Twenty years ago, during the golden age of the grocery store pet aisle, people bought pet food in the same store where they bought people food. Then came a difficult duo for the grocery store to beat: the specialty pet store with aisles of appealing pet supplies, and the baby boomer who loves his pets with fiscal abandon.

The result is that grocery stores, which had a 75 percent to 85 percent market share for pet food and cat litter in the 1980s, now have 37 percent of that market, says Bob Vetere, chief operating officer of the Greenwich, Conn.-based American Pet Products Manufacturers Association. Baby boomers, enchanted with the specialty stores' selection, now go there to buy pet supplies, taking their pet food business with them.

Conventional grocery stores "have caught on and are fighting back," Vetere says. Natural products stores, however, seem unconvinced they can win the war. Yet natural products stores are well positioned to recapture pet food dollars, Vetere says. They can stop the drain and even increase revenue in their pet sections with a single strategy: If you have limited space and you sell pet food, sell pet toys. Not leashes, not beds, not coats. Toys.

And why not try? Americans spend $36 billion a year, twice what they paid just 10 years ago, on their pets, Vetere says. "Baby boomers are into pets," he says. "And they're looking to reward their pets in human terms." So they buy natural pet food and treats, as well as expensive pet beds, high-tech water dishes, little pet coats and pet shoes, doggie cell phones and well-made pet toys.

But most of these items are uncommon purchases. A dog, no matter how pampered, doesn't use a lot of beds or wear out his little Nikes. So a natural products store need not sell those if space is limited. Pets go through food and toys. "What keeps the dollars in the store? The food and toy relationship," says Spencer Williams, president of pet toy manufacturer West Paw Design in Bozeman, Mont.

"If they're carrying food for the pet, it only makes sense that they'd look at pet needs that come up regularly," he says. "They'll be losing sales to the pet stores, to the Wal-Marts, if they don't carry them."

A natural products store that "doesn't take advantage of [the pet toy] market is making a big mistake," Vetere says. "They have a captive audience, and this is a natural line extension." Pet toys will also bring in higher profits than pet food; the markup for pet toys is 100 percent, Williams says. The key to selling pet toys in a natural products store, however, is to sell those that align with your customers' values.

"Know your customers," Vetere says. "Look at the toys through your customers' eyes."

What makes a pet toy appealing to a natural products consumer?

Go to a pet supply trade show, and browse the Internet to find interesting new pet toys, Vetere suggests. Those selling well include high-tech toys that make noise or light up, pull toys, squeaky toys and interactive toys, he says.

If space is an issue, don't use a lot. Hang the toys on vertical clips attached to the shelves that hold the pet food, suggests Brad Johnson, national grocery buyer for the Boulder, Colo.-based Wild Oats Natural Marketplace stores.

Johnson says his chain used to carry several pet toy lines but is now experimenting with stocking only Planet Dog's toys and Priscilla's cat toys. The big barrier he sees in selling pet toys is distribution. With no warehouse to store toys, his individual stores have to stock small shipments. Once the toys sell, the stores need a quick turnaround on the next shipment because they have little in storage.

Johnson says he sells pet toys because he knows his customers want them, and he doesn't want to lose business to the specialty stores. It's important to be selective about the toys a natural products store carries and to vary the supplies enough so you appear to offer a complete selection, he says.

Mother's Market & Kitchen in Orange County, Calif., hasn't carried many pet toys in the past, but buyer Sharon Macgurn is considering adding more pet toys after a holiday item flew off her shelves. "I picked up a pet toy for Christmas this year. It's called a Babble Ball (made by Pet Qwerks in Laguna Nigel, Calif.), and they just sold like crazy," she says. Mother's doesn't have room for a lot of pet toys, but because it carries pet food and supplements, Macgurn's trying to find space-saving ways to carry more toys.

Because the typical pet-toy buyer is an affluent empty nester, the price natural products stores can charge for toys is good. Natural products customers "are already predisposed to spend a few more dollars for what they want," Vetere says. "I don't think $25 to $30 for a pet toy is out of the question."

"A consumer who loves their four-legged best friend doesn't necessarily look at the end price," Volo says. "What they look for is a great quality at a fair value."

Boelke says that while most cat toys sell for under $3, "there are some very good products in the $20 to $30 range, and I am now working on a new cat toy that I expect will sell for $40."

Williams adds that most pet toys stay in the range of $5 to $14 a toy. He says retailers should choose manufacturers that offer quick shipments so the store can keep less stock on hand. "It is a natural evolution to see dog and cat toys in lifestyle-oriented natural products stores," Volo says. But because natural products customers aren't prepared to see pet toys in the store, make sure to carry them next to the pet food, she says.

Amy Bernard Satterfield is a freelance writer and a journalism teacher at Colorado State University in Fort Collins, Colo.

Natural Foods Merchandiser volume XXVII/number 3/p. 104, 106, 109