Pet specialty retailers looking for product trends that will give them a leg up on the competition should pay close attention to several forces shaping the future of pet care.
For independent pet retailers, the ability to quickly identify and respond to emerging product trends has always provided an edge in competing against mass merchants and big-box retailers.
But while in the past, independent retailers could count on having some time to capitalize on these moneymaking trends before seeing them land on the shelves of their larger, less nimble competitors, now mass merchants are adapting to trends faster than ever. That makes it more important for independent retailers to stay as far ahead of the game as possible in anticipating the next big thing.
With this in mind, Pet Business examined a variety of emerging trends that, if handled correctly, will not only strengthen the position of independent retailers on the front lines of innovation in the market, but also deepen the bond between consumers and their pets. When considered collectively, these trends—many of which span across multiple product categories—indicate that the next generation of pet products will be more tailored than ever to meet specific pet care needs, and reflect the pet and its owner’s individuality.
Pet food is one of the most prominent areas of the industry in which products are evolving to meet pets’ specific needs and pet owners’ individual sensibilities. For example, the industry has seen a surge in demand for natural and grain-free foods, as consumers become more accustomed to feeding themselves, and thus their animal companions, diets that they perceive to be healthier.
Retailers can expect these pet food segments to continue growing with the same momentum they have had over the last few years. According to GfK, a New York-based research company, natural dog and cat food sales in pet stores reached $3.3 billion between January and August 2014, accounting for 67 percent of pet food sales for these retailers’ last year. And the category is expected to continue growing at a rate of seven percent annually.
Maria Lange, senior product manager at GfK, says the natural pet food category still has much untapped potential. She notes that while 72 percent of dog food sales are natural, the category still represents just 45 percent of cat food sales, leaving much room for growth.
While natural products account for a considerable share of the food market in pet stores, Dr. Christine Bessent, DVM, CEO of Hartland, Wis.-based Herbsmith Inc., points to gluten-free products as a major emerging trend. As humans have recognized the allergenic potential of gluten and have cut it out of their own diets, they are also transposing that dietary restriction onto their pets, she says.
“From my perspective as a holistic veterinarian, it is important that the animals are eating real food [that is] species appropriate,” says Bessent. “Whether it’s raw or lightly cooked, the fact that it is real food, geared for carnivores, is important—and that food is naturally gluten free. The demand for more gluten-free pet foods is another slant on the principle for biologically appropriate food for dogs.”
Sales figures indicate that foods that are more biologically appropriate for pets are resonating with shoppers. Collectively, gluten free, freeze dried and refrigerated/frozen foods represented $566 million in sales during the first eight months of 2014—more than doubling the $243 million the categories earned just two years ago, according to GfK. While gluten-free sales accounted for the highest amount in dollars ($450 million in 2014), some industry experts say freeze-dried raw food, which totaled $45 million in sales last year, is the category to watch.
“We believe that freeze-dried raw food is a huge emerging trend because it allows pet parents to take advantage of the nutritional superiority of raw food in a convenient form that doesn’t need to be frozen or defrosted,” says Eric Emmenegger, senior brand manager at St. Louis-based Nature’s Variety, which makes Instinct raw food and Prairie holistic food.
Nature’s Variety’s Instinct Raw Boost line of products, which includes food and treat formulas for cats and dogs, offers pet owners that convenience, says Emmenegger. The grain-free kibble is boosted with freeze-dried raw bites. “It’s the perfect combination of convenience and nutrition to give pets vibrant health,” he says.
Retailers that address and educate their customers about the convenience and nutritional excellence available in freeze-dried raw foods can expect a boon in the category. Michael DiTullio, president of Especially for Pets, a seven-store retail chain in Newton, Mass., has noticed that freeze-dried food has piqued customer’s interest. In 2014, his stores experienced a 22 percent increase in freeze-dried sales, and that was on top of a 57 percent increase in 2013.
Not surprisingly, the trend toward nutrient-rich diets is reverberating in other segments of the industry beyond pet food. Consumers who see the benefits of advanced pet nutrition are also seeking products like vitamins, supplements and other health remedies to improve their animals’ overall health. This includes taking more preventative measures to ensure their pets do not suffer from health issues in the future.
Millions of pet owners are already giving vitamins and supplements to their pets. According to data from the American Pet Products Association’s (APPA) 2013-2014 National Pet Owners Survey, 14.7 million dog owners give their canines vitamins and supplements, and 3.6 million cat owners provide their felines with these health-boosting products. However, with a growing number of pet parents more focused on their animal’s health, retailers can expect these numbers to escalate.
