Can a food retailer fall in love with food?

From one grocery store to another, aside from the convenient location it occupies, what elevates one over the other? Not much really. Differentiation is often in marginal territory….

• Products assortments are similar.
• Aisle configuration runs the same direction.
• The perimeter features fresh items.
• The packaged products anchor the center store shelves.
• The checkout is a line.
• Items on sale will exist in most departments.
• The ice bag locker is near the entrance.

Some stores may feature fancier lighting or shinier floors but for the most part if you’ve been in one supermarket in Maine, the same experience will be had in Minnesota or Maryland. There are a few exceptions to format like Trader Joe’s that turns the frozen department into a singular art form. Dorothy Lane owns its Killer Brownies. Publix and Costco lead with great reputations. Wegmans delights with service-minded staff. H-E-B in Texas stands above with its highly curated Central Market banner and Midwest shoppers frequently laud HyVee. Sure, the Northeast’s Stew Leonard stores step ahead with grocery-as-theater.

Even at the high end such as Whole Foods or Plum Market, while the shelves feature more boutique brands and the prices to match the artisanal, locally sourced claims – everything remains strikingly familiar.

But what could happen if a grocery retailer were to fall in love with food?

What if food retail was a culinary adventure, an inspirational tour more than just an organized maze of boxes, cans and bags? Ultimately, the business end of food for shoppers would be a better dish, an adventurous menu, and an extraordinary eating experience. Yet a peek inside the prepared foods case of most supermarkets is a study in over-heated rotisserie chicken and meatloaf belly-pleasers. Maybe a Sushi bar here and there but not many are really blowing up the concept for a delight-to-the-senses food experience.

The Internet and food delivery apps already democratize access to restaurant quality cooking. Great chefy meals can be had in 30 to 40 minutes. How can a food retailer successfully disrupt a ‘been there and done that’ shopping paradigm to create memorable and engaging food and shopping experiences? Is it possible to transcend the point-and-click convenience of restaurants coming to the front door?

Well, get ‘em inside your front door!  Food is sensory. It is emotional. It could be a feast for the eyes, the heart and soul. An inspiration for the home cook. A place of learning and creativity. A tour of global flavors and cuisines. A culinary Disneyland with one theme leading to another.

• Our hypothesis is this: you can’t really deliver food inspiration if you don’t have a passion for culinary experience powered by a visceral appreciation for the magic of food and great cooking (plus adjacent standards that demand improved output from the commissary).

What meal solutions would be located near other menu options if you loved culinary adventure and were determined to help customers elevate their food experiences? People mostly shop for dinner these days. How can you help them with that objective (and we’re thinking way past the roasted birds)? Saucing is a simple maneuver that can elevate just about anything on a dinner plate – who is making that small wonder happen?

Vegetables are a constant drumbeat of nutritional guilting but remain red-headed stepchildren in the pantry because of the absence of inspired preparations (think Asian options) and the transformative flavor punch of roasting over steaming.

• Whatever the culinary muse might be and how stores could be organized differently, it just won’t happen if the executive team doesn’t start with culinary enthusiasm holding court ahead of singular devotion to SKU velocity considerations.

Let the big boxes have their 30 linear feet of cheap tissue and towels. You are too busy whipping up magic in flavor-forward finished dishes or partially prepared global menus. You’ve already dialed in the wine pairing or created an entire plant-based feast. Organizing shopping by menus or need states or cuisine varieties and thinking like a home cook to layer flavors from one department to another.  You know about the current menu burnout epidemic and thus refresh the ‘what’s for dinner’ quandary with creative easy-to-follow meal ideas and curated shopping lists.

Many will interject this just isn’t possible based on the razor thin margins of food retailing that demand fealty to carts speedily navigating the aisles with belief everyone needs to get in and out as fast as possible. Maybe the desire to get in one door and out the other quickly is fed by no real delight to be found in the whole store experience. Is the only emotional win we’re willing to serve up a grass-fed New York strip at $12.99 a pound?

Evidence of Innovation

Grocery icon Bob Mariano and his talented gustatorial co-conspirators Don Fitzgerald and Jay Owen could rightly be accused of putting culinary considerations at the center of a fascinating play on re-imagined grocery. Their Dom’s Kitchen and Market store now operating in Chicago’s Lincoln Park neighborhood is a totem to unabashed borrowing of aligned culinary brand equity by featuring Bonci pizzas, Tortello fresh pasts and Meats by Linz. You go there, you want to stay there. It’s a feast for the senses. Dom’s is really a series of innovative kitchens and menus surrounded by well thought out unique packaged food selections. What fun!

Kevin Coupe, in his epiphanous Morning Newsbeat e-newsletter reports even the largest of grocery chains, Kroger, is experimenting in their Ralph’s banner near the UCLA campus in Los Angeles with a Kitchen United collaboration. Ten restaurant brands and menus can be accessed for in-store pick-up or delivery through a ghost kitchen integration that hits a college crowd pleasing tour-de-force of prepared food options. Think of fried chicken sandwiches and Ramen bowls, sushi, pizzas garnished with a heavy nod to all of the Impossible and Beyond products that replicate a meat lovers’ greatest hits. Relevant to the trading area for sure.

All of this challenges the definition of what a food retail store could be if the owners were in love with the outcome of what they sell. When passion for food and eating experiences influences the merchandising and business decisions, there just might be an opportunity to achieve transcendence. That is a shopping experience so differentiated and meaningful the home cook runs around the store exclaiming, “you get me, you really get me!”

