Like most sectors across the U.S. fast-moving consumer goods (FMCG) industry, the pet care realm has been no stranger to dramatic change. As with the human food and beverage industries, product assortment and fulfillment options across the pet industry have exploded as consumers have shifted how they shop for their furry companions. And given the plethora of choice across the market (local pet stores, big box retailers, vet clinics, online retailers), as well as the pace of change across products and formats, it’s critical for brands and marketers to keep an omnichannel (1) perspective.
Across Nielsen’s omnichannel universe, Americans spent nearly $33 billion on pet food and treats in the last year. Compared with a year ago, this represents an increase of 5%, or $1.5 billion in sales (2). Although volume growth has been slow for the pet sector, pet consumables (food and treats) are still driving much-needed growth to the overall FMCG space, particularly in (where else?) the online retail landscape.
CONSUMERS HOLD OUT ON PET FOOD PURCHASES ONLINE
Relative to the 5% growth across online and offline pet consumables, e-commerce sales of pet consumables increased 53% this year.
The online growth figures alone might set alarm bells ringing for brick-and-mortar pet retailers, but consumers aren’t flat-out abandoning physical stores in favor of e-commerce. In fact, when it comes to shopping for Fido and Mittens, pet owners are pretty particular. According to Nielsen’s Digital Shopping Fundamentals research, one-in-two pet owners (51%) indicate that they don’t ever plan to shop for or purchase pet items online.
We’re seeing the impact of that unique pet-owner sentiment in real time. Although vet clinics, pet superstores and neighborhood pet stores are seeing reduced sales overall, mainstream and neighborhood pet retailers continue to find ways to resonate with pet owners and post modest growth alongside the rapid growth of online sales.
HEALTHFUL IDEALS DRIVE HEALTHY GROWTH IN MAINSTREAM RETAIL
Rapid growth in e-commerce hasn’t stopped consumers from hitting mainstream big-box retailers for their pet food needs. While brick-and-mortar growth has remained modest, consumers have spent more than $16 billion on pet food at traditional retail outlets, up nearly 2% from a year ago. Consumption has slowed, with volume of pet food down 1% in this same timeframe. In many cases, this uptick in sales can be linked to the influx of premium pet food brands on mainstream store shelves. Much like we see across the grocery channel, consumers no longer have to go far to find a premium assortment of pet products for their furry, scaly and feathered friends.
Demand for pet food in stores has continued, thanks to educated consumers seeking healthy formulas (with higher price points) at mainstream retail.
This trend is helping drive sales in the dog food category thanks to the perceived health benefits (more protein and fewer grains) of wet food. While overall dog food dollar sales are up 2% from a year ago, wet dog food sales growth is more than twice as pronounced, and the growth is exponentially higher among wet dog foods that claim to be natural or free from artificial colors. Dry dog food continues to hold a commanding share of category sales, but growth has stagnated. As consumers’ hearts and wallets grow more fond of wellness regimes in pet care, the rise of wet pet food may continue.
SPECIALTY CHANNELS LIVE UP TO THE NAME AS HIGH-QUALITY, HIGHER-PRICE ITEMS MOVE THE NEEDLE
Together, “specialized” pet retail offerings (superstores and neighborhood pet stores) represent a combined $8 billion in annual sales and 3.2 billion in pounds of pet consumables. But performance hasn’t been consistent across retail sectors in this space. In fact, while pet superstores have seen declines in both volume and dollar sales, neighborhood pet retailers have continued to experience impressive dollar and volume growth.
Neighborhood pet shops are differentiated in their ability to offer personalized services and access to communities of interest to their shopper bases. These factors are appealing to consumers, and a closer look at past performance indicates that small regional chains and independent storefronts have driven the most growth among pet “specialist” retailers. With unmatched assortment available online, as well as the convenience of pet food availability in mainstream retail, pet superstores have struggled to compete.
One area where local independents have really capitalized is in driving sales of more premium and high-quality pet meals and meal enhancers. In fact, the meal enhancer category (which includes dry, wet and liquid toppers, mixers and enhancers) represents $84 million in annual sales for specialty pet retail, up 21% from a year ago. Growth has been especially pronounced in bone broth and stews offered in cartons and pouches.
CLINICS RUN COLD WHEN IT COMES TO SELLING PRESCRIPTION PET FOOD
Vet clinics saw sales of $1.6 billion across pet consumables this year. This represents a 6% drop in dollar sales from a year ago, and pet food volume sales (which totaled 393 million pounds) has also slowed, declining by more than 8%. It’s interesting to note that wet foods, often perceived by consumers as a healthful alternative to dry options, represent a much higher share of the category within vet clinics than among other pet food retailers. Despite the larger presence of wet pet foods in vet clinics, sales haven’t seen the lift we’ve seen across wet pet food sales in mainstream channels. In fact, we’re seeing declines across almost all prescription pet food and treats. Relative to other channels, e-commerce is taking its toll on the vet clinic brick-and-mortar channel, as pet parents may be seeking online vet clinics for support or filling their prescriptions online more often.
- For a subset of retailers, some duplication of click and collect volume exists in the total omnichannel FMCG market valuation.
- Growth figures are based on total pet consumables excluding the farm and feed channel.