Pampering on the Range?

The farm and feed channel has an opportunity to grow fresh revenue by leveraging some of the key trends from pet stores.



 

When farm retail powerhouse Tractor Supply acquired Petsense—a 136-store chain, mostly located in outlet malls and rural markets—the pet industry took notice. Although Tractor Supply has been expanding its pet focus in recent years, the move showed a much stronger commitment to the pet channel. So why would a leading seller of cattle food and barn equipment want to dive head-first into the dog, cat and goldfish business

When you look from a data-driven perspective, the pairing makes plenty of sense. Preliminary figures from GfK’s farm and feed leader panel, representing about 500 farm-related stores in the U.S., show that around one-quarter of all pet specialty retail sales (which include pet stores, veterinary clinics and farm and feed stores) come from the farm and feed channel—more than $3 billion annually. That is almost half of yearly pet store sales, and much more than vet clinics. (Data comes from June 2016 GfK reports.)

Full meals account for roughly 90 percent of pet food sales in farm and feed outlets, with dogs representing 85 percent. And while we are seeing many trends from pet stores begin to spill over to farm stores, our data shows strong opportunities for pet food manufacturers to gain even greater traction—and higher profits—in this channel.

Farm and feed stores have generally focused on larger quantities and lower prices. Extra-large bags account for about three-quarters of dry dog food sales in these outlets—almost double their share in pet stores. We also know that the average price per pound for dry cat food in farm and feed stores is less than a dollar, compared to almost $2.60 in pet shops. Yet, we are seeing growth in farm and feed for some of the “pet-pampering” SKUs that have become profit centers for pet stores. 

Natural products, for example, now represent roughly 40 percent of total pet food revenue in farm and feed stores—well below the 70 percent we see in pet retail. And grain-free items now weigh in at about 20 percent of farm and feed sales, versus 38 percent in pet stores. This disparity can also be seen in shelf-space metrics; natural occupies a bit less than half of pet food real estate in farm and feed outlets, compared to 69 percent in pet retail, and grain-free accounts for half the space in farm and feed that it claims in pet (19 percent versus 37 percent).

Given the price points commanded by natural and grain-free items, the farm and feed channel seems like an obvious place to gain continuing growth for these high-performing categories.

Similarly, treats still represent less than 10 percent of all pet food sales in farm stores, compared to 13 percent in pet shops. And cat food items, in general, are not well established in farm and feed, capturing just 15 percent of sales, despite owning 25 percent of shelf space.

We can see from these (and other) statistics that Tractor Supply has recognized and bought into a highly promising trend—the growing similarity between farm and feed and pet store customers. Today’s rural customers increasingly want to treat their pets to the same healthy diets as urban and suburban pamperers. As this merging of customer bases continues, look for treats, cat food and canned products to gather steam in farm and feed, something that savvy manufacturers can stay ahead of with a fully data-driven approach.

What can pet retail players gain from farm and feed’s transformation? As these customers seek out healthier, more costly items for their pets, they may begin to venture into pet stores looking for the latest items for dog and cat fanciers. Reach out to these emerging customers and make them feel welcome in your shops.



Maria Lange is Business Group Director of GfK’s Pet Specialty practice on its POS Tracking team. Want to learn more about the farm and feed and pet retail channels? Contact Lange at maria.lange@gfk.com about becoming a participating retailer or manufacturer client.

 

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