Barking Up the Right Tree

As time marches on the demographics of pet owners continues to change. Millennials own pets now, and these consumers shop differently from the way their Baby Boomer parents shop. Still, the older, empty nesters remain a favorite target consumer for pet products companies. Both age groups are contributing to what industry observers say is a strong pet category. 

According to the American Pet Products Association’s (APPA) 2015/2016 National Pet Owners Survey, there are 79.7 million pet-owning households, representing a 50 percent gain over the past two decades. The survey also states that more than 10 percent of current pet owners are new pet owners, which equates to almost eight million new pet owners within the last year. 

Many of these new pet owners are Generation Y, which, according to the Greenwich, Conn.-based APPA, is an age group that is more likely to buy toys, gift and care items, pet cams and other techie gadgets. 

These young pet owners are important, say observers. “Millennials are highly involved consumers,” says Paul Cooke, vice president and director of trade and industry development for St. Louis-based Nestlé Purina PetCare. ”They tend to pay close attention to the product benefits, and the value equation has never been more important than with this group. They seek information and do a lot of their research online.”

In fact, according to Pet Product Marketing Trends in the U.S.: Technology, Mobile, and Social Media, a report by Rockville, Md.-based market research publisher Packaged Facts, U.S. pet owners are more likely than non-pet owners to have recently used digital devices and technologies. While many use the Internet to find home delivery of pet foods and products, others are searching for information about which pet foods to buy. The Internet is especially well-suited to “info-centric” pet products, including premium and niche items, the report notes. 

That information includes health-related aspects of pet products. Cooke says Millennials are a group of purchasers that are very cognizant of ingredients. “They want to feed their pets in the same way they feed themselves,” he says. “Health, wellness and quality of life are very important.” 

Convenience is also important to Millennials, says Mark Pasco, vice president of sales for Mammoth Lakes, Calif.-based Mammoth Pet Products. “Millennials are playing a huge part in the reason for the section changes in grocery and mass,” he says. “They are the demographic that is more conscientious of saving time and like the fact that they can buy more of what they want at places where they need to shop more often.” 

Pasco adds that dog toy sales are doing quite well in grocery and mass. “The sections have changed dramatically in the last five years,” he says. “The quality of toys and the brands being showcased are well-known pet shop brands giving the consumers a much better selection to pick from.” Mammoth’s newest toy is Candy Wraps, with a colorful, tightly woven poly-cotton rope and a TPR squeaky.

Others say Baby Boomers, not Millennials, are the driving force behind pet products sales. “In grocery the strength is actually from the empty nesters,” says Darin Eisenbarth, president of Petsport, based in Pittsburg, Calif. “What they’re doing a lot of is taking on pets as kids. They don’t have anyone to take care of and they are missing that.” 

Eisenbarth adds that grocery has stepped up their offerings to attract these shoppers to the pet section. Supermarkets once offered inexpensive, low quality items and little selection, because the purchase was need driven. “Customers now want to shop, and a lot of retailers are widening that aisle and bringing in more selection,” he says. “It is more out of necessity than anything else. Supermarkets will not get consumers away from pet big boxes if they don’t have good quality toys.” 

Petsport recently expanded its toy line with Mega Tuff Balls, Mega Tuff Ball Tugs and Triple Tex dog toys. Eisenbarth adds that grocery shoppers are also open to spending more money. They used to expect to pay $3 on a dog toy at the supermarket, and now are open to spending $8 to $12. “The love affair with just low price is starting to end,” he says. “I think it’s a good thing for the industry.” 

Flipping Channels 

Kevin Fick, CEO of San Rafael, Calif.-based Worldwise, manufacturer of SmartyKat and TrustyPup brands, says that some retailers have improved their pet sections. “We see some grocery retailers that have done a really good job of migrating away from that disorganized little four-foot section to a store within a store, and they are having an impact,” he says. “They all face the same challenges. It is a matter of who is investing in the category, who is willing to take a few chances to build that story.”

The challenge is to get the convenience shopper, who might pick up a bag of pet food while shopping for themselves, to shop in the pet section, not just stop by. “We need to convert her while she’s in the store, number one,” says Fick. “Then we need to educate her when she comes down the aisle, teach her that there is more than one need for pet. Manufacturers and retailers need to tell a better story in the aisle.” 

