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Emerging Trends Threaten Pet Specialty Retailers and Decades of Growth: Euromonitor Partners with Petfood Forum 2017

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A Dramatic Acceleration for e-Commerce

While internet retailing in pet care has been slower to develop than other categories like electronics or appliances, it took a major step forward in 2016. Growth was particularly strong in dog and cat food, which has traditionally trailed pet products like medications or supplies in terms of online penetration. As Millennials become an increasingly important group of pet owners, the proclivity of this generation to shop online is driving strong growth in e-commerce. At the same time, online retailers like Amazon and Chewy have created attractive subscription programs with recurring shipments. These offer the ultimate in convenience, as a pre-set quantity of food is automatically billed and shipped to a consumer’s home each month, saving both the time spent shopping and the task of carrying and transporting heavy bags of food. Finally, store-based retailers have dramatically expanded programs to shop online and pick up in store. Offerings like Walmart Grocery Pickup or Kroger ClickList can save busy consumers a lot of time at the store and are proving to be very popular with families. For these reasons, internet retailing’s share of total dog and cat food sales is expected to reach nearly 5% in 2017 – up from only 3% in 2015.

The Rise of “Mass-Premium”

To maintain an upscale image, many premium dog and cat food brands only sell their products through pet shops and superstores. As a result, supermarkets, hypermarkets and mass merchandisers were left with a historic focus on economy and mid-priced brands. For decades, therefore, specialists have seen dramatic share growth as pet humanisation trends led owners to increasingly seek premium foods. Recent developments, however, threaten this longstanding division between “premium” and “mass” pet food channels. First, a new subset of “mass-premium” brands – led by Ainsworth’s Rachael Ray Nutrish – has witnessed dramatic growth by selling premium food through supermarkets and mass merchandisers instead of pet specialists. Many consumers enjoy the convenience of buying premium pet food during regular trips to the grocery store, and the natural, grain-free and meat-first offerings from Nutrish really capture broader trends driving growth in pet food. In early 2017, Big Heart Pet also launched Nature’s Recipe – a brand typically only sold in pet specialty – in mass channels for the first time. As competition intensifies in the specialty space, other premium brands may follow suit, effectively blurring the traditional differences between “mass” and “premium” channels for pet food.

Challenges Ahead for Pet Specialty

These trends are a significant challenge to pet specialty stores on two fronts. First, subscription-based sales eliminate the need for regular store visits, cutting into both regular food purchases and impulse-driven sales once owners are inside a pet store. Second, the rise of “mass-premium” brands may also eliminate trips to pet specialty stores, as owners can buy super-premium food as part of regular grocery shopping trips. In response to these threats, pet specialty retailers are taking steps to remain competitive. Retailers are developing their own natural private label lines – often called “Value Naturals” – to better compete with the rise of “mass-premium” brands. At the same time, many are improving their own capabilities in e-commerce, including PetSmart’s launch of same-day delivery and subscription programs in November 2016. Services are another competitive advantage, as grooming, training and boarding drive store traffic and develop customer loyalty. Finally, training and maintaining a skilled retail staff is a key priority for pet specialists in order to provide information, advice and tips to pet parents. Despite these efforts, however, the road ahead for pet specialists will be a challenging one, especially as Millennials become an increasingly prominent group of pet owners.

Petfood Forum

  • Date: April 3-5, 2017
  • Location: Kansas City, MO
  • Link: http://www.petfoodforumevents.com/
  • Event Description: In this rapidly-changing environment, pet food manufacturers and retailers need to make informed decisions to remain competitive. In this regard, Petfood Forum can be a powerful tool for the industry. By providing industry leaders with powerful insights and emerging trends, this conference can help companies capitalize on the dramatic shifts taking place in the market today. Featuring in-depth sessions on ingredients, nutrition, marketing, technology and industry trends, Petfood Forum can help companies build a strategy and transform themselves to best capture the next generation of consumers in an increasingly complex retail environment.
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