Kurgo: Creating a Retail Category

April 2016

The role of a family pet has changed in recent years. Greeting their owners at the door with tail wagging is a thing of the past; dogs have become true travel companions and copilots to the modern explorer. 

In 2003, brothers Gordie and Kitter Spater tapped into that lifestyle, launching the Backseat Barrier. It was a product they built in their Newburyport basement, and it really took off in the Sky Mall catalog. They may not have known it at the time, but that initial, cool product would spearhead the creation of their dynamic company Kurgo, and a niche pet retail category.

“We’ve seen a lot of success since then,” asserts Gordie. “The dog travel category didn’t really exist in stores prior to that. But if you go into Petco today, you’ll see an entire section dedicated to how best to travel with your dog. This shows people are getting out with dogs now more than ever. From a historic perspective, 25 years ago, 75 percent of dogs spent the night in the doghouse. Now, 75 percent of dogs sleep in their owners’ beds. The segment has grown and there’s still more opportunity.” 

To Gordie’s point about the available opportunity: According to the American Pet Products Association, Americans spent more the $60 billion on pets in 2015, up about 25 percent from just five years ago.

His comment regarding the success of their company, Kurgo, now located in Salisbury, isn’t just hyperbole. It has grown into a true market leader, with global distribution of more than 300 products and $12 million in annual revenues. As far as dominating the category goes, “competitors do exist, but we have 80 percent penetration in pet stores across the U.S. and Canada,” says Gordie. Ninety-five percent of Kurgo’s business consists of B2B sales from its Chicago warehouse to larger companies like Petco and Pet Life, and to independent retailers like Natural Dog, a single shop in Newburyport. The company is also experiencing significant growth through its direct-to-consumer ecommerce channel, Kurgo.com.

Cool is the rule

From the Backseat Barrier, Kurgo’s catalog has ballooned into an array of cool dog travel products, including unique designs spanning a dog owner’s busy lifestyle, from dog harnesses, vests specifically designed for kayaking and coats with LED lighting, to dog hammocks, a tufted car seat cover, dog backpacks, and much more. “Dog travel might be the main category,” Kitter adds, “but we’re really all about providing everything you need to get out and enjoy life with your dog.”

If cool factor drives a lot of Kurgo’s product success, that clearly extends to its corporate culture. Gordie describes the dog-centric office as a “work hard, play hard” environment, where pets have become an extension of the workforce, helping to test new products and acting as a low-cost wellness benefit by keeping employee stress levels down. “It’s definitely a working culture, but the dogs being here also lends an air of humor to the day,” notes Kitter. 

With its refreshing culture and North Shore beach town location, Kurgo has attracted 20+ dedicated employees from throughout the region. The draw is understandable. While everyone is diligent in the development and production of their products, Kurgo has a strong focus on fun. The company sponsors a wide range of pleasure and service outings, and everyone gets the day off on their birthday. Kurgo even takes market competition to enjoyable new levels, recently sponsoring a kickball game with a rival pet supply company.

So what’s next for Kurgo? It’s now in the midst of introducing a line of “backyard” toys designed to mimic the badminton birdie and rubber horseshoes Rover has always loved. In keeping with fresh takes on the real thing, Kurgo has also developed a product for use at the beach called a Skipping Stone. Shaped just like a smooth, thin rock you might find at the beach, it’s made of rubber and floats. 

Partners in growth

As Kurgo gets ready to shift into an even higher gear, Gordie notes that he has the right support in place to help the company grow. “We recently shifted from a corporate bank to Salem Five,” he explains. “In the past, I would sit across the table from our banker and get assurances that the person I was speaking to was a decision-maker and that everything we needed in terms of financing, etc., would be taken care of. But it turned out it wasn’t working that way. It became clear I needed to have a great relationship with my bank, but not one that I thought or worried about frequently.”

He wasn’t looking for the biggest bank, says Gordie, but one that could grow with Kurgo. He wanted to know that his bank could handle the needs and challenges of doing business internationally, be flexible with credit needs, and have the right tools—and understanding—to help an expanding business like his. 

“Long before we had a proposal on the table, Kevin Rourke, the commercial division leader at Salem Five Bank, came out to meet us to learn about our business,” Gordie states. “In fact, everyone we met at the bank took a genuine interest in our business. It helps to know that, as we grow, we have the ability to have an honest conversation with our banker; that we have a long-term partner in place. When we switched, the cash management group was on top of everything and helped us every step of the way. It wasn’t a ‘sign these forms and send them back’ kind of thing. It’s been a true relationship.”