Neighborhood Pet Stores Nourish Winning Brands

Data collected in GfK’s Pet POS panel reveals that brands tailored for the neighborhood pet channel are outperforming their counterparts in other segments of the market.


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If you want to win big, sometimes it helps to think small. Compared to superstores, grocery/mass and even ecommerce, the Neighborhood Pet (NHP) channel may seem like a relatively minor player in pet retail. But NHP is actually a powerful growth engine for pet brands.

 

We know the stories well—that the natural and grain-free categories would never have gone mainstream and dominated the pet marketplace without cultivating a loyal grassroots following first.

 

The value of the NHP channel is defined even more clearly in data from GfK’s Pet POS panel, which collects actual sales information from hundreds of these shops nationwide. We code for dozens of attributes, allowing brands to compare themselves to their closest competitors and see what is really succeeding with consumers.

 

GfK data shows that brands focusing on the NHP channel exclusively have grown a stunning 75 percent in the past five years, compared to a 1.7 percent decline for products not aimed at the NHP market. This game-changing statistic raises the questions “Why isn’t every brand tailoring itself to NHP?”

 

The truth is that NHP is not for everyone. A mass brand cannot court success simply by limiting itself to the neighborhood channel. NHP retailers and buyers reward certain types of products, and those rewards can be substantial.

 

So what does it take to succeed as a “boutique” neighborhood pet SKU? Here are a few observations from our data.

 

Stay On the Cutting Edge

NHP-focused brands are much more heavily concentrated in premium segments. For example, almost 100 percent of all dollar sales for NHP SKUs during 2017 were in the natural category, compared to just 65 percent for those that sell to a broader set of stores.  Similarly, 71 percent of sales for NHP-exclusive brands were for products labeled grain-free—double the proportion for SKUs that are not NHP exclusive.

 

So, tapping into emerging premium trends is key. Maybe the NHP success stories of tomorrow will revolve around air-dried or slow-baked brands; manufacturers need to watch the data closely and pounce.

 

While ecommerce and grocery/mass shoppers are often on the hunt for discounts, NHP customers have a high tolerance for hefty price points. And if brands in NHP are destined to move less volume, it is good to know that premium pricing is not a deal breaker. GfK’s POS data show that NHP-exclusive full-meal SKUs average $2.43 per pound, compared to $2.15 for brands that do not focus on NHP. For treats, the contrast is $13.87 in NHP versus $10.65 in other brands.

 

Play Up Your NHP Passion

An important element of NHP-focused success is courting the owners of these small shops. They tend to reward the brands that are rewarding them; preferential shelf space allotments and other advantages often follow. So, be sure to let the channel know that your brand is a believer.

 

Embracing the neighborhood pet channel is not just a fallback strategy for brands; it can be the on-ramp to success for companies that speak the language of NHP customers and storeowners. Can you find your place in the NHP universe? PB

 

Want to find how GfK data can help drive better decisions for your store or brand? Contact me at sean.simpson@gfk.com.

 

Sean Simpson is Client Service Manager for GfK’s POS Tracking (Pet) team. He is filling in for columnist Maria Lange this month.

 

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