Riding the Next Wave
For pet retailers, the ability to identify the hottest product trends is key to sustaining success through the fourth quarter of 2012 and beyond.
There is no arguing that the independent pet specialty channel has fared quite well over the past few years, even as other retail segments have been decimated by a still-lagging economy. In fact, in a recent survey conducted by Pet Business, more than 60 percent of pet store owners reported sales increases over the past 12 months, with a majority of those enjoying an uptick of at least five percent.
But why is pet industry doing so well while others crash and burn from economic pressures? Of course, the obvious (and most cited) reason is the special bond that Americans have with their pets. By now, everyone has heard about pet humanization, and how this phenomenon is driving pet owners to seek out the very best products and care for their four-legged loved ones—all to the benefit of pet businesses across the country.
However, there is another side to the equation that must also be acknowledged when examining the ongoing success of the retail pet industry, and that is the high level of product innovation that is being driven by the industry’s manufacturers. It is this level of innovation that not only enables retailers to effectively meet the current demands of pet owners, but also creates completely new demands that drive incremental sales in the pet store.
With this in mind, Pet Business has identified five key areas where the latest product trends that are driving sales success for pet specialty retailers and hold the promise of even more success moving forward.
In addition to nourishing our pets, food products are what largely nourish the retail pet trade. While the margins are not usually as spectacular as they are in other product categories, nothing drives traffic into the pet store the way food does. Add to this the fact that the dinner bowl is the first place consumers focus on when looking to provide best possible care for their pets and it is no surprise that the pet food category has been a hotbed of activity when it comes to emerging product trends.
“People want their pets to be a vibrant part of their family for a long time and are taking a much greater interest in what they’re feeding their pets than ever before,” says Reed Howlett, CEO of Nature’s Variety.
Two trends, in particular, stand out in the pet food category—grain-free and raw diets. Both have innovated the way that pet owners feed their companion animals by offering the promise of more closely emulating the diets that these animals were meant to have in nature. “Our cats and dogs are obligate carnivores and scavenger carnivores, respectively, and are designed to eat mainly animal protein in the wild,” says Megan Dischler, international sales manager for Herbsmith Inc. “I think many consumers are starting to get a firm grasp on this idea and as a result are becoming more aware of filler grains in the treats and foods they feed their pets.”
What may be more impressive than the success that pet stores have had with raw and grain-free diets so far is the fact that many experts believe that the industry has only scratched the surface when it comes to the potential that these products have to drive sales.
“In the short term, raw diets will continue to be the fastest-growing segment of pet food driven by innovation and increased accessibility,” says Howlett. “In the long term, we fully expect that raw diets will be the food of choice for pet parents.”
Of course, retailers’ ability to fully realize that potential will ultimately depend on their ability to educate pet owners that there may be a better alternative to the traditional diets that they are currently feeding their pets. “Innovation, increased accessibility and education are the keys to continued growth of raw and raw-inspired grain-free diets,” says Howlett.
“Innovation that reduces barriers to trial and leads to pet parent (and pet) delight in the usage experience will be critical, and is the cornerstone. Increased accessibility both in terms of numbers of stores carrying raw and grain-free foods and prominence of presentation within these stores will drive pet parent interest and engagement,” says Howlett. “And finally, education through a diverse web of influencers ranging from in-store signage and sales associate engagement, trusted resources such as veterinarians, groomers and breeders, third party online resources, social media engagement, pet food and pet interest blogs, and friend word-of-mouth recommendations will drive conviction.”
Another product trend that has a lot of traction in the pet industry is the continued growth of the nutritional supplement category. Much like emerging diets, these products appeal to consumers’ desire to provide their pets with the best possible care, from the inside out. And similar to the grain-free and raw diet movements, the rise of pet supplements is firmly rooted in human-product trends.
It’s a category with a lot of crossover from the human world,” says Scott Garmon, president/CEO of NaturVet. “As natural supplements become more popular in the human world, there is an understanding among people that [many of the benefits derived from these supplements] can cross over to their pets.”