“The vitamin and supplement category has tremendous growth opportunity,” says Ryan Holden Singer, founder of New York-based K-10+, which makes water-soluble pet supplements and other wellness products. “The further people become educated on the benefits and importance of proper health, and the more people continue to take those products for themselves, then the category will grow.”
Pet owners who have already tapped into this diverse category are spurring a variety of trends that pet specialty retailers have seen in their stores over the past several years. Proven products like multi-vitamins, as well as supplements high in essential fatty acids, antioxidants, and glucosamine for joint health are top sellers in the market, and the increasingly knowledgeable consumers who shop the category are demanding quality.
“The educated consumer is forcing the industry to produce better products,” Bessent says. “It used to be good enough that a supplement or food had glucosamine on the label. Now, the educated consumer knows that their animal needs to have a certain amount of glucosamine per day, and now the consumer is looking for the adequate amount to support their dog’s health and wellness.
“The education of the average consumer is putting pressure on the industry to not just have a product with a lot of window dressing, but have a good product that fills the need for that pet.”
Moving forward, cutting-edge science will help manufacturers produce higher-quality products to fill voids in the marketplace, according to Bessent. As in other segments, retailers should consider what is trending in the human market to glean what could be the next trend in the pet arena. This year, based on its success in the human market, experts predict that digestive aids will be an important emerging trend.
“Probiotics, prebiotics and digestive enzymes are just starting to take off,” Bessent says. “Complete digestion support, with adequate levels of probiotics, the right types of prebiotics and digestive enzymes that are geared toward carnivores [will be] the biggest trend in 2015.”
As pet food evolves, changing the nutritional profile for and increasing the life expectancies of companion animals, the vitamin and supplement segment will follow along. “Looking at the big picture, we’ll be seeing an evolution of new supplements being developed that meet any deficiencies that may happen in the development of these new foods,” Bessent says.
With pet owners taking a more proactive approach to their pets’ health, retailers can expect them to look at products with more scrutiny. In recent years, recalls of pet food and treats made with questionable ingredients that posed potential health risks for animals have had a huge impact on consumer expectations for the products their pets interact with on a daily basis. Pet owners are demanding more transparency from companies in the how their products are being responsibly sourced and produced—and it is a trend that is impacting the entire industry; not just the consumable market.
“Customers are becoming more interested in where companies source raw materials,” says Spencer Williams, president and owner of West Paw Design, a Bozeman, Mont., manufacturer of eco-friendly dog and cat toys and beds.
The demand for more transparency is especially prevalent in the Millennial generation, which is expected to eclipse the spending power of Baby Boomers by 2018, according to Nathan Richter, partner at Arlington, Va.-based market-research firm Wakefield Research. Richter notes that Millennials are more interested in pet product features like BPA-free, natural/organic and hypoallergenic products. “Millennials are interested in these product features, but they need to understand where to find products containing them,” Ritcher says. “As this market grows, retail has a unique opportunity to attract Millennials by prominently featuring these products in their stores and marketing.”
Retailers that do their due diligence will find a robust selection of suppliers that are responsibly sourcing and producing their products. For example, West Paw Design has been committed to working with responsible USA-based suppliers since it was founded in 1996. The company is also a third-party-certified B Corporation, which means it meets rigorous standards of social and environmental performance, accountability and transparency. “As a B Corporation, we have a responsibility to help solve social and environment problems,” Williams says. “We see responsibly sourced products as one way to live our company values. As such, we have strong relationships with many of our family-owned manufacturers and have visited their mills to ensure their production standards align with our values.”
Having strong relationships with suppliers is crucial for companies that aim to be more transparent with consumers. However, some manufacturers are taking the concept of transparency a step further. Take Nummy Tum Tum, which makes nutritious consumable pet products, for example. The Corvallis, Ore.-based manufacturer grows and processes all of the human-grade, USDA-organic ingredients that it uses in its products.
The industry is collectively responding to the consumer demand for more transparency and responsibly sourced and produced products. In 2013, eight pet product manufacturers formed the Pet Industry Sustainability Coalition (PISC), a non-profit group for manufacturers, distributors and retailers to collaboratively navigate advancement toward improved environmental performance in the industry. The group, which now has 95 members, provides tools and resources for its members to help implement change—and retailers would be wise to pay attention to this changing tide.
“There is a sea of change happening in manufacturing,” Williams says. “With responsible sourcing and strict standards comes higher quality for consumers and [higher customer satisfaction].”
