Feeding the Big Dog in Your Center Store

Sponsored by Nestle′ Purina

Like the cute puppy that quickly grows into an 80 pound Labrador, the pet aisle is experiencing its own growing pains. Record pet care sales necessitate expanding of the pet department in order to retain loyal customers and attract new ones.

Growing from $60 billion in sales in 2015 to over $66 billion in 2016,¹ the pet care category is now the number two top store trip driver within retail.²  And those trips don’t stop at the pet aisle. Retailers that continually enhance their pet departments experience two and a half times higher performance within the total store than retailers with below average pet performance.³

Experts credit growth to the deep love, bond and responsibility owners have for their pets. In fact, more than 80 percent of owners view their dog or cat as a very important family member.⁴ And as millennials delay marriage and children, pets are taking their place as the most pampered member of the family now more than ever before. 

Owner’s increased emotional connection to their pets has helped pet category sales grow over $2.5 billion each year since 1994, but the pet aisle itself has remained largely unchanged.⁵ And while the pet department begins to burst at the seams, the introduction of brands that had once only been available at pet specialty retailers could attract over 11 million new pet-owning households to grocery and mass.⁶

With pet shoppers spending a whopping 31 percent more per trip, versus non-pet shoppers, the possible addition of those 11 million new households at grocery and mass means that expanding the pet care department could drive sales across the entire store.⁷

Expanding the pet department allows stores to retain their loyal pet shoppers and attract new ones by offering a selection that keeps these valuable customers coming back. Perhaps more importantly, not evolving to meet the needs of both groups can cause a serious blow to overall sales, as the loss of a pet shopper may cause up to a 17 percent decline in trips to the store.⁸

So how can retailers grow sales by expanding the pet department? While pet is very different from most center store categories, in that purchase is so often tied to emotion, there are several steps retailers can take to win in pet.

1. Attracting Customers New to Grocery and Mass:  As trips per household at pet specialty retailers has dropped by five percent from 2016 to 2017,⁹ and dry dog brands formerly only sold at those stores become more widely available,  grocery and mass have the unique opportunity to bring a whole new group of pet shoppers into their stores. However, since most pet shoppers are very loyal to their set of brands, expanding the pet aisle to include these new brands without taking away current sales is key. One way to expand your pet department may be to pull space from underperforming neighboring categories, such as laundry and cleaning supplies, or by better utilizing the current space given to pet supplies. While dog food and treats represent 44 percent of dollar volume share within pet care, these categories only have 39 percent of the shelf. Conversely, pet supplies represent 31 percent of dollar volume share while maintaining a 34 percent share of the shelf.¹⁰ Finding room to grow within the pet department or in neighboring aisles can help to strengthen the number of valuable pet shopper households within the store.

2. Optimized Assortment:  Just as there are a wide array of pet owners, you need to carry the right product mix to appeal to as many of them as possible. A pet parent’s nutritional philosophy is typically guided by their relationship with their pet, as well as their own nutritional preferences. For example, the pet humanization trend and real food movement have sparked growth in the natural pet food segment. So while offering natural pet food options is an opportunity, carrying a balanced variety of brands at varying price points to ensure you’re fulfilling each pet parent’s needs is critical.

“With the shrinking shelf space in center store and variety demands of shoppers today, it’s become increasingly important to optimize assortment in order to achieve maximum category growth and meet shopper expectations,” advises Felicia Mooty, Director of Category Leadership for Nestle Purina Pet Care.

3. Focus Within Pet Care:  As the pet care department is expanded and refined, several sub-categories should receive additional focus to best represent the current pet shopper landscape.

Changes in lifestyle, urbanization and shifting demographics are driving the growth of the small dog category, and a staggering 49 percent of dog-owning households now include a small dog.¹¹ Retailers have the potential to capture more than $100 million in incremental growth over a three year span just by making a small shift of non-targeted dry dog pounds to targeted dry small dog pounds.¹²

With over $2.37 billion in annual sales, litter should now take its place as an anchor within the pet aisle.¹³ Increased signage to educate shoppers on the proper usage of litter and direct them to the variety that will work best for their needs can unlock the category’s full potential.

Even as grocery and mass see an influx of pet specialty brands, the fact remains that the premium pet food segment, with brands like Dog Chow, Cat Chow, Pedigree, Friskies and Beneful, is still fed in over forty-six million total households¹⁴ and still represents more than 20 percent of the sales within the dry dog segment and over one-third of sales within the dry cat segment.¹⁵

 And with more than 60 percent of pet owners who purchase either premium dry cat or premium dry dog feeling “completely satisfied” with the brands they are feeding, these tried and true brands, and their loyal consumers should not be forgotten.¹⁶

4. E-Comm Solutions:  While online is only eight percent of total pet food and litter dollar sales today, over 83 percent of the category’s growth is coming from online sales.¹⁷ To win with the pet shopper, it is critical that you have strong online presence creating a seamless consumer experience between in-store and online. This is essential since 76 percent of shoppers begin their shopping trip online.¹⁸ In order for retailers to capture their own shoppers online, they have to aggressively communicate the various fulfillment options they have to meet their customers’ needs, and then create a seamless experience for them. Not meeting their shoppers’ needs online equates to lost shoppers and lost dollars given the significant value that a pet shopper brings to the box.

As we see no signs of pet spending slowing down, retailers have the opportunity to put renewed focus on their pet department and the pet shoppers who are so valuable to the total store. By proactively making plans to expand their pet department, retailers can capitalize on the growth within pet care and build a bigger doghouse before the dog no longer fits.

[1] APPA 2016 Estimate (Supplies, Services, Vet Care, Live Animals)
[2] Nielsen Category Fundamentals Study 2015
[3] Nielsen AOD Core – xAOC Retailers, 52Wk ending 7/15/17
[4] Purina Pet Attitude Study, Q3 2016
[5] American Pet Products Association Industry Trends CMI Analysis
[6] Nielsen Homescan Panel – Total US, 52Wk ending 3/25/17
[7] Nielsen Homescan Panel – Total US,  52Wk ending 12/29/15
[8] Nielsen Homescan Panel Analysis 2015 v. 2014
[9] Nielsen Homescan Panel – Total Pet Specialty, 52 Wk ending 5/20/17
[10] Nielsen AOD Core - xAOC, 52 Wk ending 6/17/17
[11] Nielsen Homescan Custom Analysis (2007 vs. 2015)
[12] NPPC Internal Projection
[13] AOD Core Total Store Report, 12.31.16, Total US xAOC
[14] Nielsen Homescan Panel – TUS, 52 Wk ending 6/30/16
[15] Nielsen Custom Scantrack Analysis, CY2016
[16] Purina US Segmentation Resizing 2014
[17] NPPC Proprietary Internal Estimate 52 weeks ending July 2017
[18] IRI: We Are At The Center of a Consumer Buying Revolution