Fourth Quarter Forecasting



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With the all-important fourth quarter quickly approaching, many pet retailers find themselves looking for any cues to gauge their prospects for prosperity as the year comes to a close.

If last month’s SuperZoo trade show in Las Vegas was any indication of what’s in store for the pet specialty channel, it looks like pet retailers could be in for a very happy holiday season, indeed. This year’s edition of the show was reportedly its most successful yet, drawing more vendors and buyers than ever, which was evident on an exhibition floor that was consistently bustling over the first two days. 

What was even more impressive, though, was the number of new items being showcased. A total of 820 products were launched at this year’s SuperZoo, which represented a considerable increase over years past. This is significant because SuperZoo has not historically been a particularly big platform for product introductions—that distinction has typically been reserved for Global Pet Expo, which is held in the first quarter and features thousands of product launches each year. Based on this uptick in new products at SuperZoo, it would appear that the industry’s vendors are feeling quite bullish about the remainder of 2016—and particularly the upcoming holiday season, given the number of Christmas-themed items that were on display.

Still, basing a fourth-quarter forecast on just the evidence presented at a pet industry trade show, no matter how successful it was, could really amount to navel gazing. Getting a clearer idea of what to expect in the weeks and months ahead requires pet retailers to look outside the confines of our industry for a big-picture perspective.

Well, at the same time retailers and vendors were making their final preparations for SuperZoo, an update to the National Retail Federation’s (NRF) 2016 economic forecast presented more good news for pet specialty stores across the country. The organization expects consumer spending to remain strong through the remainder of the year, leading to 3.4-percent growth in retail sales over 2015—an upgrade from the NRF’s original prediction of 3.1-percent growth for the year. The report cited positive economic indicators such as an improved housing market, job growth and higher wages, among other factors, as the drivers of increased consumer spending. 

Yet, NRF cautioned that retailers still face a variety of challenges through the rest of 2016. Chief among those challenges—at least for brick-and-mortar stores—is the continued growth of online competition. NRF expects increased momentum behind online and other “non-store” sales, which are expected to grow by seven to 10 percent over last year, versus the organization’s original six- to nine-percent growth forecast. 

This is an issue that has leapt to the forefront in the pet industry—particularly in the food segment—over the past several years as more and more market share has moved into cyberspace. And now, as you can read in an article penned by three of the industry’s top independent retail executives exclusively for Pet Business, a growing number of brick-and-mortar retailers are fighting back.

If they can collectively figure out the right approach to stem the rising tide of online competition, the forecast for traditional pet stores is likely to remain positive well beyond the fourth quarter of 2016.

 

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