Food adventure springs from the heart. A store can only live and breathe the devotion to food experiences when the executive team starts there themselves. The opportunity is this: create a food shopping experience so remarkable it generates talk value, social discourse, endorsement and excitement from those so awe struck that a food store might romance the actual food.

• What’s the key to competitive advantage in a world that operates in opposition to retail visits? A shopping experience you want to keep coming back to, and not just because there’s a two for one deal on a box of Cheerios.

If creative inspiration and communication of same is what you seek, use this link to open an informal conversation with a team of marketers who love food as much as you do.

Looking for more food for thought? Subscribe to the Emerging Trends Report.

How to punch above your weight and win

When shopping the aisles of a pet food store you’ve likely noticed an amazing array of new brand players on one hand, and on the other difficulty distinguishing anything truly unique between the options. Blurry at best as the protein percentage wars rage everywhere around you.

Pet care is a robust and growing business that works to float all brand boats. For now at least.

• More pet-owning households than ever
• More adoptions from rescue centers
• More puppies and kittens at home
• More mouths to feed

Even in the midst of a pandemic and economic recession the growth record is notably positive.

That said what happens when you reach a competitive tipping point as the number of brands multiplies (supply) while vying for a piece of the current volume and dollar pie (demand)? Right there, strategic best practices highly recommend nurturing true brand differentiation in the eyes of the consumer. When differences are marginal though, then what?

Read on…

This challenge gets to the heart of pet care brand conditions, a business personified by its Low Differentiation and High Durability traits among category participants. This is a healthy business ripe for disruption – when the right moves are made.

Understanding pet brand category behaviors

How is it that so many pet brands are holding firm right now?

The size of the pie is expanding. Brands that are similar to each other while exhibiting staying power are all playing by familiar rules – at least until an innovator comes along and changes the playbook.

A landscape of comparable brands with parallel nutritional claims and ingredient stories, arguing for advantage in the margins, is a living example of:

• A study in brand incrementalism
• Marginally better quality to the winners in each segment
• Pricing that stays in the segment frame, forcing choice on other more subjective cues
• A curious tit-for-tat marketplace where brands monitor and react quickly to copy competitor moves (ancient grains anyone?)
• Where staying in the competition is more important than distinguishing the brand as a unique star player

Premium kibble is kibble for the most part, although every brand understandably claims to be nutritionally superior to their equivalent price-point neighbor. That said, the language used to convey better or best bears remarkable sameness brand to brand.

Looking for marketplace advantage

When you work hard to create and earn high buyer value, the end result makes competition increasingly irrelevant. Where the pet business is generally a ground game of less differentiated brands, the sweet spot of disrupting category conventions is secured by moving from lower to higher differentiation.

Achieving greater uniqueness can happen when focused sharply on a marketplace buyer segment – a specific type of customer, where the brand strives to be hyper relevant and meaningful to a lifestyle cohort. Take for instance the consumer pursuing a health and wellness lifestyle, where the importance placed on the quality of what you eat is directly related to their perceived quality of life.

Inevitably, this consumer will transfer that same viewpoint to their pet food choices. While one could say wellness is the province of raw food brands, even there, the word raw has been democratized throughout the category in slightly de-tuned versions such as freeze-dried toppers, chunks and kibble inclusions.

Channel as a disruptive idea

Just Food For Dogs (JFFD) based in Irvine, CA has found a way to re-think the path to market.

Their model involves free-standing retail kitchens that make fresh pet food on premise, a concept optimized for higher income zip codes where the cost per pound is less important to the perceived nutritional upgrade in a freshly-prepared diet. The opportunities for customization to specific pet needs is remarkable and embedded in this concept.

Company President Carey Tischler explained this is the beginning of a national expansion: “our kitchens are an incredibly effective means of showing, not just telling, pet parents how we are different – and how fresh, whole-food can change their pets’ lives. With nine open-to-the-public kitchens serving pet parents today, and several more kitchens under consideration for 2021, our national expansion is already well underway,” he said.

Their Chicago kitchen entry now under construction sits cheek-to-jowl with the city’s largest, most progressive and well-known pet rescue The PAWS Foundation – a virtual mini-industry in moving abandoned or stray pets to new homes. Ahem, that’s new food-seeking pet owners. Across the street is Petco, a retailer that is stocking a shelf-stable packaged version of Just Foods For Dogs pet food.

Is JFFD a retail pet food kitchen company with an aligned packaged business to serve consumers where no retail kitchen exists? Or a packaged pet foods company with a unique retail kitchen extension that serves as marketplace theater and demonstration of their fresh food ethos?

“We view our business as a direct-to-consumer ecosystem,” Tischler reports, “and manage it as such – with each channel supported by our Certified Nutrition Consultants. The kitchens are a critical part of the business model, but they work in concert with our pantries (store-in-store concept) and online offering. We have a lot of evidence these channels are synergistic and effectively support each other, driving brand awareness and offering convenience to pet parents.”

In response to pandemic impacts, Tischler says the company is leaning into curb-side pickup at their kitchen locations or home delivery through third-party providers.

What’s interesting about this approach is its relevance to a like-minded consumer who sees higher food quality as verified by the fresh ingredients and preparation techniques used to preserve nutritional density. The very same food preferences they apply to themselves can now be delivered to their pet in a Chipotle-like store setting. At the very least, it’s a disruptive idea.