The increasing lifespan of pets, as well as a better understanding among pet owners about the many health issues experienced by aging animals, is one factor contributing to the growing demand for solution-oriented nutritional supplements. “This trend is really driving the interest in nutritional supplements, especially in supplements that are beneficial for the older pet,” says Dischler. “For example, joint support supplements, calming supplements for anxious older pets, and digestive support supplements are in high demand.”
One of the fastest-growing segments of the supplement market is made up of products that address allergies in pets—particularly the effects that allergies have on skin and coat health. “Most skin and coat problems, more often than not, are the result of some sort of allergies,” says Garmon. “And that is an area where we’ve seen huge increases.”
Garmon says that allergies are often addressed with natural immune-system boosters, which can be combined with calming nutrients to take an all-around approach to relieve pets with itchy skin and coats. “When a dog has [itchy skin and coat], sometimes it’s allergies, sometimes it’s just nerves; either way, once they get to that itchy stage, they’re going to need some calming as well,” he says.
Dischler points to digestive health as another hot area in the supplement category. “I think digestive supplements are also really trendy right now and for good reason,” she says. “Ideal digestive health is important for so many reasons. Digestive health is at the core of good nutrition and makes up a very large part of a balanced immune system. Not to mention, good digestive health tends to yield pets that are free from tummy troubles like vomiting, gas and diarrhea.”
Once again, the key to success with this still-evolving category is a retailer’s ability to inform pet owners of the multitude of options available to them in addressing health conditions with nutritional supplements.
“Be a source of information for your customers,” says Dischler. “The thing that really sets the independent retailer apart from the large box stores is their ability to educate and provide an additional service that box stores are often not equipped to offer. I would encourage retailers to work with their distributor reps and manufacturer reps to create educational and visually appealing supplement sections.”
Of course, no commentary on the latest pet product trends would be complete without discussing the impact of the fashion industry. Home fashion, in particular, has played a significant role in driving product trends in the pet industry, as more and more consumers look to seamlessly incorporate a variety of pet necessities into their homes. “The headline here is the humanization of pets,” says Ann Hanson, director of marketing and innovation for Petmate. “Pets are now a part of our daily lives.”
To meet the demands of today’s fashion-conscious pet shopper, manufacturers are paying close attention to the latest trends in human fashion industries so that they can be translated for pet store shelves. “It’s important to understand what’s going on with design trends in household [fashion] and expect those to be applied to pet,” says Hanson. “For example, we’ve seen bright colors as a key trend throughout a variety of [human product] categories, and you’re seeing even brighter color options in everything from collars and leashes to carriers for pets.”
While the influence of human-product trends can clearly be seen in just about every product category, incorporating the latest fashion aesthetic into pet products brings a unique set of challenges. Because these products are designed to fit in with the current fashion sensibility of pet owners’ homes, retailers must look for the most sustainable trends, while staying prepared to quickly respond to shifting trends.
“We have to be looking further on out,” says Hanson. “And we have to have an eye for what trends will be here for three to six months, versus trends that have a much longer lifespan, and opportunity for a broader impact in the marketplace. On the other hand, with items such as collars and leashes or bedding, categories that can turn more quickly, we have a greater opportunity to bring in seasonal trends.”
According to Christina Quezada, marketing communications coordinator for Petmate, there are a couple of pet categories in which human-fashion influences have become particularly important to product design. “Some particular categories we have really focused on recently in regard to home fashion are bedding and feeding/watering,” she says. “You can see evidence of home fashion trends reflected in our fashion bedding launched at Global Pet Expo, which incorporates inspiration from various sources, including contemporary Americana fashions, neutral and natural fabric trends, and eclectic quilting designs. All of these were designed with a modern living space in mind, as it becomes increasingly important to create products that blend seamlessly within the home, and complement furniture, art and color schemes.”
