Retail update: how consumers navigate multiple channels for pet products
According to Packaged Facts, the US pet product market has never been more competitive. Will consumers know where to find your brand in the sea of tin cans and biscuits?
Paul Cooke, vice president of industry development for NestlÃ© Purina Petcare, believes the US petfood and treats market has never been so flooded with brands and products all targeting the pet parent. "It doesn't matter whether you're talking about mass, drug, home improvement or convenience stores; everybody competes for the pet consumer," said Cooke in a March 2011 Pet Business article. Packaged Facts backs up that assertion with its most recent report, Pet Product Retail Channel and Consumer Shopping Trends in the US.
The 2012 consumer report examines pet shopper and retail channel trends across all the major pet product shopping venues in the US, which includes an exhaustive list of channels like supermarkets, discount stores, wholesale clubs, drugstores, convenience stores, pet superstores, other pet chains and independent pet stores, the Internet, veterinary clinics, natural supermarkets, dollar stores, agricultural/feed-seed/farm stores, home improvement/garden centers, home goods stores and closeout/discount stores. The US pet product retailing market has never been more competitive.
Over the long term, three trends have greatly intensified this competition:
- The expansion of the two big-box pet specialty chains, PetSmart and Petco;
- The growth of mass merchandisers and supercenters, especially Walmart supercenters; and
- The rise of the Internet.
Since 2008, the recession and the aftermath of economic sluggishness have pressured petfood retailers of all kinds. Today, budget-conscious consumers demand value in the products they buy, chart out grocery shopping trips beforehand and are willing to switch channels and brands to make ends meet or simply save a few dollars, says the Packaged Facts report.
Despite a plethora of consumers focused on pinching their pennies, there still remains a strong upscale element to the petfood market. But with the premiumization wave of the first half of the first decade of the 2000s, many pet owners have already done their "trading up" and, with the recession, scaled back some. At the same time, both long- and short-term, the mostly resilient petfood market's above-average prospects have continued to attract new players, expanding the range of retailers vying for a slice of the kibble pie.
According to Packaged Facts, the market divides between mass market at 58 percent, pet specialty at 30 percent, Internet/catalog at 7 percent and all other at 5 percent. For the foreseeable future, the bulk of petfood retail sales will continue to occur through the mass and pet specialty channels, with Internet sales continuing to advance (Figure 1).
Although the petfood market has fared better than many consumer packaged goods categories during the economic downturn, pet owners have not been exempt from the sluggish US economy. According to the Experian Simmons consumer survey data, as of summer 2011, 39 percent of dog or cat owners report being financially worse off than they were a year ago. In the Packaged Facts September 2011 Pet Owner Survey, 69 percent of pet product buyers were of a mind that many pet products are becoming too expensive. Perhaps not coincidentally, 74 percent agree that they look out for lower prices, special offers and sales on pet products (Figure 2).
One of the main ways in which pet owners are seeking deals is by shopping around, says Packaged Facts data. Nearly half (47 percent) of petfood buyers agree that they shop for petfood at a variety of stores, while Experian Simmons data show that the percentage of dog or cat owners who are channel-loyal was at 41 percent in 2011, down from 49 percent in 2008 and from 53 percent in 2006. Needless to say, the financial situation of a pet owner can affect the channel choices.
Despite any money-saving tradeoffs pet owners may be making, premium petfood and treat products remain a fact of life in the US pet market. Pet owners' desire for premium products affects their channel choices as well as their brand choices within a given channel. According to Packaged Facts, close to one-third of petfood buyers (30 percent) agree that they prefer to shop at pet product retailers that offer the best products available, even if they are more expensive, and almost one-quarter (23 percent) agree that they prefer to shop at pet product retailers that offer natural/organic and other specialty brand products.