• Of note, we think Just Food For Dogs has a significant opportunity to weigh in on transparency, ingredient sourcing and food standards to further enhance their nutritional credibility story, although we haven’t seen that manifest as yet. Transparency is a unique point of competitive advantage in an industry where it’s largely a missed opportunity.

Just Food For Dogs is a marvelous study in innovation around a category governed mostly by conventional extruded solutions.

In mainstream retail FreshPet presents an interesting twist on packaged products and certainly deserves the growth they’ve experienced. However, we believe even more can be done to separate and elevate brands above the forest of sameness. Differentiation operates to attract a cohort of engaged, enthusiastic fans who have a deeper, emotional connection to the brand that is stronger, frankly, than a reason to buy focused on protein percentages.

Zig when everyone else zags

In the last seven months the pandemic has served as the most important personal priority- shifting mechanism of the last 30 years, advancing the importance of health and wellness to sheer survival. Taking care of your immune system is now a clarion example of how consumers reassert some control over their lives in an uncontrollable societal and environmental setting.

We’ve characterized this as Health is the New Wealth. Yet this development has not translated fully to pet food.

Pet lifestyle is a real thing. We believe there are ample numbers of households that operate daily around the pet-to-parent dynamic. A consumer insight-savvy brand could embrace a lifestyle platform that rises over the ubiquitous discussion of human-grade proteins and fresh vegetables ingredient trope. It would be a ‘zig’ to emerge above the endless chatter about real meat, chicken or fish and tag the emotional equation of what higher quality pet food is intended to do: The quality of the food provided is the ultimate expression of love for furry family members.

Addressing and leveraging consumer lifestyle affords a much deeper conversation on topics more relevant and resonant to the pet food buyer than food science and dietary claims. It’s also inherently an emotional construct, key to engagement and message impact.

Pandemic and purpose-based brand building

COVID-19 has operated to refocus people on their beliefs, purpose and societal values that contribute tangibly to the greater good. These considerations are influencing brand preference and purchase. Up to this point organic ingredients haven’t been widely employed outside of a handful of pet brands. The word sustainability continues in some respects as a form of check-the-box afterthought invoked like a Whole30 label certification.

Organic is really about farming methods more friendly to the environment and less damaging to our climate. Sustainability, likewise, can be viewed optically as regenerative agriculture practices that if widely adopted could help turn farmland into the world’s largest carbon sink.

These ideas can be repackaged as a move to address carbon footprint, playing a decisive role in managing the existential threat of climate change on our future wellbeing. Could this become an embedded mission for a pet food brand? We think so. Pet food is a very big user of feedlot meat and agricultural ingredients that in a larger sense of their production are among the biggest contributors to greenhouse gas on the planet.

• Carbon footprint is starting to show up now on select human food labels. We believe this is the start of a major trend. It will be interesting to see how it translates in pet food marketing.

Whether it’s channel and business model differentiation, a switch to lifestyle marketing and communication, or embracing a mission around climate change, each of these ideas represents a potential new tool in the standard go-to-market toolbox.  Concepts that were popularized in recent years by premiumization of the pet food business and the dawn of popular grain-free formulation claims.

The latter became a herd-like move. We observed most premium brands quickly shifting to emphasize the ancestral diet blueprint.

• Yet this becomes the very reason to consider a strategic move towards greater differentiation not less. If supporting high buyer value – moving past common ingredient stories – makes your competition less relevant wouldn’t you seriously consider it?

We know this is hard. It feels risky. It sounds like bucking category norms. Will the consumer react well to it? Of note, consumer interest is a testable proposition. In what is mostly a sea of sameness, clear observable brand distinction can be a highly prized and leverageable asset.

If exploring new thinking and fresh ideas sounds like a good conversation to have, we welcome the opportunity to think with you. Use this link to open what could be a very interesting and rewarding conversation.

Looking for more food for thought? Subscribe to the Emerging Trends Report.

Symphony of logistics becomes an orchestra of societal values

For the last 30 years or more, supermarkets have operated as a highly-choreographed dance of sourcing, merchandizing and value pricing all stage-managed with intricate daily replenishing management of same. It is, in many respects, a remarkable achievement that provides the lowest cost-to-quality food on earth in an assortment depth that is the envy of the rest of the planet. The grocery store has stood as an assurance of food quality and availability, yet now arrives precariously at a moment of transformation that is far beyond the mechanics of coming in-store robots, the challenges of e-commerce friction and assorted home delivery platforms.

Strategic shift underway

Food retail may also be the most visible in-your-face demonstration of traditional brand marketing strategies borne of the post-World War II consumer packaged goods explosion; focused on a more impersonal and product feature-and-benefit form of consumer communication.

A sea change started to emerge in recent years based on an evolving consumer mindset driven about what matters most to them on the path to purchase. Witness the emergence of health and wellness as a primary driver of consumer preference, the attention now paid to transparency and supply chain integrity and a growing concern over food safety practices. All of these emerging trends have eclipsed the traditional purchase motivators of taste, price and convenience.

The Great Pandemic of 2020 pushes the envelope of change faster and farther as consumers not only connect the dots between the quality of the food they eat and their quality of life, but now see retailers and brands as active participants in their social and societal concerns and growing activism.

