Pawing Away at the Competition

October 12th, 2012

An insider’s perspective on the pet industry.

Few industries experience recessionary growth. Alcohol and gambling always do well, but, during the current recession, we also see that pet spending is steady. While pet owners may have scaled down spending during the recession, they still find the money to pamper their pets. With 62 percent of U.S. households owning pets and spending a projected $52.87 billion cumulatively for 2012, the category has continued to expand nationwide.

Recently Bozell met up with Soggy Paws—a retail business that features self-wash stations for dogs and high-quality food and toys. Soggy Paws focuses on exceptional customer service and a deep knowledge of dogs and their nutritional needs. The stores also have a cat-focused section. The business has grown from an entrepreneurial start-up to four locations in Chicago and one in Omaha.

Bozell asked the co-owners of Soggy Paws to share their perspectives on the pet industry, their business and some of the challenges they have faced. The following is a transcript of the interview with Soggy Paws’ Paul Rathe and Kevin Richardson.

Please start by sharing a little history. How did the Soggy Paws idea start?
RICHARDSON: In 2004, the dog market was ready for a middle price point. It’s a very fragmented market with a lot of opportunity. Our first location was decided purely through market research.

How did you market the first store?
RATHE: We tried a lot of things. We did direct mail, placed ads in the paper, and became members of the local Chambers of Commerce.

Recently Soggy Paws opened an Omaha location. What have been the unique challenges for this store, compared with the Chicago stores?
RICHARDSON: No one knowing who we were, or the concept, was the first obstacle. Omaha is today where Chicago was in 2004. There is a lot of education about pets that is happening. It feels a little like starting over. We are building a market all over again.

What have been the marketing successes?
RICHARDSON: Relationship marketing or event marketing, like “Yappy Hours” and events with local rescues. Social marketing has worked really well, too.

RATHE: Omaha has been great on Facebook. People are so much more active and responsive.

Pets seem to be a recession-proof industry. Would you agree?
RATHE: Yes, things just got put off a bit. People waited longer in between washes for their dogs. We also saw an uptick in new customers the day before a holiday. People also started downgrading their food – still buying premium brands but adjusting their level of spending.

If you knew then what you know now, what would you have done differently?
RATHE: I think we would have spent the money to be in a more expensive place with more guaranteed traffic instead of being the pioneers in a neighborhood.

RICHARDSON: If I knew where the economy was going, I would have franchised right away.

What would you say to someone considering opening a pet-focused business right now?
RICHARDSON: Don’t do it because you love dogs or you will get burned out. Maybe 10 percent of your day is getting to play with dogs. Hire smart people and let them make decisions, knowing that sometimes you will have to talk about how to make better decisions in the future. Also, realize you need to know what you are about. Every time something comes up [like a problem], if we go back to what we’re about, we’re okay.

Soggy Paws shared with Bozell how they continue to evolve their business as the market and economy change. And the takeaway is that no business is safe from the recession. You have to constantly adapt to your environment – economy, customer needs and wants, etc. Marketing is just as important. While having marketing efforts during economically leaner times can seem financially daunting for smaller companies, it can be just what you need to stay on track and be successful in the highly competitive pet industry.

Bozell has a great deal of knowledge and experience in the pet marketing segment. To learn more, email petlovers@bozell.com.

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