While pet owners are paying close attention to the sourcing and production of existing products in the industry, some actually want to get directly involved in the process by making customized products for their pet. Whether it is a tailored diet or personalized toys, apparel or accessories, the industry is seeing more demand for customized products.
“This new age is about finding out more about the consumer, what they want, what they desire and then cultivating the right plans for them,” says Steven Blustein, CEO of Austin, Texas-based PrideBites, which offers custom pet products directly to consumers and retailers. “We believe that pet parents are going to enjoy more personalized plans—not only with [hard goods] but with consumables as well.”
Nestlé Purina saw this was true when it began developing a new pet food brand. The company found that 70 percent of dog owners wanted a food to help support their dog’s unique needs and preferences, which prompted the creation of Just Right by Purina, a customizable pet food.
“Part of this personalization trend is [that pet owners] want to have more say in what goes into their pets’ bowls,” says Brian Lester, marketing director for Just Right. “The hyper personalization to get something that is not just right for a dog’s breed size or their breed, but that is absolutely right for the individual dog is very appealing to pet owners.”
To create a custom food, Purina uses a dog’s individual information—like age, activity level, breed, body condition, and other nutritional needs like weight management or skin and coat support—to create a custom diet. Dog owners can also personalize the packaging by including a picture of their dog and adding the dog’s name on the bag. The packaging has feeding instruction tailored specifically for each dog. Based on the feeding instructions, the company knows the “days of supply” and can offer auto replenishment, so the customer gets a new bag of food before they run out.
While Just Right is currently only available through Purina’s website, as technology advances, retailers should expect manufacturers to integrate their hyper-tailored product experience into pet stores. PrideBites, for example, currently offers customized products directly to consumers from its website. However, Blustein says the company is hoping to change that model.
“The same technology we’re using online needs to come in store to bring the consumer back to share the experience,” he says. “If the retailers are hurting in the industry, in terms of getting people in the retail location, we have to be able to show technology and the emergence of the web to be a benefit to retailers and how we can have a joint approach, and that’s where I see the future.”
Just as technological advances are reshaping the relationship between manufacturers, retailers and consumers, they are also cultivating product innovation in the pet industry. Not only are manufacturers using technology to improve their manufacturing processes, more are integrating it into products, with the aim of improving how pet owners interact with their pets. As a result, the pet tech category has emerged.
“The more humans can use technology to make our lives easier so we can focus on the important things, the better,” says Lorien Clemens, director of marketing at Issaquah, Wash.-based PetHub. “If a pet owner is given a product that makes caring for their pet easier, then that will excite them.”
While pet technology is still somewhat in its infancy—the industry is just starting to see more digital-based products that utilize Bluetooth, GPS, QR codes and smartphone interfacing—retailers can expect the category to take off over the next few years. According to Global Unleashed: Dogs Go Mobile and Connect Online, a study conducted by market-research firm Think Global Qualitative on behalf of Knoxville, Tenn.-based pet manufacturer PetSafe, dog owners in the U.S. have expressed an interest in apps or products that allow owners to interact remotely and/or use their smartphones to create a game for them and their dog to play together. These pet owners also want better ways to contain or track their dog, such as GPS dog collars.
Of course, products like these are available in the pet care market. PetHub, for example, makes pet identification products that utilize GPS mapping and Bluetooth wireless services. Meanwhile, Minneapolis-based Anser Innovation offers PetChatz, a wall-mounted videophone that allows pet parents to have visual interaction with their pets from anywhere, anytime through their smartphones, tablets or computers.
“Everything is becoming connected our mobile devices, and I can control my world from my mobile device,” says Lisa Lavin, founder and CEO of PetChatz. “That’s an expectation that consumers have, and they have the same expectation regarding pet tech as well.”
As the trends toward high-tech pet products and preventative healthcare for pets continue to grow, retailers can expect pet owners to inevitably seek out products that bring these two worlds together. For example, participants in Think Global Qualitative’s study indicated that they would like to see more products on the market that have the ability to track a dog’s health history/status, increase exercise and improve grooming. Clemens predicts products like these will shape the future of pet tech.
“Wearable tech is really just booming in the human space,” she says. “Fitness based and health monitoring products are huge. I think wearable tech and preventive care that is related to health will drive the space for pets.
“Devices are getting smaller, more powerful and more interactive and connected,” Clemens adds. “The more we find that our lives are connected to technology, and the more our pets become part of our lives, we will want to connect them to technology.”