Top 10 Trends Toward Another Top-Notch Pet Decade
What every pet market builder should consider as they rethink old strategies and develop new ones.
The U.S. pet market is stable but also in steady flux as a number of long-term trends gradually reshape its fortunes. Based on the past two decades of market watching, here’s what every pet market builder—from marketers and retailers to ingredient and packaging developers—should consider as they rethink old strategies and develop new ones likely to still be relevant 10 years from now.
For more than a decade, the strategy of converting pet shoppers to higher-priced fare has paid off handsomely. But this old news is a tack that depends on the success of upper-echelon, higher-income, better-educated consumers able to understand and afford the nuances of themes such as “ancestral.”
Only about 10 percent of pet shoppers fall into a decidedly affluent category, so with its tenure this strategy is now largely one of robbing Peter to pay Paul rather than creating real market growth. Constantly tailoring this approach to woo shoppers at all income levels is essential to its ongoing viability.
With innovation in pet food formulation already in overdrive, the smart money is on packaging as the new premiumization. On the human side, packaging has become ground zero for food industry innovation—think K-Cups, which now account for about a third of the U.S. retail market for coffee. Pet food and treats have lagged uncharacteristically in this area.
Our pet health and pampering practices have matured greatly in the past decade, and pet food packaging needs to reflect that. From additional refrigerated and frozen innovations to natural bulk options, it’s time to accelerate thinking outside the bag.
3 Product Purity
According to Packaged Facts’ January 2015 pet owner survey, 61 percent of dog owners and 50 percent of cat owners are concerned (strongly or somewhat) about product safety, and 56 percent of dog owners and 45 percent of cat owners cite fear of product contamination/product safety as a key consideration in the pet food they buy.
Factor in trends such as contaminated treats from China, and it seems safe to say that companies shifting product and ingredient sourcing and production to the USA are investing in a compelling proposition that will continue to interlace with themes including natural and limited ingredient.
4 Grocery Copycatting
According to Packaged Facts’ pet owner survey, only 15 percent of pet shoppers strongly agree that the natural products sold by pet stores are superior to those available at mass, while two-thirds are more or less on the fence (somewhat agreeing or disagreeing, or having no set opinion).
At just about any cost, marketers on the pet specialty side of the street must make the difference abundantly clear. They’ll also do well to keep an eye on those annual lists of America’s favorite grocers, with operators such as Whole Foods, Trader Joe’s, Costco, Wegmans and Publix among the perennial winners.
Look no further than a Kroger or a Walmart Supercenter to see impressive imitations of even the highest-end fare.
Shoppers love these retailers, and these retailers are fully aware that shoppers love their pets. Increasingly, private labels from these top-of-the-charts grocers will not only mimic trends, but also help set them.
5 Big-box Evolution
With both Petco and PetSmart now private, publicly available data on this enormous chunk of the market is a thing of the past. Yet what these two mega retailers do, or not, is one of the hinges of the future U.S. market.
For both, the foremost challenge is not smaller pet specialty retailers but the many mass retailers beefing up their game. Because of their weekly one-stop household shopping appeal, grocers have a built-in advantage when it comes to customer loyalty, so how well the two top dog specialty retailers are able to lock in repeat and add-on purchases will largely determine how relevant they remain. Petco’s Unleashed stores and Drs. Foster & Smith acquisition look like solid long-term bets, as does PetSmart’s ongoing quest for exclusive brands.
6 Brand alliances with retailers
When it comes to pet product shopping, channel loyalty is down, with most shoppers surfing multiple channels. Only the largest market players, however, have the luxury of representation at both pet specialty and mass. Increasingly, brands are finding it advantageous to strike exclusivity deals with a given retailer à la PetSmart.
Looking ahead, more and more younger brands will have to make a long-term gamble on one or more powerful retailer parents, such as Merrick Pet Care with Petco, putting their cards on security rather than a “sky’s the limit” approach to distribution. This trend will continue to blur private label lines, with more brands being licensed or acquired outright by their retail parent.
7 Generational marketing
Much has been said about the growing clout of millennials, those Americans born roughly between 1980 and 2000. But marketers who shift their focus too hard or long away from the previous generations of X and boomers do so at their own peril.
Few marketers have the wherewithal to develop generationally segmented marketing programs, so finding common ground between the generations—particularly the generational bulges of boomers and millennials—is the ticket. Everything that’s old is new again, and two sure-to-please propositions are 1) save them time and 2) save them money.
8 Downsizing the market
A trend in force for several years, small dogs continue to grow their share of the overall dog population, while the cat population has seen a decline. Neither animal type yields the pet product volume returns of big dogs, but both should be central to the pet market’s overall focus, as they meet both of the
above-noted cross-generational criteria in that they are less expensive and more convenient in terms of pet sitting, portability, grooming, etc.
Compounding these advantages are trends in urban living, including the greater acceptance of pets in high- and mid-rise apartments and condos, so savvy marketers and retailers will be aiming to help dog owners in particular rethink how to make pets in the city work.
9 The future is online
For both the time- and money-saving marketing propositions, the Internet will be the cornerstone, reaching consumers less and less from dinosaur desktops and more and more from smartphones and tablets.
Already 41 percent of pet shoppers buy their pet products online, Packaged Facts survey data show, with about one in five reporting they are “buying more online than I used to.”
Millennials (roughly age 15 to 35) were practically born with microchips in their heads, X-ers are not far behind, and even the oldest boomers will include the Internet more frequently in their shopping consideration set.
Easy online ordering and free home delivery of pet food, as well as increasingly orchestrated apps, are largely the future of this market. (Just ask Amazon or any brick-and-mortar bookstore, if you can still find one.)
10 Pet prescriptions
Sluggish growth in the pet population is worrisome at best, but intensive efforts to bolster pet adoption are in full force. Here again, the Internet is playing a pivotal role.
According to Packaged Facts survey data, as of Q1 2015, 22 percent of dog owners and 13 percent of cat owners used an online pet-finding service for their most recent pet acquisition, up from 12 percent and 7 percent, respectively, a year ago.
But nowhere are the stakes higher than with Human Animal Bond Research Initiative (HABRI), which is working to gather and disseminate the growing body of scientific proof supporting the link between pet ownership and enhanced human health.
Looking ahead, expect to see the day when “get a pet” becomes, if not an actual prescription, then a sturdy recommendation of doctors addressing human conditions including depression, high blood pressure and obesity, to name only a few.
This article originally appeared in the May 2015 issue of Pet Product News