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How Grocers Are Capitalizing on the Pet Category

Premium brands entering mainstream store aisles is fueling growth
Photograph: Shutterstock

There’s good news on the pet front for retailers hoping to capitalize on the category in 2019. “For the first time in decades, sales growth of pet food in the mass market channel, including grocery, outpaced growth in pet specialty in 2017,” says Debbie Phillips-Donaldson, editor-in-chief of Petfood Industry and Petfood Forum, both produced by Rockford, Ill.-based Watt Global Media.

Recent data from Nielsen shows spending is up channelwide. During the past year alone,

Americans spent nearly $33 billion on pet food and treats. While those sales are coming from both online and in-store, e-commerce has seen 53% dollar growth during the past year across pet consumables, with dog food and treats up 52% and cat food and treats up 54% compared to a year ago.

Mainstream brick-and-mortar retailers also are holding strong. “While growth has remained modest, this year has seen upwards of $16 billion in pet food fly through mainstream brick-and-mortar doors, up nearly 2% from a year ago,” Nielsen reports.

What’s driving the increase? The emergence of premium pet food brands into mainstream store aisles is one factor. “Today, premium assortment isn’t limited to specialty stores,” the Nielsen report says.

Phillips-Donaldson echoes Nielsen’s findings. “Pet food brands figured out how to take many of the product claims and features that had been exclusive to pet specialty—grain-free, natural, limited ingredient—and offer them at more of a mass market price,” she says.

Interestingly, as impressive as online growth figures are, consumers aren’t abandoning physical stores in favor of e-commerce. According to Nielsen’s Digital Shopping Fundamentals research, slightly more than half of pet owners (51%) indicate they don’t ever plan to shop for or purchase pet items online.

Overarching Pet Trends

As pet parents turn to grocery retailers and big-box stores to fill their pet product needs, keeping up with current trends is more important than ever for retailers who want to lead in the space—especially considering how important attracting and keeping pet shoppers can be. “Pet is shopped by approximately 75% of households in the U.S.,” says Joe Toscano, VP and director of trade and industry relations for St. Louis-based Nestle Purina PetCare. “If a grocer loses one pet shopper, they lose $7K across the store annually; lose 1,000 shoppers and that equates to $7 million across the store.”

nestle purina petcare food
Photograph courtesy of Nestle Purina PetCare

According to industry experts, humanization and healthy product profiles continue as the overarching trends driving pet product sales. “We continue to see pet food trends mirror human food trends,” says Toscano. “Just as people are looking for foods that are marketed as ‘better for you,’ including natural, fresh ingredients and grain-free, they tend to look for similar cues in their pet’s food as well.”

Experts predict these trends will be long-lived, courtesy of millennials, a group the American Pet Products Association says is now the largest segment of pet owners.

“Millennials are a different breed of pet parent; they tend to invest more time and money in their companion animals and collect more information before making decisions about pet care and products. These involved pet parents are very conscious of their companion animals’ health, just as they are their own,” says Tom Wien, director of marketing for Azusa, Calif.-based Cardinal Pet Care. “They want products for their pets that are safe, natural, healthy and don’t contain harmful chemicals or artificial ingredients. Humans are shifting toward organic products for themselves, and they want the same for their pets,” he says, citing insights from market research firm Technavio forecasting the global organic pet food market will increase at a compound annual growth rate of 9.1% through 2021.

cardinal pet treats
Photograph courtesy of Cardinal Pet Care

Breaking Down What ‘Healthy’ Means

While consumers who shop the pet category prefer better-for-you products, it isn’t always clear just what “healthy” means.

According to Phillips-Donaldson, it goes beyond the “natural” label these days. “Natural product claims continue to be popular, though those have become almost a given,” she says. “The term ‘natural’ is so overused and used in so many contexts, it has made it more vague, and even confusing, for consumers.”

More specific claims are becoming the norm. Examples include clean label (simpler, shorter ingredient lists, ingredient names consumers recognize, and transparency in terms of where ingredients come from and how they are produced); functional ingredients (superfoods, probiotics, high protein/high meat); and non-GMO and preservative-free.

Health benefits products deliver are also being touted: improved dental care, skin and coat health, joint health, weight control and help for aging pets, to name a few, Phillips-Donaldson says. “Grain-free pet food continues to be big and grow in sales, but the growth rate has been declining from its headiest days,” she says. “We’re even starting to see the use of ancient grains in pet foods, following that trend in human foods.”