Pets Go High-Tech
As we move further into the digital age, there are a number of pet product categories that are being revolutionized with an unprecedented influx of tech-forward features. This incorporation of new technologies into pet products is a natural progression for the category, given consumers’ fascination with electronic gadgets and gizmos, says Lorien Clemens, marketing and outreach manager for PetHub, which makes a pet identification system that utilizes mobile and online technologies to speed the recovery of lost pets.
“Consumers want technology,” she says. “They are looking for ways to take the technologies that make their lives easier and riche, and apply them to their pets.”
The influence of the latest technologies on the pet care category has manifested in a wide range of product categories. Today, pet owners can charge up a dog’s LED-lighted collar through a computer’s USB port before taking an evening stroll, identify a neighbor’s lost pet by scanning its ID tag with a mobile device or take care of a week’s worth of pet feedings with a computerized automated food bowl. But as far as the pet market has come, in terms of technology, the trend is really just in its infancy. As high-tech human products become more refined, and the technologies used to make them become less expensive through mass production, retailers should expect to see even more integration with pet products.
In addition to being used to add tech-forward features to traditionally low-tech fare, technology is also improving pet products in a much less visible way. For example, the use of antimicrobial technology in areas where bacteria growth has traditionally been an issue for pet owners is improving products from the inside out.
“We use Microban [antimicrobial technology] in several of our products, ranging from our feeding and watering [items] to dog houses,” says Hanson. “As health, convenience and safety become more important factors in the selection of pet products, current technologies will become a bigger part of product design. So instead of just putting a bowl down, they want to give their pets a bowl that will resist the growth of harmful bacteria—just like we use protective measures when we eat or drink.
“A good example of the combined use of this and other technologies in a product would be in the Replendish Waterer. Not only does this product contain Microban, which is manufactured into the plastic base, but it also utilizes a submerged filtration system that separates debris and certain chemicals from a pet’s drinking water.”
Licensed to Sell
Licensed products have been present in the pet industry for decades, delivering varying degrees of success for pet specialty retailers. However, in recent years, the strategy of aligning pet products with high-profile brands has become a lot more refined, with manufacturers and retailers alike avoiding many of the pitfalls that led some licensed pet products from falling short of expectations. According to Sean Knecht, COO of Pride Bites, a company that offers a line-up of NCAA-mascot themed and custom-themed pet toys, the major impediment to success with licensed products in the pet industry has been the traditional practice of “logo slapping”— simply putting a licensed character or logo on a generic product.
Steven Shweky, partner/president of Fetch … for pets!, a company that focuses on licensing in a number of pet care categories, agrees that such a practice will inevitably leave pet owners underwhelmed. “The main mistake that retailers make with licensed products is failing to make sure that brand translates well to the target consumer and product category,” he says. “A lot of times, companies will try to utilize licenses that really have zero connection to the product that they are trying to sell. For example, a dog treat manufacturer that simply puts a picture of Spiderman on its packaging just doesn’t get it. If you made the treat in the shape of a spider web, or something like that, there would be a better connection to the brand.”
Both Shweky and Knecht believe that, given this new, more-comprehensive approach, the potential for licensed products in the pet care segment is unlimited. For Shweky, the focus is mainly on trusted human consumer-product brands for consumables and nostalgic entertainment brands for non-consumables.
“Today, we’re only at the base of the growth curve. You will see it extending further and further into categories such as food and treats—things that are high-volume,” he says. “We’re already seeing it in supplements, with PetSmart offering GNC-branded products.
“On the entertainment side, licensing is very cyclical; there is a three- to five-year stretch where it’s hot, then a two-year stretch where it slows, and it keeps going around and around. I think we’re at the beginning of that period, so you will definitely see it growing through 2015.”
Not surprisingly, Knecht is more bullish on the sports licensing side of the business. “The audience for college sports is ever growing,” he says. “Every year, new kids are entering college, so they and their families are becoming college sports fans. Because of that, sales of college sports-themed products should never trend down.”