Two fundamental impacts of COVID 19 on behaviors and attitudes

1. The pandemic has served to reveal the inescapable, searing questions of economic inequality, exclusion, racial prejudice and its unfairness while lighting a fire to address and solve these inequities. How this plays out will require sensitivity to the issues and strategic planning to address it openly and visibly in policy, procedure and behavior.
2. On another front, at one time consumers aspired to improvement in their lifestyle through status signaling in conspicuous consumption of brands that elicited those feelings of aspirational identity. However, today this has fallen away, shed by a pandemic that has entirely recalibrated what matters to people. Today a brand reputation is enhanced by its social, cultural and environmental values.

Brands and retailers must add responsiveness to a requirement for higher purpose, generosity in behavior and social improvement to their actions. Do you think this transformative insight has fully translated into how brands and retailers package their story and represent themselves in the marketplace? I would say no. Or not yet, while a few are in the starting blocks and getting ready to claim their competitive advantage.

Recasting the supermarket business model

Here we find ourselves in a moment of mechanization. Robots. Digital ordering platforms. Supply chain optimization. Experiments with drones. Electronic grocery carts. Wringing more efficiency in an effort to get product A into hands B more quickly, efficiently and at lower cost.

Nothing wrong with any of this, except it may inadvertently mask the cultural trend changes that argue for a different priority around how supermarkets organize their business for success and relevance to the consumer they need to keep. Technology has its place, but there is a more human need arising that should be considered strategically, as customer-centric planning becomes a top priority.

Let’s go to the ground on this together, where the food culture ‘rubber’ meets the consumer relevance road:

For over a year we’ve been reporting on the shift to home-based meal consumption and cooking. A fair question then: what does the massive pivot to home cooking mean to supermarkets? We’re not talking about the obvious of selling more products, more often for more occasions.

The intimacy people have with food and its preparation is increasing. There’s another form of ‘closeness’ that is percolating underneath as a potential component of retail strategic uniqueness and differentiation – the two components of sustainable business growth.

People buying food from people

You may recall there was an era prior to the maturing of efficient retail when people knew the sellers and makers.

A relevant story: awhile back I had the honor and privilege of meeting Glen Kohn and his business partner at a networking event staged by Chicago’s impressive food brand incubator, The Hatchery. Later during a deeper get acquainted meeting, Glen spoke in detail about his company Prevail Jerky, an emerging super-premium brand of clean, high quality jerky snacks offering an array of culinary forward flavors.

He told the story of how his wife had food allergy challenges. He wanted to make a jerky his wife and family could enjoy. You see Glen was a smoked meat mastermind who had a personal passion for barbecue, smoking proteins and making his own bespoke jerky. He set out to perfect this high protein snack with a recipe that stripped away the legacy bad-for-you allergenic ingredients and use of nitrates, excessive sodium, artificial flavoring and sugars that dogged this dried packaged meat category since inception.

More magical in my opinion is a preparation technique, and he won’t say exactly how he does it, that improves the eating experience by making the meat less tough and chewy. Ultimately what we have here is another improved, higher quality, better-for-you product in a legacy category, with a personal story behind it. In effect, the food quality is guaranteed through Glen’s personal journey.

Even before the Pandemic sent us behind closed doors and placed an even higher premium on human contact, personal relationships were making a comeback. People want to know who the makers of their food are, where they come from, what they are about and how that translates into the product they’ve created.

• Increasingly, we see the aisles at food retail stocked with new brands built by a person, not an R&D lab or innovation department. What was once a hall of impersonal, faceless brands, is turning into a showcase of businesses that acquire their social value through consumers’ desire to support an actual, real-life maker.

Makers bring with them values, beliefs, mission and unique standards of quality that provided deeper meaning past the better recipe. Here’s the strategic twist: while local sourcing has been popularized recently, this nuance stretches the idea further to what we’re calling Local-ism.

People now look at purchases as a statement of what they believe is important rather than flags of social status and prosperity. They are voting their beliefs and values with their wallet. The checkout lane is a voting booth. They are electing product winners with a voice, face and story. The intimacy with food goes deeper. The sense of community building gains a whole new perspective. The store is an aggregation opportunity for these stories-as-brands and a place where they can be brought to life.

• Now retailers have an opportunity to move past the old-school model of being a seller of boxes, cans and bags off shelves at velocity on hyper-thin margins. Food retail can disrupt itself by becoming a form of neighborhood cooking club that respects the environment and the farm while supporting people who craft new food solutions that come to market with a soul. Doesn’t sound like a distribution center for factory food, does it?

What was once impersonal, transactional and formulaic, takes on some of the pastiche of the corner market where the buyer knows the seller, meets the maker and real trusted relationships take root. This is not in conflict with technology and robotics but is rather an important reflection of consumer insight to better guide retail strategy and banner differentiation.

How to think about this: efficiency only goes so far. Becoming a more human-focused business that embraces the emotional investment people have in food, its provenance and related quality is a path to relevance that beats yesterday’s reliance on store location and lower pricing to create competitive advantage. Amazon may have a tougher time with this kind of thinking.

Recommendations on humanizing food retail

• Optimize your aisles and product assortment to feature local and emerging brands with a maker story.

• Use your content creation platform to provide a voice for their stories – and a real, relevant reason for your customers to feel connected to the products they buy at your store.

• Serve this up in a context that works in people’s lives around meal and snack solutions. That’s the foundation for relevance for the food-savvy consumer.

