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Latest ‘Category Killer’ Invasion Aimed at Fido and Fluffy

July 5, 1995

UTICA, Mich. (AP) _ The Pet Food Warehouse here has enough rawhide chew toys to keep Fido’s teeth clean into the 21st century. And enough cat food stacked to the rafters in 20-pound sacks to keep Fluffy feisty for all nine lives.

The ``superstore″ approach to retailing _ providing customers with staggering selection and low prices in a warehouse setting _ is fast changing the business of selling pet supplies. Small, independent pet shops are facing the same competition that has killed off many of their counterparts in electronics, toys, hardware and office supplies.

It’s another invasion of the category killers, the big retailers like Home Depot and OfficeMax that dominate their segment of the retail market. This time, they want your pets _ who are often welcome to stroll the wide aisles with you and sample the goods.

And why not? Americans spend billions a year on pets _ $8.77 billion on dog and cat food alone in 1994. More than half of all households have at least one animal.

``The pet industry has always been recession- and depression-proof,″ said spokeswoman Geri Mitchell of the Pet Industry Joint Advisory Council in Washington. ``People are always going to feed their animals and take care of them. And the number of pets is growing.″

The pet supply business was dominated for decades by grocery stores and independent pet shops. No wonder, then, that venture capitalists and entrepreneurs jumped in to form the big chains.

``This was a $16 billion category with no players,″ said Brian Devine, a former Toys R Us Inc. executive who now heads PETCO Animal Supplies Inc., the nation’s second-largest pet supply retailer after No. 1 Petsmart.

There are an estimated 18,500 pet stores in the country, of which just 650 are considered superstores. But that’s up from 250 superstores just two years ago, and the number should nearly double by decade’s end, Mitchell said.

Their success so far has led to ambitious expansions. For example, Livonia, Mich.-based Pet Supplies Plus Inc., No. 3 in sales nationally, has 95 stores and plans to open 30 more this year. It recently opened the first of 50 outlets planned for the New York City area.

To attract customers, superstores offer deep discounts on the premium dog and cat foods that were a high-profit product for the independents.

Statistics compiled by industry analyst Jack Maxwell of Wheat First Securities in Richmond, Va., show how the superstores have cut into the pet food business:

In 1993, the latest year for which complete figures are available, grocery stores got $4.8 billion of the $8.4 billion Americans spent on dog and cat food. But grocery stores’ 55 percent share of the market was down sharply from 95 percent a decade ago.

Traditional pet stores sold just $200 million worth of food in ’93. Wal-Mart Stores Inc., the nation’s No. 1 retailer overall, sold three times that. And superstores, with far fewer outlets than any of the other categories, sold about $900 million in food.

Last year, their sales increased 88 percent to $1.7 billion, Maxwell said.

Inside the big stores, dog and cat food usually is in the back, much like milk in most supermarkets. That ensures customers will pass all the other merchandise on their way to pick up the most popular items.

Retailers know customers often make impulse buys of other supplies. And there’s no shortage in these stores: Some offer more than 11,000 products, compared with about 1,500 in the average pet shop.

At Utica’s Pet Food Warehouse you can spend 9 cents on a live cricket for your snake, buy a doggie pork sausage called an Oinkeroll for $3.99, or invest in a six-level ``cat condo″ for $189.

Some of the big stores offer bathing and grooming services. They generally limit the pets they sell to freshwater tropical fish, birds and occasionally reptiles _ rather than sell dogs and cats, most offer adoption clinics with local humane societies.

It’s price that lures most customers.

``They’ve got good deals and a large variety of stuff,″ said Ted Theodoro, who owns three dogs and shops regularly at a Petsmart in Tucson, Ariz. ``Their prices are usually lower than what you’d find in a supermarket ... this is rock bottom.″

Lillian Kennedy, a retired nurse, shops at the store for hard-to-find food her veterinarian recommended for her tabby.

``The shelves are all open and everything’s well-marked. You see exactly what you want and need right away.″

Beating such virtues is a big challenge for small pet shops typically run by hobbyists.

Bob and Nancy Frazzini, who own Meribar Pet Supplies in Warren, saw sales grow 10 percent to 30 percent annually until 1990, when the chains began opening in the Detroit area. There’s a big PetCare SuperStores outlet about a mile down the road.

They have a typical mom-and-pop shop. Customers are greeted by a cacophony of squawking birds, barking dogs and bubbling aquaria. They try to offer everything a pet owner might need, but know they can’t compete with the warehouses’ selection.

What hurt most was the drop in premium pet food sales, which comprised 20 percent of their business and created repeat customers. ``The small independents are the ones that built those brands, and the superstores come in and sell them as a loss leader,″ Frazzini said.

The couple, in business since 1969, emphasize service and expertise. They’ve also joined a pet store cooperative to get discounts at the wholesale level _ enabling them to charge consumers less _ and do joint advertising.

Industry experts say specialization is the key to the small shops’ survival. Many have expertise in one type of pet _ exotic birds, reptiles or salt water fish, for example.

``There are going to be independents who fall out,″ said Jack Sweet, editor of Pet Product News in Mission Viejo, Calif. ``But there will also be those who grow and prosper and fill those niches.″

End adv for Sunday, July 9

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