Pet Age recently spoke with Tim Blurton, CEO of Hyper Pet, who provided valuable insight into how the company plans to shape the dog sector of the industry.
Q How are you driving innovation at Hyper Pet?
A Over the past two years, we have significantly invested in our product design and development capabilities. We have hired a number of new designers, including bringing in one of the foremost designers in the pet industry, Ryan Rutherford, to head up our product development activities. In addition, we opened a new design office in New Jersey equipped with the latest 3D modelling technology to allow us to quickly develop new products and to visualize and test new concepts and designs.
This year, as in the past, we have put lots of time and focus on reaching out and listening to both retailers and consumers to understand what problems pet owners are facing, what types of products and toys they enjoy, and to understand their views on products and designs. This feedback is all built into our product design and development process. And, once we have final prototypes and samples, we often use our connections with local shelters and rescues to get feedback about the products and especially their durability from people who really know dogs and work with them every day.
Q What are the benefits of Hyper Pet being owned by a private equity company?
A Before Hyper Pet was acquired by Guardian Capital Partners, it was much harder for the company to invest in longer-term activities and to attract the amazing skills and talents across all of our departments—from operations to sales and new product development—that we have currently to drive the business forward. Now we have a strong blend of new talent and ideas, combined with the amazing team that was always at Hyper Pet, committed to giving great experiences to pet owners and their pets and great service to retailers.
With the PE company’s confidence in the future of Hyper Pet, we have been able to invest in a purpose-built 100,000-square-foot, state-of-the-art warehouse and corporate office facility in Wichita, Kansas. This allows us to become much more efficient and to provide even better service to our retail partners.
We have also been able to make some other strategic acquisitions, including the purchase of Aussie Naturals that added both Natural Toys and Single Protein Natural chews to our portfolio. This has not only allowed us to provide a broader service to all our customer base but has led to the development of new product categories such as Choys—the combination of toys and natural chews—that are beginning to be a huge success in the marketplace.
PE has given us access to a lot of additional resources at the advisory level but also in terms of strategic marketing. This has allowed us, for example, both to improve the pack design of all our brands to be more contemporary and more informative to consumers, and to completely redevelop our websites to allow us to provide much better information on our products to both retailers and consumers in one location.
Q How does product differentiation protect the independent pet retailer?
A At Hyper Pet, we believe strongly in differentiating clearly between brands and products across retail categories and sometimes between retailers in a category. The different routes to market to independent pet stores and to large pet specialty chains, to the mass channels and in particular to the fast-growing e-commerce world create challenges to ensure that each retailer is able to offer value to their customers and to remain competitive in the broader marketplace.
There are many ways to address this, and most commonly, companies rely on MAP pricing to ensure that the independent channel is protected from the competitive pricing nature of the new e-commerce channel. Unfortunately, the complexity of this system makes it very difficult for manufacturers to effectively police. Although Hyper Pet does employ MAP policies as a tool, we rely much more heavily on differentiation of brands and product designs. Our PETLOGIX, Aussie Naturals and Wild Eats brands are dedicated exclusively to the pet specialty channel and are sold primarily to independent pet stores. The products and designs within these brands are clearly differentiated from the products in our mass brand ranges.
Q Why does Hyper Pet utilize direct distribution to independent pet retailers?
A When Hyper Pet acquired Aussie Naturals, we adopted the same direct distribution model to independent pet retailers that Aussie had used successfully for many years. We have a team of independent reps that call on stores and explain our new products and can provide training to store staff on both new and existing products. The reps will sell predominantly Hyper Pet products amongst a handful of other non-competing brands; they are extremely knowledgeable about the various Hyper Pet ranges and are directly connected to the Hyper Pet headquarters, in cases where they need further support. We also have support staff available by phone.
One key advantage for stores compared to going through distribution is that all of our products can be ordered direct from us so the stores do not have to worry if the distributor is stocking only certain items of the range. Also, the level of service is higher because there is no risk of the product being out of stock at a certain distributor—if we have the product in stock in the USA, it will be delivered. Since we see the demand directly from stores, we are in a better position to forecast accurately and ensure we remain in stock of all items the majority of the time. This has improved over the past few years, as we have worked hard to improve and give ever more excellent customer service.
Using direct distribution, we get more immediate feedback about our products—whether it is positive feedback or areas where we can improve products or service. Direct distribution also allows us to ensure that promotional offers and opportunities are directly available to retailers and so can be passed on to the consumers to drive volume and produce greater revenues and profits for retailers.