• Marry and merge your indulgent food strategies with better-for-you as the relationship between these two draws ever closer.

• Look past the coupon to start creating other experiences both digital and in-store that showcase your love for food adventure and culinary creativity. Love of food is something you can immediately demonstrate to your shoppers.

When you become highly differentiated, unique and relevant to people, your need to rely on heavy advertising spend to generate traffic declines. When you become remarkable in your shoppers’ eyes, people talk about their experience. Word of mouth is still the most effective form of marketing outreach at your disposal. It is an outcome of remarkable-ness.

Changing perspective may be hard to do because retail traditions and embedded thinking are more about logistics and efficiencies than experiences and food adventures. When the name of the game for decades has been how can we deliver food most cost-effectively – somewhere, we’ve lost sight of the real people who are buying the food – and meeting their needs beyond assortment and price.

When you can see merit in bringing to life the voices and stories of food makers and create ways for buyers to meet them, it lifts your banner above competing mostly on price and product range. That’s a race to the bottom no one wins and plays right into the hands of the endless digital shelf.

A supermarket chain CEO once said to me, “if you walk our office halls on any given day you may find it hard to determine if we’re in the food or hardware business. So much of what we do is too far removed from emotional connections to food and what people use it for.”

You just need to fall in love with food and its ability to transform people’s lives.

If this conversation gets you thinking and you would like to explore it further with like-minded people, use this link to start a conversation without any expectation of a business relationship save we made new friends.

Looking for more food for thought? Subscribe to the Emerging Trends Report.

Recession-proof category, but winners and losers

You probably sat down this morning at your kitchen-table-home-office, like every morning nowadays, looking at the screen in front of you like it’s a crystal ball. You’re hoping to conjure certainty in the face of little and gaze at a future with well-defined outcomes and assurances. This can be hard to come by. On occasion it helps to have some of the most experienced minds in your industry offer perspective.

Emergent asked four leading voices in the pet care business to weigh in on current conditions and provide their observations on where the business is headed for the balance of 2020. Helpful news ahead – we summarize the key takeaways at the end of this article.

Despite the economic chaos and roller-coaster conditions at retail, one thing remains steadfast and true – people assign a higher pocketbook priority to furry family members.

The headline: despite the pandemic impact on businesses generally, pet food remains on a trajectory to finish the year ahead of 2019. That said, there will be winners and losers in the battle to come. Retailers and pet parents will remember those brands which were there for them, that communicated to build trust, supported them and remained present – and those which didn’t.

Out of sight is out of mind and some brands have gone underground in the last two months, creating an open invitation for more progressive players to step in and take share. As you plan for what lies ahead, here are assessments and recommendations from experts the industry relies on for guidance.

Participating in this report are:

Mark Kalaygian, Editor-in-Chief, Pet Business

Lindsay Beaton, Editor, Petfood Industry

Glenn Polyn, Editor-in-Chief, Pet Age

Jennifer Semple, Editor, Pet Food Processing

It’s a time of uncertainty and contradictions

1. Pet brands are trying to navigate uncertainty in the supply chain (meat packing plant closures) on one side and retail sell-through on the other. What’s your best take on the state of the industry’s health and what do you foresee happening in the next six months?

Mark Kalaygian: “Based on what I’m seeing, the industry is quite healthy. All reports are that the supply chain is holding up nicely, with minimal, isolated disruptions caused by logistical issues, as opposed to production problems.” While e-commerce has picked up momentum, “I believe when stay-at-home orders relax, traditional shopping patterns will return,” he reports. “That said emphasis on omni-channel strategies are important when people have a more limited number of shopping excursions.”

Lindsay Beaton: “While stay-at-home orders and social distance concerns may have prevented some people from getting to physical stores, e-commerce saw 77% growth in March as people stockpiled. However choppy sales conditions may continue for the rest of the year.  My gut is pet food companies should look at their e-comm strategies not just for now but as a new standard for doing business.”

Glenn Polyn: “Pet brands are in a good place, all things considered. Any who may be under duress were probably struggling before the pandemic happened.” The grain-free segment, one of the industry’s strongest categories over the last decade, took a sales hit following DCM-related media reports. “Those who were already more impacted by a DCM (grain-free) slow-down may be experiencing added pressures,” he said.

Jennifer Semple: “Pet food is typically a recession-proof industry and is expected to remain one. Package Facts is still projecting 4% growth for the year.” Knowing the importance of impulse buying to some more discretionary categories at retail, “treat sales may well be soft until consumers have a comfort level to go out and shop at the store,” she said.

2. On the one hand we have evidence that the value proposition for pet ownership is at an all-time high and pet rescue and shelters are seeing a surge in adoptions, yet we’re also observing evidence of balance sheet strain such as some retailers cutting headcount and reducing employee hours. What do you think is impacting the conditions between growing enthusiasm for pets in the home and pet food category fiscal health?

Mark Kalaygian: “The high levels of quality time people are spending with pets, and new ones in the household, could lead to a trade up in food quality to brands carried (mostly) at independents.” Right now, FDM (Food Drug Mass) channels are experiencing a lot of traffic based on consumer response to stay-at-home orders, “there is SKU overlap between big box chain (Petco, etc.) and FDM channel that could create some erosion for big box if FDM shopping patterns persist. We saw a similar dynamic play out during the ‘08/’09 recession. We think food sales will remain strong. However, it will be (increasingly) important to optimize channel strategy,” he explained.

