The expanding opportunity in pet care

Sponsored by Nestlé Purina

If there was ever a perfect storm of opportunity in the pet department, this is it. Pet care is the $69.5 billion star of the center store, and growing 2.6 times faster than the total store on average. But now, a convergence of pet specialty brands jumping into the grocery channel, with lucrative e-commerce opportunities, is putting grocers with a strategic focus on pet care in a position to reap even bigger rewards than before.

Brand migrations and e-commerce.

In the last year, several popular pet food brands have gone from being sold exclusively through pet specialty stores to expanding into the grocery and mass channel. Compounding that is the incredible boom in pet care sales through the e-commerce channel, up 68 percent in 2017, with estimates that 20 to 25 percent of the all business expected to migrate online by the year 2020.

Each development is significant, but together, these dynamics are reshaping pet care opportunities for grocers—dissolving the boundaries between the specialty and mass channels, and creating opportunities to reach a new group of shoppers who spend big on higher-margin super premium pet foods.

How to make the most of these trends?

So, what can you do to take advantage of these dynamics, right now? Here are five ways to do just that.

Follow the data.

If you’re deciding whether or not to add a new pet food brand to your shelf, look to demographic insights—at the regional or even store level—to ensure the products you carry garner the greatest demand from shoppers in your area. Natural or super premium brands may not align with shoppers in some of your stores, for instance, so they shouldn’t take away from your current best-sellers.

Expand, don’t replace.

When bringing in a new pet food brand, it’s important to allocate space by expanding your pet department, rather than reducing your current assortment and squeezing the new brands into your existing footprint. This is a common (and costly) mistake, and one that can alienate your current shoppers by eliminating their brand/SKU preferences. The loss of one pet shopper translates to an average loss of $6.9K across the total store annually. Now imagine losing 1,000 pet shoppers due to eliminating their pet food brand. That will cost you $6.9 million annually.

Call out “better for you” foods.

Highlight natural segments and category innovations with navigational signage, in-aisle merchandising, weekly promotions, and dedicated end caps. Even if you’ve yet to bring in a new specialty pet food brand, having an in-store focus on premium and natural items can lead to increased sales, because some shoppers still don’t realize that mass and grocery retailers already carry these high-quality options that rival that of the former specialty pet food brands.

Balance your approach.

Your sole goal shouldn’t be to convert shoppers to specialty offerings, but rather, to appeal to the largest group of consumers and meet all their needs, from the private label brand to the premium and natural products you carry on your shelves. Every retailer needs a strategy to win across the full selection of pet products, which includes not only capturing the tradeup, but also maximizing revenue from your core consumers who are satisfied with their current brand of choice.

Integrate physical and online.

Pet food is a fast growing e-commerce category, and it can be a key player in building out your digital strategy. But you need an integrated approach:

1) Develop a great in-store pet experience with robust signage promoting your e-commerce capabilities;
2) Beef up your online pet offerings, but align them with in-store pricing and promotions; and
3) Offer variety of fulfillment options: in-store pick-up, curbside collect, and home delivery.

Market dynamics are clear: the pet department is poised to impact your business in a bigger way than ever before. But you can’t sell in the same space and expect to be rewarded. To max out this unprecedented opportunity, the time is now to expand your pet department to better meet the needs of your current, and potentially new, customers.