How to Win in a Changing Marketplace
While pet specialty retailers face serious challenges in an evolving competitive environment, they can still be successful by playing to their strengths.
We are seeing some dramatic shifts in the pet marketplace, certainly the most since I came into the industry six years ago. Independent companies and small family brands—like KLN Family Brands, Fromm Family Foods and Champion Petfoods—are committing themselves fully to the neighborhood pet channel. At the same time, once-niche manufacturers are embracing an omni-channel strategy, moving into grocery/mass while remaining in pet specialty.
And, of course, e-retail—once expected to have minimal effect on food and beverage—has transformed the pet marketplace and continues to do so at a rapid pace. With Amazon offering free shipping, credit card discounts, and now moving into grocery with its Whole Foods acquisition, the shifts seem destined to continue.
It may feel like pet specialty—especially neighborhood pet stores—faces a dire scenario in this environment. But there is good news: Data from GfK’s Pet Specialty POS (point of sale) panel shows solid to strong year-over-year sales growth for brands that are dedicated to the independent pet channel, while ones following an omni-channel strategy are flat or even declining.
We also need to look at other examples of services that were said to be unable to compete in the digital world. Not long ago traditional television viewing was expected to be crushed and outmoded by Netflix, Hulu and the like. There is no question that business models are changing; but existing businesses are not going away, they’re just adjusting to a new reality.
In this transition, retailers may need some help from manufacturers, some of whom are enforcing ‘strict’ pricing policies where customers can get products in store cheaper than online, or where certain product lines are only offered in store and not online. In an ideal world, a brick-and-mortar retailer should get a chance to sell the product at a special price.
So, even though pet specialty clearly faces some tough choices and evolving circumstances, we do see ways that it can make the most of its special role in pet owners’ lives.
• Digitize—Use your website and other web services to make your special offerings more accessible; having an outdated or no online presence at all is a clear no-no.
• Touch and feel—The ability to see, feel and even taste a product is an unmatchable benefit for brick-and-mortar retailers, so focus on product sampling and events like tasting parties.
• Convenience—We know from GfK’s Consumer Life research that time saving is the No. 1 hallmark of innovation for consumers, so offer home delivery, loyalty programs and other simplifiers for harried pet owners who still want to give their furry friends the best.
• Relationships—Emphasize your personal connections to pets and their owners. Always refer to regular customers by name and offer strong loyalty programs. This helps build the personal connections that pet specialty businesses thrive on.
• In-person services—If you cannot offer grooming, boarding and other such services, partner with local businesses that do.
• Innovation—Pet specialty has always been known for nurturing the newest healthy foods; introduce your customers to new offerings through reviews, “first-try” coupons, and a strong knowledge of the special needs of your owners’ pets.
• Perfect partners—As mentioned, GfK POS data shows strong growth for brands committed to the independent pet channel. Partner with local companies that have the same commitment to excellence that you do.
In the end, it is essential for pet specialty players to see today’s challenges as opportunities, not threats. Some pet owners may buy only on price, but these will not be your best customers. Focus instead on the huge population of people who want to give their pets the best and who appreciate pampering—for themselves and their four-legged companions. Tap your advantages, show your passion for pleasing customers and leverage personal connections, and you will win in the end. PB
Maria Lange is Business Group Director of GfK’s Pet POS Tracking team. Want to find how GfK data can help drive better decisions for your store or brand? Contact her at email@example.com.