Lindsay Beaton: “It’s true that animal shelters all over the U.S. are seeing adoptions and fosters in numbers they’ve possibly never seen before. Many shelters had to reduce staff or shut down entirely to protect their human workers and volunteers when the COVID-19 pandemic began spreading. The best way to look after their animals was to get them into private homes. With employees suddenly telecommuting or with reduced work hours, communities responded heartily. At the same time, these (temporary or otherwise) pet owners were unable to get to physical stores to take care of their new furry companions. The current conditions have served to speed up an already-occurring migration to online channels.”

Glenn Polyn: “The retailers I have spoken to tell me that their sales are on a roller coaster ride that changes daily. One day there might be a huge wave of customers clearing the shelves only to be followed by the slowest of days with hardly any sales. Some retailers may be cutting staff, and that’s to be expected as customers are mostly going to be seeking necessities. And the fact that pet owners aren’t always walking up and down aisles means they aren’t going to be impulse buying. Considering the pandemic is such a unique event, the wave of adoptions might not be permanent once the nation returns back to some semblance of normalcy.”

Jennifer Semple: “Boston Consulting and IRI reported a surge in pet food sales during March, likely due to panic buying, and followed by a dip. Pet ownership levels are strong but many of the opportunities for impulse purchasing and trying new pet foods and treats are suppressed right now without as many people browsing in physical stores. As communities open up, the drive to feed, nurture and pamper pets will help revitalize the industry. In the near term I expect pet brands will focus on their best sellers, while tracking how consumers are spending.”

3. What is your best advice to pet food companies working to optimize their plans and navigate current market uncertainty? If you were CEO, what are the top three moves you would make?

Mark Kalaygian: “Going forward, a strong, clear channel strategy is in order in light of e-commerce growth. Independent pet specialty retailers were already paying close attention to how pet food companies were balancing their approach to omni-channel sales before the pandemic struck, and that is only going to increase in the months ahead.

“If I were running a pet food business I would focus on the following: Make sure the supply chain is consistent and working across all retail segments and partners, and not just the larger accounts. No independent pet retailer wants to deal with product shortages while a bigger competitor down the street enjoys high fill rates.

“With a fair amount of overlap already I would consider how to create uniqueness and distinctiveness for brands in independent vs. big box channels.

“Given the growth and shift to e-commerce shopping I would make an added effort to help independents compete more effectively with online specialists.”

Lindsay Beaton: “According to a recent PFI survey, only 11.9% of pet food manufacturers cited ingredient shortages or inconsistent supply as a top challenge. That said it’s better to be prepared with multiple options should any supplier conditions change.

“If I were a pet brand CEO, I would pay attention to:

“Anyone who was already set up for e-commerce had a significant leg up when the pandemic hit and everyone started staying at (and shopping from) home. Now a much larger portion of the pet-owning population has come to understand their e-tail options. Subscription purchasing surged 28% in March.

“It seems wise for pet brands to either be doing business on the larger e-comm platforms or helping specialty retailers make sure their e-commerce platforms are robust and marketed well.

“According to market surveys, by and large consumers are pleased with the way their brands of choice are handling the COVID-19 situation and want to continue hearing from them. When people head online it also means they are doing research there, checking influencer sites, reading product reviews, browsing social channels so it’s important to have your marketing house in order.”

Glenn Polyn: “Communication is vital. CEOs need to ensure the brand message is getting across to both pet owners and to retailers. On the one hand, you want to help consumers realize their pet lifestyle goals to keep pets happy and healthy, and perhaps share their stories on social media channels. Not to be overlooked, now is also the time to create well-written, engaging, interesting stories that help retailers and distributors understand how the company values (and understands) their efforts and how their concerns and needs are being supported.”

Jennifer Semple: “If I were making the calls at a pet food company, I would communicate, communicate, communicate. I would frequently talk to distribution partners, retail owners, competitors and friends in the business to gauge what is resonating with customers, what the customer concerns are, how their purchasing habits are evolving, and I would optimize my processing efforts to better serve what I’m seeing in the market.

“I would also look to diversify to meet another product need, serve another distribution or sales channel, or identify how I could help another company serve their customers better by manufacturing for them.

“Another priority would be to rally the troops within the company. Be open with where the company currently stands, what the immediate priorities are and what the near-term and long-term goals are. I would provide avenues to receive input and ideas from all corners of the company to identify the clearest, most direct path to growth and opportunity. I think many companies are successful because they create a culture of ‘we’re all in this together’ and from that culture gain a better understanding of the company’s true strengths and opportunities.”

Optimism if the right moves are made

It’s cathartic to hear the words and passion coming from those who so closely follow the pet care industry and by virtue of their occupation, have routine detailed conversations with the leaders of many businesses both big and small. Anytime you see the words ‘recession proof’ in a sentence it brings a measure of confidence.

But the challenges nonetheless are steep and varied. Some brands will come out ahead and some will lose ground despite the forecasts. The reason is straightforward: uncertainty can sponsor a form of organizational retreat and withdrawal. While understandable, that condition helps create a self-fulfilling prophecy of defeat. It requires a measure of business moxie to stand in the breach and operate progressively.

