event features 10 to 12 adoptable dogs and cats. Shoppers interested in a particular animal must fill out an application and undergo a 24-hour waiting period. Responses to questions about pet and veterinary history, how the animal will be taken care of, and if it will be kept outside or inside are reviewed during that time.
“We'll call a landlord, confirm that yards have fences, and check on veterinary history,” Dean said. A $75 fee, which includes the cost of having the animal spayed or neutered, a veterinary exam and shots, is also collected. Usually two to three owners per event are approved for adoption, said Dean.
Pedigree provides kits that include a 7.9-ounce bag of Pedigree dog food and $9 in coupon savings. Food Lion also distributes Pedigree samples to customers who already own pets.
Since Food Lion's been pleased with results so far, “We're putting together a calendar of events for 2009,” Peterson said.
Food Lion is wise to play on the emotions of pet owners, since satisfaction with emotional engagement drives 24% more visits and 46% higher spending, said Cooke, citing a Gallup Study.
“This is a very emotional category, and retailers that are cognizant of that fact and make it a priority with their customers win big time,” he said.
Meijer is also doing an exceptional job of engaging pet owners, several experts told SN.
With its pet-related Web pages, the Grand Rapids, Mich.-based chain targets shoppers ranging from those still contemplating whether they should get an animal, to consumers who have health-related pet care questions but not the $60 it costs just to have an animal seen by a veterinarian.
Meijer also promotes pet food and supplies with an online buyer's guide, which includes questions to help gauge pet owner readiness and an easy-to-navigate way for visitors to shop for new pet essentials.
“The decision to get a new puppy is a big step no matter who you are,” reads the site. “Relax. It's nothing to be scared of. Think of it as getting a really fluffy baby.”
Another of Meijer's Web features allows visitors to pose questions to a Pet Advisor.
Inquiries range from questions such as whether it's okay to feed dog food to a cat (it's not) to advice on how to get dogs to stop biting and nipping family members (it's generally a form of social play). The tool is not only making pet owners' lives easier, but helping to elevate Meijer's status from food retailer to trusted authority.
“People get a dog, yet they have no idea what they're doing, for the most part,” noted Wisner. “There are a lot of issues, and people are looking for advice.”
Meijer answers dog and cat questions that are emailed to the Pet Advisor, with the help of experts from Nestlé Purina PetCare.
“Two people work on behalf of Meijer and Purina to answer the questions,” said Kaite Flamm, spokeswoman for Nestlé Purina PetCare. Likewise, experts at TetraCare Aquarium answer fish-related questions on behalf of Meijer. All other pet content on the Meijer site is powered by Purina.com.
The tools are especially valuable now, as consumers look for “do-it-yourself” animal care solutions.
Just as pet owners are turning more to pharmacy and healthy foods for their own preventive care, they're avoiding costly vet visits in much the same way, noted Blaker. In fact, when it comes to premium pet food, owners are willing to shell out more money for their animal than they are for themselves.
“In many cases, the owner will spend to maintain a healthy diet in their animal, sometimes to the detriment of their own health and well-being,” Blaker noted.
Cognizant of the trend, Shaw's, West Bridgewater, Mass., launched a rewards-based pet loyalty club 18 months ago. The program keeps pet-owning families coming back each week by offering rewards in the form of free pet products.
Members are currently eligible to receive a free pack of Purina One Wet Dog Food when they purchase 15 4-pound bags of Purina One Dry Food for Dogs between Jan. 1, 2008, and April 16, 2009. Among the other offers: Purchase two bags of Iams Dry Dog Food, 7-8 pounds, Aug. 10, 2007, through April 16, 2009, get $4 off one bag of Iams Dry Dog Food, 15.5-17.5 pounds; and purchase 10 containers of Tidy Cats Scoop Litter, 20 pounds, Oct. 17, 2008, through April 16, 2009, get one free bag of Purina Cat Chow, 3.15-3.5 pounds.
In order to sign up for the program, shoppers must currently hold a Shaw's Rewards Card. The chain keeps track of how close shoppers are to earning rewards, and even emails updates after each qualifying transaction. Rewards status can also be tracked online, and eligible consumers are sent rewards coupons in the mail.
Experts observe that the chain has tapped into a lucrative market with its program.
Pet owners continue to be one of the most important shopper segments in the store, noted Cooke.
“In 2007, pet owners spent 26% more than people who don't own pets, across total U.S. retail” according to Nielsen's Custom Channel Facts 2007, he said. “That equates to $47 vs. $38 per trip for pet owners and non-pet owners, respectively.” Since nearly two-thirds of all American households own pets, the group isn't one that retailers can ignore.
With its Paws and Claws pet club, K-VA-T's Food City banner, Abingdon, Va., is building bonds with shoppers.
To gain membership, pet owners must provide their pet's name, breed, age, sex and birth date, according to Cooke. When that animal's birthday rolls around, owners receive a birthday card addressed to the pet, along with offers for discounts on relevant items.
“This is huge,” said Blaker, who suggested that retailers improve upon the idea by asking more animal-specific questions about weight and fur type.
“During flea and tick season, you can make recommendations about the right products to use,” said Blaker.
Likewise, when a dog hits seven years old it becomes a “senior animal,” he said. The retailer can use that as an opportunity to inform the owner that it's time to switch to senior formulations.