News / Industry News & Events / Competitive Advantage (02/14/19)

Competitive Advantage

02/14/19

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Carrying frozen fish food and keeping a variety in stock allows retailers to maintain the edge in this category. The marine side of the hobby is doing well, according to industry experts, and, as a result, pet specialty retailers are seeing a shift toward frozen food offerings. This uptick in the category is certainly helping brick-and-mortars as online competition continues to heat up.

Customers increasingly look to provide their fish with higher-quality diets, retailers reported.

People are so obsessed with what their dogs and cats eat, said Juliane Chambers, assistant manager of the Aquarium Center in Clementon, N.J. I think some people even take a little bit more care for their pets diets than their own diet. The same could be said sometimes for fish. Quality food has become much more available in the last five years or so.

Retailers are also seeing younger hobbyists approach the marine side of the hobby, driving new trends in the space.

Most of our saltwater customers are from the younger generation these days, Chambers said. The older generation was really into it. But now a lot of millennials are getting into it, and they are more specific. They ask more questions, and they dont like run-of-the-mill stuff. They like to go outside of the box.

This demographic shift is affecting what marine foods customers are asking for.

The overall market may not be experiencing as rosy of sales growth in flakes or pellets as we are seeing, said Kelly J. Randall, marketing director of Omega Sea in Painesville, Ohio. The APPA [American Pet Products Association] National Pet Owners Survey shows flake purchases for freshwater fish owners up ever so slightly year-over-year77 percent in 2014 versus 79 percent in 2016and down for saltwater fish owners75 percent versus 69 percentso overall I would say its flat to down. The APPA data also indicates that younger fish owners buy flakes less and pellets more than their older counterparts.

In contrast, frozen sales are growing, retailers reported.

Customers are moving toward the frozen stuff, said Sean Crerar, co-owner of Lil Shop of Reefs in Woodland, Calif. We have more food for saltwater in our freezer than we do in the dry goods section.

While flake and pellet sales are still a factor, and retailers are still stocking both types heavily in-store, increasingly, its a necessity to have a freezer on-site to maintain and grow marine food sales.

People are gravitating more towards the frozen stuff in our store in general, said James E. Minigh, owner of Bluewater Reef Aquatics in Holy Hill, Fla. Its healthier and creates less waste.

New Products

Fresh & Frozen

While there have been some developments in the pellet and flake side of the marine food segment, newer frozen and coral offerings are also appearing on the market.

Hikari recently introduced Reef Riot, a blizzard-type food for reef tank hobbyists, said Chris Clevers, president of Hikari Sales USA in Hayward, Calif. The line includes two formulasone for carnivores and one for herbivoresthat feature a mix of ingredients in varying sizes for corals and fish.

Hikari also recently introduced its Lake Okanagan Canadian Freshwater Mysis Shrimp in cube form, Clevers added.

Our customers have been asking for [the cube form] since we introduced this line a number of years ago, Clevers said. Like the Reef Riot line, [the Mysis shrimp] too have had bio-encapsulated multivitamins added and have been through our 3-Step Sterilization process.

Coral foods have become extremely popular, as well, and new offerings are hitting the market.

Most of the new marine foods have been coral foods, said Erin Powers, owner of All Things Aquariums in Wilsonville, Ore. I carry Rods Reef foods, Hikari and San Francisco Bay Brand. In terms of dry foods, I carry Aquadine, which is more of a premium food. I also carry Hikari and Ocean Nutrition.

New coral offerings also play to the trend of customers seeking quality, especially for pricey livestock such as corals.

There have been a few new coral foods coming out, but nothing crazy as far as new fish food, said James E. Minigh, owner of Bluewater Reef Aquatics in Holy Hill, Fla. Benepets coral food is one of the better ones on the market. The powder they just came out with feeds everything from bacteria to copepods, arthropods and all the microfauna, so it helps the tank all the way around.

Omega One has also changed up its flake line with a packaging refresh, said Kelly J. Randall, marketing director of the Painesville, Ohio-based company.

For the last six months, we have been hard at work on our packaging relaunch, she said. All of our flakes have received a major facelift for our 20th anniversary.

Pricing Trends

Frozen Market Share

Price sensitivity is not something pet specialty retailers that do business in the aquatics segment can afford to ignore, but todays aquatic hobbyists are open to spending what it takes to buy high-quality fish foods for their tanks, according to industry experts.

Sean Crerar, co-owner of Lil Shop of Reefs in Woodland, Calif., normally sees customers spend a modest amount per visit.

Customers are usually going to spend under $20 on food, Crerar said. Some will come in and spend $80 on food every month.

Other retailers have seen frozen offerings take up a very large percentage of their overall marine foods sales.

Frozen offerings take about 80 percent of sales in my store versus everything else in the marine food segment, said Erin Powers, owner of All Things Aquariums in Wilsonville, Ore. That percentage has stayed fairly steady. Most of my customers supplement with dry foods because I recommend it, but they still prefer frozen.

The average customer at All Things Aquariums is spending between $10 and $20 per visit on marine foods, Powers added. The $20 mark seems to be the average amount spent per visit, according to most retailers.

At the Aquarium Center in Clementon, N.J, the average customer spends approximately $20 on frozen food for one purchase, but it can vary based on their tank, said Juliane Chambers, assistant manager.

Theres a customer that comes in and spends around $60 a month on frozen food, Chambers added. In terms of my marine food sales, its split 50-50 between frozen and dry.

Many customers will mix and match, as well, so offering a variety is in retailers best interests.

Frozen probably makes up 30 to 40 percent of my sales, said James E. Minigh, owner of Bluewater Reef Aquatics in Holy Hill, Fla. Im all fish and reef. Customers are spending around $40 per visit on marine foods. Not a lot of people will buy just one pack of food. Theyll buy a pack of food and a little bit of pellet or some coral food. There are always multiple pieces, but usually it all starts at the $20 frozen mark and goes up from there.

Customer Education

Serving Savvy Consumers

Product recommendations from knowledgeable sales staff are extremely effective in helping pet specialty retailers drive sales of marine foods, industry participants report.

The customer is going to rely on our information for their purchases, especially on food, said Erin Powers, owner of All Things Aquariums in Wilsonville, Ore. Theyre going to buy whatever we recommend, basically. Unless theyre really on a budget and they are looking for the cheapest option.

The marine hobby is pricier by nature, so retailers can often count on customers being willing to spend a little more for their fish food. In addition, nonspecialist retailers and big-box competition generally cant compete with local fish store expertise.

When customers realize whats really going onthat theyre getting bad adviceits a deterrent for them to visit [another retailer], said Sean Crerar, co-owner of Lil Shop of Reefs in Woodland, Calif. By establishing a rapport early, retailers can build a repeat customer base.

Its all about education, said Juliane Chambers, assistant manager of the Aquarium Center in Clementon, N.J. Its best to catch somebody in the beginning and let them know about the work involved.

Sales are a part of it, but for me, not so much. Its nice to sell customers [pricier] food, but thats not why Im giving it to them, she added. Im promoting it because its better, healthier food. When it comes to saltwater fish, especially regarding their health, food is everything.

Hobbyists are increasingly aware of the value of quality foods and are rewarding stores that offer the best product assortment and customer service with their patronage.

I attribute our success to the consumer becoming more educated and aware of the benefits of high-quality ingredients in fish food, said Kelly J. Randall, marketing director of Omega Sea in Painesville, Ohio. As long as you have a loyal customer coming back for your excellent service and education, then I think it makes sense to encourage more-frequent purchases of smaller-sized containers in a variety of types. This just gives you more opportunities to educate, serve and interact with the customers.