Yet that is our call to action to the leaders who read this report. Here, in sum, is the counsel of your pet food prophets:

• The business remains generally in good condition despite a faltering economy.
• Communication is a resounding call to action and was repeated over and over for the very reason the experts have taken note of a retreat to silence. Not every story or word needs to be treated like a CIA top security file disclosure. Talking to customers and pet parents is necessary, important and will be rewarded.
• In a related insight, keep the intel investments going to assess how consumer attitudes and behaviors are shifting within this new cultural minefield they’re living in. To truly know them and their aspirations and concerns is the secret sauce for more effective marketing investments and messaging strategies.
• Segments of the business driven largely by impulse buying will indeed take a hit until store browsing fully returns.
• E-commerce is big and getting bigger, and likely to remain an important channel long after the pandemic recedes, so best to map strategy now.
• When assets are tight and every dollar needs to work like 10, focus on your best sellers and prioritize.
• Pay attention to supply chain conditions and make sure you have strategies in place should a healthy “Plan B” be required for continuity purposes.

It is important to know that as much as experts see some insulation for the pet food business given the out-sized priority families assign to pets, multiplied by their growing value in a chaotic, less secure world, it is the actions leaders take now that will inform the business outcome later.

Your true north is operating in service of retailer and pet parent needs, aspirations and the health and wellness of pets. Being mindful of consumer concerns and needs can help shape the one thing our experts repeated most often: communicate, communicate, communicate.

Editorial note: Emergent would like to express our heartfelt thanks to each of the editors who participated in this story. We appreciate your time and efforts to help inform the industry.

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Being relevant and valued in the moment of need

The New Yorker published a story chronicling China’s historic crackdown on the movement of people in public places in an effort to control spread of the virus. An interesting outcome is that home (quarantine) cooking is on a rapid rise especially among younger Chinese consumers who previously were much more likely to outsource their meals.

As massive numbers of people must stay home, turn on the stove and make their own food, popular Chinese social channels such as Douyin and Weibo are turning into online quarantine-driven cookbooks with recipes, journals and menu suggestions. Home grocery delivery is equally impacted. People are ordering the ingredients used that will help hone their cooking skills while they also discover the benefits of greater control over flavors, ingredients and preparations.

This event has disrupted normal food consumption habits and required many with limited cooking skills to seek support, inspiration, comradery and cooking tips to weather this lifestyle altering storm. This may have long-lasting impacts on food making and buying behaviors.

Home and hearth offer stability in an uncertain world

We’ve written before about the skyrocketing growth in online ordering through delivery apps like GrubHub and Doordash. This growth is connected to the consumer’s desire for convenience but driven in part by a sense of greater safety and control at home in a world that appears to grow less friendly and out of control by the day. Online everything allows the consumer to shop and also to eat easily without having to venture outside the household sanctuary. This is a powerful motivator that may only accelerate in the face of COVID-19.

The need for help – an opportunity in the making

Food retailers and brands are facing an extraordinary moment when behaviors and offers could coalesce to help consumers realize new home-based food consumption habits and even culinary ambitions. Of course, there will be a need to prepare for a potential onslaught of online ordering that could tax delivery services.

However, and importantly, there is an enormous opportunity here for retail, food brands and meal kit providers to be of help to consumers in gearing up for home cooking realities and adventures. Conditions like the potential of a pandemic are unusual and may create behavior shifts that will continue beyond the end of the crisis.

• Here it is simply stated: how can you help the consumer with a rapid rise in home cooking occasions and a parallel need to know more about creating menus, meal preparation techniques, ingredients, food storage and safe handling, and sharing their experiences and ideas with others in your brand communities?

Now is the time to step up with tools and resources designed to enable these at-home eating experiences while positioning your banner and brand as a go-to, empathetic voice and valued resource.

Home cooking tool time

Some recommendations on the path forward:

• Publish download-able menus tied to special offers and connected to shopping lists.
• Serve as guide by providing instruction via online video on cooking skills and techniques – especially for vegetable dish preparations that aren’t as well understood.
• Inspire the home cook by bringing chef techniques and voices to the table on cooking hacks and layering flavors.
• Enable social sharing of meal ideas and preparations among your shopper community.
• If ever there was an Instagram moment, this is it. Your social pages can be a helpful, informative and inspiration resource for novice home cooks.
• Answer common food preparation and storage questions like, should you refrigerate berries or should you avoid storing apples near bananas. Shelf life questions will likely be common.
• Communicate early and often on food delivery conditions, wait times and manage those expectations.
• Get creative: food retailers can offer online meet ups and interactive webinars that will help families manage at-home events and dinner parties (social channel broadcast opportunity).
• In short, become a resource and not just a product source.

Emergent believes this return to the kitchen is likely to have a lasting impact on the growth of e-commerce grocery ordering, and a long term upswing in home cooking.

If you’re wondering how to navigate this rapidly changing environment, we can help.

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The Vital Role of Velocity in the Growth of Emerging Brands

Every new, emerging food and beverage brand is a leap of faith for the founders. It’s also a leap of faith for the retailers who put those new products on the shelf. For this reason, a near universal yardstick is used to determine if the product is a winner and thus a longer-term player, or if it’s a bust and headed towards delisting. That unalterable path to traction and success, or lack thereof, is velocity.

Velocity in simple terms is the repeat purchase data that shows what happens following the initial run-up on trial after a product is launched at retail. The question retailers are attempting to answer: are purchases escalating as users come back again and again while new users continue to enter the top of the sales funnel?