Opportunities for Retailers

While the future appears bright for the pet category, grocery retailers will have to step up their games to continue competing with pet specialty stores. Experts on the front lines say there are several steps these retailers can take to make the pet aisle a regular stop for pet parents.

Grocery stores, of course, can’t carry everything specialty pet stores can, says Leslie Yellin, EVP of Multipet in Moonachie, N.J. “The focus should be on the core items, with updates and promotions on high-margin, quick-turn items,” she says. “Pet toys are one category where the shopper will buy in multiples and is always looking for what’s new.”

multipet silly rope monsters
Photograph courtesy of Multipet

Optimizing product selection, pricing inventory competitively, creating an easy-to-navigate department complete with navigational signs and endcaps, and having a consistent promotional strategy are key elements of pet category management, Toscano says. “Try offering BOPUS (buy online, pickup in-store) or home delivery options to meet the consumers where they choose to shop,” he says.

Moving beyond basics in pet food is also key. “Grocery stores should take a second look at going beyond the basics in pet food, if they haven’t already, and consider stocking a good selection of specialty foods and treats,” Wien of Cardinal Pet Care says. “Merchandising is a key to selling more specialty and premium pet foods at supermarkets, since many consumers need to be made aware that the store carries them. Grocers can draw attention to specialty foods and treats by grouping them together in a special section.”

Tyler Hill, VP of sales—food, drug, mass and club for Redbarn Pet Products, Long Beach, Calif., concurs. “If stores are dedicating more shelf space to natural human foods, they should consider following suit for pet products as well,” he says. “Once they have the customer indoors, retailers should capitalize on three areas to build repeat customers: premium product, merchandising and value.”

redbarn chewy louie
Photograph courtesy of RedBarn Pet Products

Pet Food Forecast: Wet Days Ahead

Educated pet parents looking for healthy food for their furry family members are turning to mainstream pet retailers, recent data from Nielsen shows. The category of wet dog food is growing as a result, thanks to the fact that it has more protein and fewer grains than its dry counterparts, which pet owners perceive as health benefits.

Pet Consumables Omnichannel Performance

12 months ended June 2018. Estimated totals based on projected data.
Source: Nielsen

“While overall dog food dollar sales are up 2% from a year ago, wet dog food sales growth is more than twice as pronounced, and the growth is exponentially higher among wet dog foods that claim to be natural or free from artificial colors,” Nielsen reports. “Dry dog food continues to hold a commanding share of category sales, but growth has stagnated. As consumers’ hearts and wallets grow more fond of wellness regimes in pet care, the rise of wet pet food may continue.”

Wet food formulations have not only gone to the dogs; cats are eating it, too, according to Joe Toscano, VP and director of trade and industry relations for Nestle Purina PetCare. “There are a number of reasons why the 94 million cats in U.S. households are finding more wet food in their dish these days,” says Toscano. He points out that 69% of pet parents feed wet food simply because it’s very well-liked by their cats, according to the Cat Food Regimen 2015. “Others choose to feed wet food because they know that the moisture helps keep their cats well-hydrated.”

Michelson Found Animals Foundation Predicts 2019 Trends

Pet food that mimics human fare, alternative therapies and smart technology items will be heating up the pet products scene in 2019, according to a survey from Los Angeles-based Michelson Found Animals Foundation.

  • “Human” Food: Pets’ plates will look more and more like ours. Of those surveyed, 45% personally follow a diet and 70% of those put their pet on a special diet, too. Almost half of pet parents who eat organic also feed their pets organic food.
  • Alternative Therapies: Pet owners who have tried alternative therapies are likely to use them on their pets. For instance, CBD- and hemp-based products are a growing trend among humans, and 74% of those who have used these alternatives themselves have used them on their pets as well.
  • Smart Technology. One in four pet parents admit they spend more on tech for their pets than for themselves. Forty-seven percent of those who use health-related pet tech products are interested in nutrition apps, 46% in vet telemedicine and 31% in fitness trackers. Fifty-three percent are interested in getting a pet tracking device, 52% a microchip and 40% pet monitoring cameras. 

See the full Pet Products Showcase: January 2019.



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