Meeting Tomorrow's Challenges Today
Forget how the conversation has been framed up until now—tomorrow’s problems are here today.
All too often, when members of the pet industry discuss the challenges facing today’s specialty retailers, the conversation focuses on some undefined period down the road. In this future, say the experts, Baby Boomers will slow their spending on pets, the Internet will become a formidable source of competition, and the product trends that have largely driven pet store success will stop paying big dividends to the retailers that were early adopters.
Well, it is high time that we start discussing these issues in the present tense.
A presentation given by Scott Bender of Cleveland Research at the recent PIDA Management Conference really drove this point home on several fronts. Reporting that growth in the pet specialty channel slowed in 2014, Bender cited a number of troubling trends—many of which were expected to be tomorrow’s problems—that may largely be to blame.
For example, it looks like the declining impact of Baby Boomers as a customer base in the pet care market may be happening at a faster rate than anyone expected. Possible evidence of this can be seen in the slowing growth of dog adoptions in 2014. It seems that Baby Boomers simply aren’t replacing their pets at the same rate as in the past, and Millennials are far from picking up the slack.
This should come as no surprise, as the emerging generation of consumers is increasingly opting to live in urban environments and putting off family life longer than their predecessors. As a result, in 2014, the U.S. experienced declines in new and existing home sales, as well as a slowdown in the creation of new households—both of which have historically been critical to growth in dog ownership.
Interestingly, Bender reported that cat adoptions continued to accelerate during the same period, which seems to add some credence to the idea that the industry’s customer base is one that is very much in transition. And while its great to see our feline friends in need get loving homes, when talking dollars and cents, cat ownership simply does not have the same impact on pet industry spending as dog ownership.
Another important development moderating the pet specialty channel’s growth is the maturation of the natural products trend. While natural products still play an important role in pet stores across the country, and will continue to do so for the foreseeable future, they simply do not hold the same potential for growth—for a couple of reasons. First, those pet owners who are receptive to the idea of trading up to natural products likely already have done so. In addition, grocery and mass retailers are no longer significantly behind the curve when it comes to this product segment. They have been able to leverage this trend, along with an improved approach to merchandising their pet aisles, to successfully defend—and in some cases even grow—their market share. The result is a consumer base that holds far less potential for conversion into pet store shoppers.
Despite the formidable issues facing pet specialty retailers today, however, the future is still bright for those that can utilize their competitive strengths to adjust to the evolving pet care market. Independent pet stores are still better than the rest of the retail field when it comes to staying nimble enough to react to the opportunities presented by emerging trends—for example, the growing raw food category. They also have an unmatched ability to incubate and guide those trends with the most potential to grow their businesses. By focusing on these advantages in the marketplace, pet retailers can ensure themselves of a prosperous present and future.