For most new successful brands, a heavy category user audience has resonated to the product and fuels the outcome. Getting to this sweet spot isn’t luck of the draw or guaranteed once the product is on shelf.

There are two primary drivers of velocity:

1. Memorability – the consumer remembers your brand name and seeks it out
2. Effectively answering the “why” – every successful food or beverage has a primary ”why” that draws fans in time after time. The “why” can be defined as the primary dietary objective or problem that the product solves.

Both of these drivers are marketing challenges. Yet far too often, we find founders and investors preoccupied with the finer points of securing distribution gains (meeting with distributors and retail buyers), ingredient sourcing and manufacture (getting the product out the door) and financial management of both.

It may appear that the ability to scale the business is best served by adding more retail accounts or driving more traffic to the web site. While in fact, if velocity is not successfully managed, and the memorability and the “why” go unattended, greater risk is injected into the business.

Number one error going in

In the very early going before any brand equity exists, product experience is the primary reason why early adopters come back. Simply said, the promise is fulfilled in the eating and drinking experience. The product taste is a home-run and the expectations on healthier, higher-quality choice are delivered.

This means that in the early periods before any retail scale is achieved, it is vital to seek input and review from the product’s best users to determine if any tweaks need to be made to the recipe, texture or flavor profile. If the product is optimal then added distribution makes sense.

However far too often there’s a false sense of security embedded in the initial product experience win. This may prompt the brand’s owners to mistakenly believe once on shelf the product will sell itself. “If you build it, they will come” is a precarious trail to navigate because other key ingredients in managing velocity goals go unaddressed.

Bandwidth can be a challenge here because there’s already so much on the plate for founders in the day-to-day struggle to get the product made and off to distributors or retail outlets. More often than not, we find that business owners are not expert marketers and can at times assume that marketing consists only of social channel posts or sending out press releases. There’s much more to it than that.

How to manage velocity

Memorability is required to get consumers coming back again and again. This puts greater pressure on the web site, packaging and consumer-facing communication to bring the brand front and center in the context of the consumer’s needs and wants.

However, it is right here where the most frequent fundamental errors are made. Most emerging brands cast the story upside down. They believe the story should be about themselves and their product attributes and benefits. When that happens, the story is embedded with a disconnect right out of the gate, because it casts the brand as the hero.

Every consumer, every day wakes up believing they are the hero of their life story. When the brand presents itself as a hero, it competes with the consumer for that role and people walk on by in search of a guide to help them solve their needs. The construction of the story is paramount, with the consumer as hero and the brand operating as the expert guide and coach on their journey.

The story is about them, the consumer, and their wants, needs, concerns, aspirations, desires and challenges. The consumer needs to find themselves in the story you are telling. Then and only then will they engage and listen.

This is the path to relevance, an essential ingredient in effective marketing strategy.

For the most part new, emerging businesses are b-to-b players, devoting most of their time, energy and communication to investor, trade and distributor audiences. So, it’s no surprise the skill sets in consumer-facing outreach may not be fully developed. The story creation is a top priority and is best done by experienced, creative marketing brains who have the skill sets to build it, and then move the story in earned, owned and (later) paid media channels.

This leads us to the second key element of velocity – the “why”

There’s a key message that needs to be addressed in all forms of outreach from package to outbound communication. What is the primary dietary need or want your product solves that keeps people coming back? Insight research is vital here to determine what the “why” is. Is it weight management? Is it energy? Is it an indulgent reward? Nearly every food and beverage category has a heavy user audience whose purchase frequency is a vital component to achieving velocity objectives. Interviewing these heavy users to get your arms around the “why” is vital to managing velocity because the answer should become a focus of your messaging and hammered everywhere.

People are interesting creatures – we all are – and we never tax our brains if the message is too complicated or dense. Far too often new brands turn their packages into a Heinz 57 variety of claims and benefits in the hopes that one of the many bullets will register. However, consumers will not invest the time and energy to wade through all of that to find something – anything – meaningful to them.

Instead they move on.

Simple, clear, concise messaging is incredibly important especially in a retail setting where the consumer may allocate only a second or two of brain time before they walk past. This explains the importance of the “why” and how it becomes a core area of messaging focus in an effort to simplify what’s being conveyed.

The role of emotion

Another key insight – people are not analytical, fact-based decision-making machines. We are led by the heart over the head. It is the feeling people have in the presence of your brand that impacts whether they are drawn closer or repelled.

Emotional storytelling is important because it respects what we know about people and how they operate. The emotional stories of improvement or change experienced by users can be a vital component of bringing this insight to life. Authentic, real stories are more powerful than the old “that’s why we” tropes of traditional, self-promotional advertising.

“Trusted” is the desired result – and that is best earned through honesty, transparency and a brand voice that is human and real, not ad-like.

Video is an excellent medium for emotional storytelling because words, pictures and music can be combined to achieve that effect. Unscripted testimonials can be valuable here because they’re authentic, relate-able, and honest.

Intentional message design

Words matter. Dialing in emotion, the “why” and a more human, conversational voice are important when creating consumer-facing outreach. It’s harder than it looks and must be done with intention.

When memorability and the “why” are correctly brought to life, velocity outcomes can be managed in earnest. When you know that your heavy users have found themselves and their needs in this incredibly exciting brand and its mission – and are responding as hoped – real velocity management has begun. The scale will come.

We can help you build the right story.

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