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The Big Opportunity Retailers Are Missing in Small Dog
Pint-size pooches may represent a multi-million dollar opportunity for retailers.
February 3, 2017
4 Min Read
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Sponsored by Nestlé Purina.
See that Chihuahua peeking out of the top of that purse? She could just hold the key to total store sales.
As Americans spent a record $60.28 billion dollars on their four-legged friends in 2015, with sales projected to come in at nearly $63 billion in 2016, pets pose a huge opportunity for retailers. In fact, the pet care category (including food, litter and supplies) is ranked number one in total sales out of 265 categories sold in US supermarkets, drugstores, mass market retailers, military, commissaries and select club and dollar retail chains.[1]
However, when it comes to the pet care category, we’re learning that size does matter. Small dogs currently make up 70 percent of the dog population growth[2], making these pint-sized pooches a sleeping giant in sales growth and representing a multi-million dollar opportunity for retailers over the next three years.
Changes in lifestyle, urbanization and shifting demographics are driving the growth of the small dog category[3] and a staggering 49 percent of dog-owning households now include a small dog. While these small dog owning households buy fewer pounds of pet food per trip, their purchases pack a big punch, as they spend more per pound than large dog-owning households.[4]
Weighing in at less than 20 pounds, their size isn’t the only thing that separates small dogs from their beefier brethren. Small dogs have unique health needs that dictate the way their owners shop the pet aisle. For instance, their smaller jaw may require a smaller kibble size, and their higher metabolism and lean muscle mass mean they benefit from more nutrient dense food with higher antioxidant and protein levels.[5] Despite these different dietary needs, small dog formulas are under-utilized. Only 8 percent of dry dog sales come from small dog formulas, despite 40 percent of dogs being a small breed. This is where some small changes can lead to big opportunities for retailers.
Just as you wouldn’t put a Great Dane’s collar on a Shih Tzu, the retail strategy for the pet category should not take a one-size-fits-all approach. Consider the fact that the average small dry dog food formula costs almost twice that of a non-targeted dry dog food formula. Thus 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.[6]
The opportunity doesn’t stop in dry food. Around half of small dog owning households also feed wet dog food. In fact, 73 percent of wet dog food sales in tubs and trays come from small dog owning households.[7] Getting these shoppers to add more tubs and trays to their basket per trip could lead to a big growth in pet sales.
With these small shifts to better appeal to shoppers with small dogs, retailers can win BIG:
Optimize Small Dog Product Assortment: Just as all small dogs differ in their breed, age and preferences, small dog shoppers’ needs vary as well. These pet parents are looking for a variety of dry food bag sizes, wet food brands and product benefits to meet their pets’ needs. For example, small dog shoppers looking for targeted nutrition for their pets don’t necessarily only buy small bags. Households with two or more small dogs may buy more midsize bags.[8] It’s important for retailers to carry a variety of targeted products in a variety of SKUs.
Shelve Small Dog With the Parent Brand: While it may be tempting to create a dedicated small dog section, targeted small dog formulas should be shelved within their respective brand by segment to avoid consumer confusion at the shelf. Shopability is key, so dry and wet food should be shelved separately to eliminate confusion and help support shopper navigation.
Execute Wet Dog Multiples on Tubs and Trays: With the growth in the small dog population, and the need for variety across wet dog food brands, comes a higher demand for wet dog food tubs and trays. Research shows that small dog households are spending 30 percent more on tubs and trays,[9] so an increase in promotions using multiple pricing could entice these shoppers with a proven strategy for growth.[10]
Educate Small Dog Owners Along the Path to Purchase: While the shopper may be an expert on their own dog’s personality, they may not know why their pet needs a small dog food formula. Educational signage in the aisle or at shelf can help move them down the path to purchase.
As the pet population gives way to more and more small dogs, the pet aisle also must evolve. Through consumer education, the right product mix and an increased focus on promotions, retailers can awaken the sleeping giant within the small dog category.
[1] IRI Public Information
[2] Nielsen Homescan Custom Analysis (2007 vs. 2015)
[3] Packaged Facts: U.S. Market Outlook, 2016-2017
[4] Nielsen Homescan Custom Analysis, CY 2015
[5] NPPC Small Breed Substantiation Document, 2015
[6] NPPC Internal Projection
[7] Nielsen Homescan Custom Analysis, CY 2015
[8] Nielsen Homescan Custom Analysis, CY 2015
[9] Nielsen Homescan Custom Analysis, CY 2015
[10] Nielsen Custom Analysis, May 2016
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