What Inflation Is Doing to Pet Retailers and 3 Reasons They Shouldn’t Worry

But right now there's a problem. Inflation.'Some of our suppliers have increased the prices we have to pay for stuff three times in three months,' he said.

Customers are getting sticker shock, he lamented.

He's not alone in his frustration. Steve Richmond, owner of Lovely Pets Aquarium Store in Kingston, Mass., is struggling to figure out to what degree he can pass along price increases to customers. 'It's hard to raise prices without turning off my customers, without people thinking that I'm price gouging them,' Richmond said.

That's not to mention the time it takes to adjust pricing when it does become necessary. 'We are all struggling on labor, and if a food line has an across-the-board increase, that means we have to physically re-sticker the shelves, correct our POS system and update any online pricing,' said B.C. Henschen, a partner in Platinum Paws, a pet store and grooming salon in Carmel, Ind. 'That can really be time consuming when we are all short on time.'

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Yet, while there is no denying inflation is a burden on retailers, some in the industry see bright spots.

Michael Levy, founder and president of Pet Food Express, a retail chain with more than 60 stores in California, said he doesn't expect prices to come down any time soon, and he anticipates that many customers will struggle with the higher prices. However, he forecasts that stores and product vendors are likely to remain profitable despite the possibility that some pet specialty shoppers may seek cheaper options in other retail channels.

'I do believe that the price increases will outpace the customer losses, providing manufacturers and retailers with good profitability,' Levy said. 'Additionally, we are continuing to see growth in the number of new pet parents arriving at our stores.'

Pet Food Express has already passed along some price increases to both brick-and-mortar and online customers without receiving much backlash from shoppers so far, Levy added. It has helped that most vendors have adjusted their SRPs and MAPs accordingly.

Mike Hresko, owner of House of Tropicals in Glen Burnie, Md., is equally optimistic—if not more—about the pet industry's ability to withstand the effects of inflation.

'In our business, when inflation is high, we do better, and it looks like we're going to go through a few years of inflation,' Hresko told Mizer in this issue's aquatics retailer roundtable.

He theorized that while people are quick to cut back on vacations and other big-ticket items during periods of high inflation, they will still invest in things closer to home—and their hearts.

'People stay home and people get back into their hobbies ... they don't buy the big-ticket items at all,' he said.

There is that 'it' factor when it comes to the pet industry—the thing that makes venture capitalists want to invest in pet product companies and career accountants want to quit their corporate gigs to open up a pet store. People's passion for pets tends to keep the industry humming along despite economic factors that surround it.

David Lummis, senior analyst with market research firm Packaged Facts, said: 'My sense is that, given its traditional recession resistance and strong pandemic performance, the pet industry will be less affected by any inflation-related price hikes than most other consumer packaged goods categories in terms of consumer cutbacks, because pet owners are so dedicated and so much of the spending is non-discretionary and/or health related.'

So while inflation will challenge many pet businesses, it is hardly likely to result in the pet industry being relegated to any dusty corners.

by Jennifer Boncy Jan 10, 2022