The Pet Aisle Special Report: Appealing to the Modern Pet Owner

The future of the pet aisle in mass and grocery stores depends on whether manufacturers and retailers keep up with pet owners’ changing demands.

Dogs and cats might live in the moment, but pet products manufacturers and retailers must look to the future. While factors such as consumer demographics and competition seem to change constantly, other factors such as limited space and price pressures remain. Industry observers say the future of the pet aisle depends on whether the stores take the category seriously today. 

Some retailers are more prepared than others to face the future, says Paul Cooke, vice president of trade and industry development for Nestle Purina PetCare, based in St. Louis. “A lot of grocery stores, you walk in and it looks like it is 1975,” he says. “You walk into other more progressive retailers and you have that ‘wow’ factor. You’ve got fresh, you’ve got natural, you’ve got value, you’ve got healthy, you’ve got solutions.”

Cooke says the retailers that find success are the ones that see pet products as a basic need for shoppers. “Pet is a key category that anchors the focus on center store,” he says. “Many retailers define themselves by the perimeter, but they really win by winning in center store. What they do is create an in-store experience that their consumers are satisfied with.”

Of course consumers want to be satisfied not only with their shopping experience but also with the products themselves, so manufacturers are working to develop the right products to fit the stores’ assortment. This mix has changed, as grocery and mass consumers are looking for higher quality items.

“With competition coming strong from both pet specialty and e-commerce, mass retailers are going to need to make significant improvements to the pet aisle to capture and keep those consumers,” says Kevin Fick, CEO of Worldwise, based in San Rafael, Calif. “Competition for consumers among brick-and-mortar stores will be even fiercer in the coming years as online continues to gain share.”

Some stores are still using an older approach, which Fick says means focusing on very basic, low-cost, low-quality merchandise. These retailers will have to make significant improvements to the pet aisle to capture and keep those consumers, Fick says, if they want to compete with pet specialty and online stores.

Fick adds that some stores are indeed attracting these customers. “We’re seeing some retailers really raising the bar in terms of product offerings and merchandising. In other cases, retailers are trying to understand how to appeal to the pet specialty consumer with newly designed, organized spaces focusing on the leading brands rather than a more mixed offering.”

Others agree that grocery and mass are transitioning to more of a pet specialty look. Tim Fabits, vice president of sales at Long Beach, Calif.-based Redbarn Pet Products, says the pet parent is in their local grocery store an average of four trips per month, and they make only one trip per month to their local pet store. Grocery retailers know this, and are working to make their pet aisle a true destination. “They are accomplishing this by offering higher-quality treats, food and the ancillary items desired by today’s discriminating pet parent,” says Fabits.

One challenge, though, is price. “While the crossover between grocery and pet retailers becomes increasingly blurred by the day, I am hoping that there will remain price parity so that both grocery and pet stores can compete on a level playing field, ultimately giving pet parents multiple options when shopping for their furry companions,” says Fabits.

And price is important. According to U.S. Pet Market Outlook, 2015-2016, a report from Rockville, Md.-based Packaged Facts, 71 percent of pet product consumers say they look for lower prices, special offers and sales on pet items. That figure has steadily increased from 69 percent in 2014 and 68 percent in 2012.

However, consumers are sometimes willing to pay more. Also according to Packaged Facts, 71 percent of pet products shoppers in 2014 said they would spend extra to ensure the wellness of their pet, up slightly from 70 percent in 2013. This trend has led mass retailers to offer more pet foods that boast whole ingredients such as meats, fruits and vegetables, and these attributes are clear on the mass products’ packaging.

Variety is Key

Pet parents are seeking high quality products while also looking for value in grocery and mass. Manufacturers are responding with new products, making it up to retailers to offer these improved items.

“The future will be determined by what grocery and mass retailers do to ensure that their customers can find the types of products that they are seeking in their store’s pet section,” says Paul Shilling, national business development manager of Cardinal Laboratories, based in Azusa, Calif. “Certainly, there is a trend in today’s market toward higher-end products that is being fueled not only by the desire of pet parents to give their pets the best, but also by a strengthening economy where pet parents are willing to spend more on their pet children.”

The key is to develop the right mix of products that provide pet store quality choices, says Shilling. That can help create the type of growth in grocery and mass that the pet specialty channel has enjoyed.

