I’m not a big fan of Las Vegas. Generally speaking it’s too hot during the day and too cold at night for my enjoyment. Further, as I have aged I’ve become less of a fan of noise and crowds and rooms without windows. While you won’t find me hitting the strip on a personal vacation, I make an exception for SuperZoo, the “National Show for Pet Retailers”.
Of the major pet shows, SuperZoo is, in my opinion, the most valuable to attend for someone who surveys the industry. Part of that charm is due to the shortcomings of the other major retail shows. As an example, Global Pet, the largest pet show in the nation, is, well, as you might expect, big and dominated by the presence of the large industry players. Sprinkled in between are a host of import companies and the mid-market is pushed into the corners of the room. The booths of the innovators are usually quite crowded and getting an audience is pretty tough; product providers are there to do business after all. In its defense, Global Pet has the best press room. Further, the benefit of Global Pet is that is sets the tone for the year, even if you have to travel to Orlando.
In contrast, SuperZoo helps you see take a pulse on the state of the year. The show provides a great sense of what retailers have done year-to-date and what they will be emphasizing for the holiday season. Of significance, the show, because it is perceived as regional, is not dominated by the large multinational CPG players; the mid-market is well represented. Further, it is much easier to get access to business owners and learn about the state of the industry company-by-company. SuperZoo also has the best food (Lotus of Siam is my favorite), which is important in picking your tradeshow. It also means that our bi-annual report publication date is just around the corner.
As I prepare for my fourth SuperZoo, I’m very interested in what I will see for a variety of reasons. First, I’m interested to get a read on how the industry is doing in light of the broader economic climate. Prior to the 2009 recession, the pet industry was viewed as “recession proof”. While the industry thrived relative to other consumer facing franchises during financial downturn, the contraction did take some wind out of its sails and the message was recast as “recession resistent”. In contrast to 2009, where the impact of reduced liquidity was so broad, we should be able to get a real read on how decoupled (or coupled) the pet industry is to the general economy. Currently, we have stagnant GDP growth and high unemployment but also rising consumer incomes and improving individual balance sheets. Notably, Petsmart (our pet industry public company proxy) posted strong 2Q2011 results with same-store-sales increasing 5%, comp transactions growing 2%, total sales increasing 7% and earnings growing 32%. So is this a case where Petsmart is executing impeccably, or is the industry thriving against a relatively sanguine economic backdrop? Conversations at SuperZoo should yield some insight.
Second, I’m interested in getting a better sense on the state of pet food, dog food in particular. While any pet pundit would pursue this line of inquiry at anindustry show, I am now more interested than ever as I believe the market dynamics are changing. Notably, the super premium category is seeing hyper-competition driven by big budget CPG acqusitions, large independents increasing sales and marketing spend (Blue Buffalo television commercials anyone?), and in-house brand launches for the largest independent pet retailers. I see this environment as very challenging for a mid-market kibble manufacturer who does not have a meaningful angle of differentiation. However, I also see this as a great time for food companies pushing alternative form factors (dehydrated, raw, freeze-dried) as all the kibble marketing messages now seem to blend together. I’ll be looking to see if the recent equity raised by the upstarts in this niche translates into an increase presence at their booths.
Lastly, I remain interested in other opinions about pet e-commerce. We’ve heard the party line from Petsmart in their 2Q earnings call, but I want to get it from the product providers perspective. Of greatest interest is how their wholesale pricing is being impacted by what is clearly price competition in the industry. Further, with the increase in proprietary product at the major pet retailers, I want to know if the mid-market pet players see the direct channel as their future, and if so how they are going to change their operating model.
If you are going to be in Vegas for the show. Give me a shout, and hopefully we can meet up and chat.