Worldwise, for one, plans to increase its presence in stores. The company, which makes bedding under the TrustyPup brand and cat toys and other cat products under the SmartyKat brand, acquired the dog toy and pet carrier company Quaker Pet Group last year. Now TrustyPup will dive into the dog toy category, Fick says, adding that stores will see benefits too. 

“It gives the retailer a cohesive way to merchandise,” he says. “When you’ve only got two feet or four feet, that’s not a lot of space to tell a story. To have two or three different manufacturers in the same space gets confusing to the consumer and more expensive for retail. This gives them a one-stop shop.” 

Cooke says pet owners have a multitude of options for where to shop, so retailers need to respond with more than just assortment, pricing and convenience. The consumer wants to shop in a place where they feel comfortable. “The pet department really should feel like a perimeter category that most retailers use to define who they are,” he says. “Retailers need to differentiate themselves to their pet owners with a department, not just another aisle, that features unique products, is easy to shop, has value every day and focuses on their pet’s needs.” 

Among these needs is natural products. For those consumers, Purina developed Beyond, Dog Chow Natural and Cat Chow Natural. 

Natural is also an important feature in treats. “The trends we are seeing are following human dietary trends in that pet parents are looking for healthy alternatives and better nutrition for their companion animals,” says Barbara Denzer, vice president of marketing for Cardinal Laboratories, based in Azusa, Calif. “Grocery pet shoppers are looking for the same level high-quality food that pet specialty stores are carrying such as food and treats that contain no antibiotics, no hormones, more protein, are non-GMO and gluten- and grain-free.” 

Cardinal’s Full Life Omega Chews are a grocery line that fills this demand, she says. The treats contain no wheat, corn, soybean, artificial flavors, gluten or grain. 

The desire for natural products extends to products that are not food. Jesse Henman, national account manager for Ferndale, Wash.-based Healthy Pet, which makes ökocat cat litter, says cat owners are switching to natural litter, and stores are adapting. “When I look at their set, I look to see if they have ten percent of their facings allocated to natural litter, so they are not missing out on the opportunity,” he says. “If they don’t have natural litter in their set they are not giving consumers the opportunity to transition to natural litter.” 

Retailers can benefit because natural litter has a higher price point than other litter. Pet owners continue to treat their pets as part of the family, says Henman, so these shoppers are willing to spend a premium on products that they perceive to be higher quality items. Observers say recent growth in pet product sales has been in pricing, not unit movement, which means consumers are willing to spend more and still buy the same number of units. “Anybody in grocery would want to have that high dollar ring consumer,” he says. “They would want to increase the transaction.” 

Henman adds that the future looks bright for natural litter. “We will continue to see more grocery chains add to their natural litter selection. They will go from zero to something, or they will add where they’ve got not just one but two or three,” he says. 

While some grocery retailers expand their offerings, mass stores are the preferred channel for price and convenience, at least among dog owners. According to the APPA survey, 35 percent of dog owners said discount/mass merchants offer the most convenience, followed by pet chains (30 percent) and grocery (12 percent). Forty-seven percent said mass stores have the best prices, followed by pet chains (23 percent) and grocery (seven percent). 

Cat owners especially like the mass channel; with 41 percent saying mass stores offer the most convenience for buying cat products, followed by pet chain stores (21 percent), and grocery (20 percent). Price was where grocery competed with pet specialty, with 52 percent of cat owners saying mass stores had the best prices, followed by pet chains (14 percent) and grocery (14 percent). 

Mass stores have the opportunity to have bigger sets, larger assortments and products with a variety of prices, says Chris Gatto, vice president of sales for food, drug and mass for Bloomfield, N.J.-based Ethical Products. Still, grocery can certainly compete. “With grocery, where the opportunity presents itself is to have expanded sets and to try to continue to grab the pet specialty and larger mass customers,” he says. “The future of grocery is just the way it has been. They will continue to optimize the space they have with trending materials and sharp price points.” 

The trending materials include long-lasting ones, as durability is still a big trend and is important for consumers seeking value. Brighter color schemes are also on-trend now, as people tend to gravitate toward the fun colors. 

“We always say pets do not choose their own toys,” says Gatto.