By looking at the right data, pet specialty retailers can ensure that they are positioned to catch the next wave of hit products.
The remarkable growth of premium pet food categories has become both a blessing and a burden for pet retailers. According to GfK’s point-of-sale database, which includes data collected from approximately 11,000 pet stores—natural products alone accounted for 63 percent of all pet food sales in the fourth quarter of 2013. That translates to a growth of nearly 12 percent year over year.
With the success of premium products, however, has come an excess of choice, affecting both retailers and consumers. To make best use of limited shelf space, retailers need to understand not just what is selling today, but also which products are likely to keep growing tomorrow. For all its recent success, growth in the natural pet food category has slowed more recently, dropping five percentage points in 2013 alone.
Savvy retailers need to stock both the products consumers have been buying for a while and the ones they will want to try next week. By staying a step ahead of emerging trends, retailers can differentiate themselves by offering sought-after items that consumers may have trouble finding elsewhere and providing guidance on an unfamiliar category when customers seek help.
A Tale of Two Categories
So, how can pet retailers spot opportunities in today’s market? Let’s look more closely at two special-needs categories—one that is strong but steady, and another that is growing rapidly.
According to GfK POS data, weight-loss products accounted for $433 million in sales during 2013, representing about 24 percent of total special-need pet food sales. However, the weight loss category is essentially flat year over year, with a 1.5-percent drop in dollar sales.
By contrast, joint/mobility SKUs grew a remarkable 47 percent in 2013. Though they accounted for a relatively small $110 million last year, these products seem poised to break through to new sales levels. Not surprisingly, we have seen the number of joint/mobility products begin to accelerate, from 141 in January 2013 to 192 in January 2014.
Clearly, keeping a close eye on the mix of established products (e.g., weight loss) and up-and-coming categories (e.g., joint/mobility) would be a forward-thinking approach for any retailer.
How Trends Flow Downstream
Where do emerging trends come from in the pet retail space? One clear path is from owner to animal. As consumers have focused more on their own health—think of the growth in organic foods, yoga and juicers—they have also sought out smarter eating options for their pets. Data from GfK Mediamark Research and Intelligence (MRI) shows that fitness-conscious consumers prefer to shop at pet specialty retail locations. These pet owners are likely seeking the premium products they cannot find at grocery stores.
Trends also flow from veterinary offices to pet specialty stores—and from there, to grocery and big box chains. More and more manufacturers are now offering store-friendly over-the-counter versions of their prescription (vet-only) diet products; and we are seeing refrigerated options and other high-end items in more grocery stores these days.
Finally, trends can be counter-intuitive. For example, consumers who cannot afford to treat themselves to the best food seem to be willing to splurge on their pets. This trend is similar to the way Starbucks has managed to weather a host of recessions without lowering the prices of its premium coffees.
With the right data in hand, and a desire to understand what will be the next big thing in the pet marketplace, retailers can outpace the competition month after month. It’s all about what you know and when you know it.
Maria Lange is Senior Product Manager on GfK’s Retail and Technology team, helping clients make the most of GfK’s pet specialty data and insights.
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