Claiming a Seat at the Holiday Table
As pet owners increasingly indulge their animal companions during special occasions, specialty retailers have the opportunity to capitalize on the growing market for holiday-related pet food and treats.
Just when we think pet owners could not become more identified with their furry, feathery or scaly friends, a new trend emerges to prove us wrong. Pets may still look and act like creatures to most of us; but in the eyes of their owners, they might as well be people.
Consider one of the latest growth sectors we are observing in the pet market: holiday items. Overall pet food sales have grown a respectable 3.7 percent in the past two years (July 2012 to June 2014), according to GfK’s panel representing over 11,000 U.S. pet retailers; but seasonal SKUs have jumped 14.7 percent in the same timeframe, a leap of over $2 million.
It started with Thanksgiving and Christmas, in the form of special treats for the pets on days when their owners are also indulging. But the trend now encompasses almost every human occasion imaginable—Halloween, Valentine’s Day, Flag Day, even tailgating during football season—with Merrick and Blue Buffalo leading the charge.
Wet foods account for the lion’s share of seasonal pet sales; this subgroup has grown 6.8 percent since July 2012, while overall wet food sales are up only 4.8 percent. The most dramatic seasonal spike, though, has come in treats, which have more than tripled in dollar sales—up a huge 207 percent in two years (July 2012 to June 2014), to $1.84 million in sales.
Equally important, holiday SKUs drive up the price per pound substantially. For all pet food—dry and wet—the average price per pound is $1.94, compared to $3.39 for seasonal items. Looking at treats (excluding rawhide and bones) alone, we see a difference of nearly a dollar—$8.90 per pound for all SKUs, versus $9.85 for seasonal treats. These differences are especially notable because the food itself is often very similar, but packaged with a holiday twist. The potential for added revenue is clear.
Nearly all of this seasonal growth is being driven by big stores, which have the size needed to stock a variety of specialized items. Seasonal sales are up 24.9 percent in the larger stores since 2012, compared to just 3.6 percent for small shops. In general, more and more outlets have decided to stock seasonal products. These items were sold in 65 percent of stores in 2011, while in 2014, 73 percent of the pet retail channel offer seasonal products in their shops.
The fact that holiday pet shopping is becoming a habit for consumers shows in their buying rhythms. Pet owners are beginning to stock up on food for Thanksgiving, Christmas and other holidays at least a month in advance, and they continue to buy some of these SKUs well after the holiday itself has passed.
So how can retailers take advantage of these insights into the holiday food trend? Here are some ways:
• If you don’t stock holiday SKUs now, why not? There are more and more opportunities, and experimentation may yield welcome surprises, in the form of added revenue.
• Be aware of shoppers’ buying rhythms. Stock early, but don’t give up on holiday displays and offerings at the last minute; some shoppers always wait, and buying can sustain into the next month.
• Play up your holiday offerings by creating in-store events and client communications keyed to the seasons—for example, a Halloween costume contest or pet holiday sing-alongs. Post related photos and videos on your social media pages.
• Small stores: Don’t let your larger competitors steal all the holiday thunder. Even a small selection of seasonal treats can become a centerpiece for promotion and in-store interaction.
To retailers seizing the holiday pet opportunity—good luck!
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. Want to learn more about pet owners and shoppers? Write to GfK about becoming a member of its POS database, and receive regular reports on retail trends in the pet space. Contact Dave Stevens at firstname.lastname@example.org.