DOG-GONE GOOD

WILLIAM SMYTH

Supermarketers continue to build pet care centers to help boost sales in the dog-food category, and they are bringing in more special-diet varieties to win customers back from mass merchandisers and specialty retailers.

More and more households in the United States own dogs. According to a survey conducted in 1998, by the Pet Food Institute, Washington, 38% of all households in the United States have one or more dogs. That's a lot of canines that need to be fed, and retailers are looking for more ways to market their products.

But according to Information Resources Inc., Chicago, dog-food sales are down in supermarkets. For the 52-week period ended March 28, 1999, the overall category of dry dog food in supermarkets was down 2.5%, to $1.5 billion. Canned was down 3.1% with sales of $648 million. Although all the major brands, like Purina, Kal Kan, Ken L Ration and Friskies, have seen a drop in dry sales, some of their labels have had increases. Purina O.N.E., for example, saw an 11.5% increase, while Dog Chow in little bites saw a 22.6% increase.

IRI statistics show that dry dog food was up 15% in mass-merchant channels for the same 52-week period, but still far behind supermarkets, with $824 million in sales. Canned sales were at $226 million in the mass channel, up 14.2%.

Still, supermarket retailers need more strategies to ensure that they don't continue to lose ground to other channels. One analyst who did not wish to be identified said that nutrition-oriented dog foods have always been available, but mostly from vets. That situation, however, has changed. "Nutritional products and special-diet dog foods that consumers were getting through vets are now being offered at the Pet Smarts of the world," said the analyst. "Getting those products into the supermarkets is the only way to compete."

The analyst also noted that many supermarkets can do a better job of merchandising dog food. "Some supermarket [destination] centers consist of 20-pound bags in the front of the store. Terrible merchandising," the analyst said.

Nonetheless, retailers SN spoke with said they are paying attention to the dog-food category, and plan to bring in more special-diet items.

"It seems that the pet-food store chains have taken up a lot of business from supermarkets," said Steve Nastasi, a category adviser for Fleming Cos.' Phoenix division. "Supermarkets now are making the pet areas more of a niche area by bringing more diet food in-store," he continued. "They don't want to lose the consumer dollar and they want to make sure that consumers come back."

According to Nastasi, many programs are run with dog food throughout the approximately 600 stores that the Phoenix division services. "Purina was just in yesterday to talk to me about a promotional pallet program to be put up throughout our stores. It's an eight-item premade pallet that could be situated anywhere in the store besides the pet aisles," said Nastasi. The produce department is an area that the pallet would most likely be displayed in, he said.

Eileen Romero, category manager for Fleming's Philadelphia division, has seen special-diet dog foods prosper in her stores. "We had one company bring in Iam's through a distributor," said Romero. "Our customers are seeing that this is the way to go." Iam's is a Dayton, Ohio-based dog- and cat-food manufacturer that is rarely seen in supermarkets. Distribution has generally stayed among pet stores and pet food specialty stores.

Romero told SN that there is a simple reason special-diet dog food sticks. "Brands like Iam's are like baby formula. Dogs will take it when they're young, and the pet stores and veterinarians say it's good. They also say that if owners switch brands, the dog will get sick or have diarrhea. People are afraid to switch to other brands [once the dog is grown]," she said.

According to Romero, a lot of stores in her chain have developed pet centers, which have helped sales. "Customers are realizing that these aisles are a destination area," said Romero. "We have long dedicated aisles with signage for our products to alert customers that we have what they're looking for."

Romero admitted that mass merchants have hurt sales. Still her stores advertise weekly, with a special section in the circular devoted to dog and pet supplies.

Brown & Cole, Bellingham, Wash., has brought in some special-diet dog food, but most of these items are private label. "We have private label, but we also carry Purina O and E and a brand like New Balance," said Bob Benner, category manager for Brown & Cole. "The New Balance is supposed to be a professional-level dog food."

The addition of pet-care programs in Brown & Cole stores has generated additional sales. Eight months ago, Brown & Cole began experimenting with pet destinations, and within the last two or three months has added "expanded aisles" in two more stores. These sections have helped tremendously with sales, according to Benner.

"We've expanded the size of the department and selection to contain more supplies, more specialty type foods than we've had in the past," said Benner.

According to Benner, aisles can be from 80 to 120 running feet. "The store has warehouse racking [stacked on top of one other] to display the items and give the section a warehouse look," said Benner. "We also have treats and rawhides placed in bulk bins. Additional endcaps are used throughout the department to better display the products. It seems that people are drawn to it. With more selection, they're apt to find what they want," he added.

Bill Adcox, a buyer for Pritchard, Ala.-based Autry Greer & Sons, agreed that special-diet food should be a sub-category in the pet department. "We do not have special-diet or veterinarian-approved dog foods at this point in time," said Adcox. "We will be getting them though. I see it happening in the future."

One Michigan chain that did not wish to be identified has seen little in the way of special-diet or veterinarian dog foods. The buyer told SN that the mass merchants like Costco, B.J.'s and Price Club have taken a chunk out of dog-food sales at his stores. The buyer's stores have 60 to 80 linear feet devoted to pet supplies and food, with 50 feet of that space devoted to dog food. The retailer uses a pet club to help sell the category.

"We have a Pet Club in which customers who buy a certain amount of pet supplies get a coupon sent to their homes by direct mail," said the buyer. "After $50 is spent, a customer can get $5 off the next purchase. The Pet Club is associated with our [preferred-customer] card program."