One way to drive that growth is to offer a selection of items in different price points. Consumers want good and better products, says Shay Moeller, product manager for Wahl Clipper Corp., based in Sterling, Ill. In clippers, shampoos and other grooming needs, some pet owners want the least expensive option that gets the job done, while others want the next level. Wahl offers retailers a small set of both, Moeller says, because there is always limited space.

The stores that find success in pet are the ones that communicate that they have quality products at grocery and mass prices, say observers. “They are creating more awareness and saying, ‘We have the products and you can stop here as a convenience,’” says Moeller. “It all comes down to making sure they carry the items that are needed. People look to see if they are serious or not.”

It is difficult to be taken seriously in the business if space is limited. Grocery and mass still suffer from this shortcoming, says Chris Gatto, vice president of sales for food, drug and mass for Ethical Products, based in Bloomfield, N.J. Some retailers are adapting by switching to distributors that specialize in pet products, a tactic that Gatto says works best for large retailers with multiple stores.

Other stores are putting a heavier focus on private label. “Accounts that are capable of pushing toward their own brand have the ability to promote it,” says Gatto. “It’s going to be perceived as a better value, which then in turn promotes higher sales.”

It is important to pay attention to trends, he says. Right now there is a trend toward owning  small dogs, a trend that Gatto says might continue for two years. People with small dogs often have more than one dog, so they need more toys. Also, dogs of all sizes can be strong chewers, and there is also a trend toward more durable materials.

It is important to know these trends in accessories because they are impulse items, say observers. Ethical Products makes toys, and its Fashion Pet division makes apparel. “No one goes into the supermarket saying I need to buy a toy or a sweater,” says Gatto.

Maybe not, but that has not stopped manufacturers from developing even more toys, and retailers from upgrading the segment. “The pet toy section in grocery and mass has had a major overhaul in the past five years,” says Mark Pasco, vice president, sales and marketing for Mammoth Pet Products, based in Mammoth Lakes, Calif. “Past grocery and mass stores focused on inexpensive brands mainly imported from China.”

Pasco adds that stores have started offering better products because consumers want to be able to shop for high quality, well-known pet shop brands in grocery. “The section is much better now, but there is still room for growth,” he says. “I think other well-known grocery and mass stores will realize this concept is working and will capitalize on the idea. Consumers are branching out when shopping for pet toys and will shop in grocery as long as the mix is fresh and exciting and the brands they know and love are available.” 

Building on Success

One advantage for grocery and mass is that consumers are increasingly loyal to these channels. Packaged Facts reports that in 2014, supermarket loyalty among pet products shoppers jumped to 30.3 percent, compared to 25.3 percent in 2013. Meanwhile, other pet stores (not PetSmart and Petco) saw their percentage of channel-loyal customers drop from 21.7 percent in 2013 to 18.4 percent in 2014. Loyalty among pet shoppers of mass stores remained flat at around 26 percent.

Consumers are also loyal to certain types of toys, says Leslie Yellin, executive vice president for Multipet International, based in Moonachie, N.J. Pets can develop a preference for certain textures or sounds. That means opportunity for the retailers.

“Pet toys continue to be a staple for consumers shopping in grocery and mass,” says Yellin. “Success in the category comes from retailers that rotate their stock with new designs, colors and fabrics. Doing rotations offsets the cost of a total reset with the reward of a department that continues to transform.” She predicts the pet toy section will expand in the future, and the consumables department will shrink.

Signage can help bring shoppers to the pet section, and Yellin notes that more stores are using floor tiles with paw prints. Those visuals, plus working with manufacturers to develop the purchasing strategy, can really help the retailer keep the shopper’s interest while they are in the pet aisle, says Yellin. “Building the department to be more like a pet store within a store is a great way to satisfy the consumer’s needs for their pets.”

It is also important to pay attention to changing demographics, says Justin Lengel, marketing and design assistant for F.M. Brown’s Sons, based in Sinking Spring, Pa. “The future of the pet aisle is bright, with an estimated 16 percent increase in sales between 2015 and 2018,” says Lengel. “Millennials are having children and moving into suburbs, establishing families and purchasing pets. We’re looking for ways to hold the mature market while reaching out to this young generation as well. They’re extremely important to the industry, with an estimated spending power of $3.4 trillion.”

Every pet owner is important to the industry, says Purina’s Cooke. “The progressive retailers that are winning across most categories recognize no one comes in to shop one category,” he says. “There are national retailers that have called out pet as being important to their future, and they are investing in it because they know the shopper that shops pet is the consumer they want to invest in.”