Seven Key Pet Trends
Among the many trends shaping the retail pet marketplace, there were several that proved particularly important in 2014.
If there was a gluten-free smartphone app for pampered pets owned by doting Millennials, it would have premiered in 2014. Like so many other industries, pet retail and manufacturing have been shaken up by the rise of health awareness, the explosion of digital marketing and the changing of the generational guard among consumers. Here are seven of the top trends from the year just past, with recently released full-year data from GfK’s point-of-sale retail panel representing over 11,000 pet specialty outlets.
1. Using Data as a Difference Maker
When new products are introduced by the dozens, and shelf space becomes increasingly scarce, how do retailers large and small make decisions about which SKUs are worth their attention? How do manufacturers spot ascending trends, and scurry away from those that are descending? Data is the key, and there is more and more of it around. Every marketplace player needs a detailed knowledge of his or her customers to target effectively; but big-box stores and major manufacturers have a distinct data advantage. How will the little guy keep up? And can anyone put all the pieces together to make sense of this brave new landscape?
2. Millennials Making an Impact.
Generation-Y consumers (aka, Millennials) represent the future of spending in essentially every category; and they have very distinct needs and preferences—different from Gen X, Baby Boomers, pre-Boomers, and even each other. Although more than half (52 percent) of Gen X’ers now own a dog (according to GfK MRI data), Millennials are not far behind (47 percent) and just a two points below Boomers (49 percent). More importantly, GfK’s research shows that Millennials are 47 percent more likely than the average American to say they are “very likely” to get a dog or cat in the next 12 months, while members of Gen X are six percent less likely.
3. The Power of “Privileged Pets”
Roughly two out of every five Americans (43 percent) feel strongly that “pets deserve to be pampered” (source: GfK MRI), and pampering takes money. In GfK’s Pet Owner Navigator segmentation of pet shoppers, almost one in 10 consumers fell into the Privileged Pet category—higher-income owners who prefer smaller pet shops and are willing to spend a lot of money on their dog or cat. These pet owners drive not just revenue, but emerging trends that may wind up going mainstream.
4. The “App-ing” of Pet Ownership
Just as smartphones have transformed how consumers stay healthy and shop for bargains, they are beginning to reinvent pet ownership. Pet people—especially Millennials and other young generations—love their mobile devices and want to manage everything with them. And the pet world has already discovered apps—from Dogbook (yes, just like Facebook) to PetCube (essentially a baby monitor for pets).
Of course, behind every app is a data collection machine, which makes them even more appealing as sales and loyalty tools for manufacturers, retailers and even veterinarians. He who has the most data, wins.
5. The Seasonal Tsunami
They started with Thanksgiving and Christmas—special treats for pets on days when their owners are also indulging—but the seasonal pet product trend now encompasses almost every human occasion imaginable—Halloween, Valentine’s Day, Flag Day and even tailgating during football season. Overall, pet food sales grew a respectable 2.8 percent from 2013 to 2014, according to GfK’s POS panel; but seasonal SKUs have jumped 16.6 percent in the same timeframe—a leap of nearly $3 million. Within the seasonal treat category alone, sales of Halloween-themed pet foods grew by an impressive 178 percent YOY, and Christmas-themed products drove 121 percent more sales than the previous year.
6. Raw Power Takes Hold
According to GfK’s point-of-sale pet retail panel, growth in refrigerated and frozen food accelerated from 16.6 percent in 2013 to 18.2 percent a year later, with annual dollar sales rising from $91.9 million to $108.5 million. By contrast, growth of gluten-free items has dropped off dramatically, from 79 percent to 29 percent in the same timeframe. Of course, refrigerated and raw products still account for just one-sixth of gluten-free petfood’s revenue (which was $684 million in 2014); but the category seems to be more than just the latest fad in pet coddling. It is a focal point for larger trends and battles playing out in the industry, and it could become a turning point for some key players. The big challenge for raw: Recalls and health concerns may make this something that larger market players choose to invest in sparingly, if at all.
7. Savor the Flavor of the Moment
The days of selling pet dinners as “Original Flavor” or “Classic Recipe” are over. In the new pet marketplace, dog and cat food must not only be natural and healthy—grain-free, gluten-free, even locally sourced—but also appealing to the human palate. Products like Bocce’s Truffle Mac & Cheese with Bacon or Grammy’s Pot Pie, from Merrick, are taking humanization to the next level. Dog owners can pamper their pooches with “coffee,” in the form of Yappuchino or Pup-kin Spiced Latte treats from Three Dog Bakery.
What should retailers and their suppliers look for in 2015? More pampering, more refrigerated selections and maybe an uptick in natural cat sales, which remain substantially lower than for dogs. Stay tuned for more challenges and opportunities as 2015 unfolds.
Maria Lange is Senior Product Manager on GfK’s Retail and Technology team, helping clients make the most of GfK’s pet specialty data and insights. She writes the “Savvy Retailer” column in Pet Business and is a frequent commentator on the pet marketplace.