Go Fetch!

Store brand opportunities are plentiful within the pet care products space — for retailers willing to go after them.

The United States is a pet-loving nation, boasting more dogs and cats, for example, than any other country, according to MapsofWorld.com. In fact, the number of households with a pet or pets now outnumbers the number of households with a child or children.

►Do meet consumer demand for healthful, natural and premium pet foods and treats.

The 2011-2012 American Pet Products Association's (APPA) "National Pet Owners Survey" notes that 62 percent of U.S. households own a pet. The U.S. Census Bureau, meanwhile, reports that in 2010, a child or children under the age 18 resided in less than 48 percent of U.S. households.

What's more, U.S. pet owners also shell out an incredible amount of cash to care for and pamper their non-human companions. In 2010 alone, APPA says, they spent more than $48 billion on food, supplies/OTC medicine, vet care, grooming and boarding, and other pet care needs.

That said, the total U.S. pet products market did see "lower than usual" growth in 2010, says market research firm Packaged Facts, a Rockville Md.-based division of MarketResearch.com. In a February 2011 survey of pet owners, the firm learned that the economic downturn finally had hit this traditionally resilient category. More than a third of respondents (35 percent) said they were spending less on pet products because of the economy, compared to 27 percent in February 2010.

►Don't buy into the misconception that natural-type products are less-profitable than "regular" pet foods and treats.

Sales of pet food and supplies within supermarket, drugstore and mass merchandise outlets (excluding Walmart) also were lackluster during the 52 weeks ending Sept. 4, according to data from Chicago-based market research firm SymphonylRI Group — and store brands posted significant dollar and unit share losses within the cat food and dog food categories (see the table, below).

Fido's health matters

But Packaged Facts predicts that the sluggishness will be shortlived. It expects sales to notch back up across all channels to approximately 5 percent in 2011 and to almost 6 percent in 2012. And health-oriented products are expected to lead growth here. These types of products — including refrigerated and frozen raw foods, cat and dog supplements, nutraceutical treats, and cat and dog treats with a functional health benefit — actually showed fairly strong growth in 2010, Packaged Facts notes in its April "Pet Market Outlook 2011-2012" report.

Chris Ruben, chief marketing officer for EuroCan Pet Products, Tyler, Texas, concurs that health and wellness are top of mind with today's pet owners.

"Pet parents want to buy products that help to keep their animals out of the vet's office," he says.

All-natural products fall under the healthful umbrella and are of growing interest here.

"Pet parents are much more label-conscious and want to know the quality and origin of the ingredients used," Ruben notes. "In particular, the trend is away from additives, preservatives, sugars, salt and hard-to-pronounce ingredients."

Although the traditional dog biscuit most likely will remain a staple on store shelves, consumers are beginning to take a second look at heavily processed pet treats fashioned to look like little pork chops or other "people foods," adds Rebecca Kalch, CEO of Becca's Barkery, Cabool, Mo. Another positive associated with pet food and treats made from natural high-quality ingredients is a reduction in the amount of pet waste.

"One of the misconceptions among retailers is that the profit margin on 'natural' products is smaller," she says. "This is simply not the case. Natural products retain a healthy profit margin while offering a higher-quality product, which results in a win-win situation for the retailers as well as the consumer."

Look What's New

Pet Pride Kitten Formula Mini Crosses & Circles Cat Food from Cincinnati-based Kroger is said to be suitable for kittens in their first year of growth. It is formulated with essential vitamins and minerals and an increased amount of protein. This product retails in a 3.5-lb. plasticlined paper bag.

Billed as wholesome biscuits made with real salmon, fruit and vegetables, President's Choice Nutrition First Salmon & Pumpkin Dog Biscuits from Loblaw Companies, Brampton, Ontario, are rich in omega-3 fatty acids and contain no soy, wheat, corn, byproducts or artificial colors, flavors and preservatives. The biscuits are a high-quality source of protein, help to control bad breath and are suitable for dogs of all sizes and breeds. They also help treat sensitive skin and stomachs. The biscuits retail in a resealable 454g flexible pouch.

Natural products also are part of an ongoing multiyear trend toward premium-quality pet food and treats. Bill McKee, vice president of U.S. private label sales for Simmons Pet Food, Pennsauken, N.J., notes that the premium trend now is working its way into single-serve cans, pouches and cups.

"The single-serve solution is perfect for retailers, as these segments tend to be more profitable, help cultivate a premium image for the store brand and foster increased loyalty to the retailer," he says.

►Do consider environmental issues when it comes to new pet care products and product packaging.

Enhance the package

In addition to natural and premium ingredients, retailers might want to consider improvements to their pet food and pet treat packaging. Although a "generic-looking" store brand package might attract some value-conscious shoppers, an upgraded boutique-type package encourages a second look on the part of name brand loyalists and entices trial, Kalch notes.

"The upgraded packaging attracts those consumers who wouldn't normally buy the store brand while assuring the loyal store brand consumer that the quality of the product is equal to or superior to that of [the] name brand," she says.

But McKee believes that the upgraded look cannot stray too far from that of the name brands.

"Private brand pet food has to withstand scrutiny against the national brands," McKee says. "They have to have the look and feel of the brands in all aspects, including the container and the packaging."

On the wet food side, retailers also will want to package with variety in mind. McKee notes that variety packs continue to play a dominant role in all sizes of pet food.

And with many pet owners thinking "green," retailers also should factor the good of the environment into package-related decisions.

"As pets have joined the bandwagon in reducing their carbon 'paw' print there is more demand for manufacturers and retailers to support this initiative by offering items that are 'carbonsoft' and/or 'carbon-friendly,' Kalch says. "For example, our packaging is BPA-free."

Put your best paw forward

Store brand pet care products also stand to benefit from some simple marketing efforts. Ruben advises retailers to use messaging that compares the store brand to the national brand — assuming the store brand's quality is on par with or surpasses that of the national brands.

"It is also important for retailers to call out the health and wellness benefits of their store-branded products on packaging and shelf edges," he says.

End caps and power wings work well to promote store brand pet care products, Ruben adds.

"Positioning store brands at the beginning of the pet aisle [using] j-hooks or clip-strips is also effective," he says. "Store-branded pet products should definitely be part of the retailer's 'loyalty rewards' program and promoted at least once per year."

McKee agrees that end cap displays are effective in communicating value and encouraging trial — as are promotions, coupons and sweepstakes/contests.

Speaking of contests, Greenville, S.C.-based BI-LO is one retailer that recently showed some creativity here. This past spring, the company hosted a pet lookalike contest tied to its Paws pet care brand. Participants entered for a chance to win one of several prizes — with the first prize being a year's supply of Paws brand pet food.

►Don't skimp on marketing — use end caps, coupons, promotions and even contests to call attention to store brand pet care products.

Act now

But retailers need to act now to grab a bigger share of the dog biscuit.

In reality, few of today's brands within the pet trade actually matter to consumers, notes a spokesperson from Topet USA Inc., Morrison, Colo. But despite that reality, he says some retailers are opting to return to a branded-only pet care products strategy instead of optimizing their store brand program — leaving dollars on the table.

"There is tremendous opportunity for quality and nutritious pet food that offers consumers real value," he says.