What Impact Did COVID-19 Have on Pet Retail?
From initial spikes to sharp declines, the coronavirus pandemic drastically changed the face of pet retail over the past few months.
The COVID-19 pandemic has forever changed the way people shop. Over the past two months, government-sanctioned quarantine orders saw millions of Americans sheltering in place, causing consumers to move through a threshold of behaviors that ranged from pro-active, health-minded buying and pantry-loading to adjusted shopping habits within restricted living conditions. As we shift into a “new normal,” it is important to take stock of what has happened to help inform a path forward as lockdown rules begin to loosen.
So, what has happened so far?
Within the U.S. pet retail industry, the impact has been substantial, seeing sales numbers fluctuate at historic proportions. During the month of March, as shelter-in-place orders went into effect, pet owners rushed to load-up their pantry with essential pet food and supplies. Sales numbers skyrocketed during the second and third week of March, netting 40 percent and 51 percent growth, respectively. Nielsen data shows that year-over-year, in-store retail sales are up 26 percent and up an impressive 77 percent within e-commerce channels in March. Pet food is a fixed-consumption category, though, and pet parents buying more pet food doesn’t mean pets are eating more—supplies will just last longer.
The impact of the stock-up can be seen immediately, as in the weeks following the pantry-load sales plummeted. Dollar sales dropped 40 percent from the third week of March to the fourth week, settling about 15 percent below previous year’s levels. Dollar sales have been slowly improving but have remained in the red into May.
Pet parents went big with their pantry loading, literally. For dog dry food, consumers within brick-and-mortar retail channels stocked up on the largest bag sizes of shelf stable dry food. For dog dry food bags larger than 28 lbs., Nielsen data shows that sales in the third week of March had growth rates at 74 percent over the previous year (compared to 47 percent for bags less than 7.5 lbs.).
Without question, dry food saw the most significant growth during the pantry stock-up period. During the third week of March alone, in-store retail sales of dry pet food was up 63 percent, wet food saw an increase of 42 percent and treats were up 28 percent.
A similar trend was seen online: dry pet food saw an increase of 84 percent, wet food saw an rise of 76 percent and treats were up 57 percent. While this initial wave of purchasing is impressive, it’s important to note that within brick-and-mortar, supplies of dry food appear to be lasting longer than both wet food and treats. By the end of April, dry food remained down compared to previous years at about -15 percent, while wet food improved to mostly flat (-1.4 percent) and treats have already rebounded (9 percent).
What’s behind the rise in treats? It’s possible that snacking during quarantine may be on the rise for pets and new pet owners may be treating their new pets as they train at home. With this in mind, perhaps the rise in treats will continue. Only time will tell.
As a whole, e-commerce has been a major benefactor as many pet owners looked to remain home during the pantry loading period, both through single-purchases and subscription sales. Nielsen data shows that dollar sales for e-commerce subscription-based services saw 28 percent growth from February to March. Non-subscription sales also saw significant growth, jumping 72 percent in the same time period. While an increase in single purchases may include plenty of first-time online buyers, either out of necessity (store closures) or fear (avoiding trips to retail), new subscription sales could be seen as a bell-weather for what’s to come. As consumers commit to auto delivery, they are also committing to e-commerce, at least for the short term. This may have a significant impact on future in-store traffic.
A Pet Ownership Boom
One unexpected result of Covid-19 was the rise of new pet owners, as many Americans opted to either foster or adopt. There have been numerous stories of fostering facilities and shelters going empty, and this uptick in pet owners can also be seen in Nielsen data. Sales of pet bedding and accessories spiked in late April. This increase came a bit later than the food load-up, indicating non-existing pet parents bought more but new pet parents bought the essentials.
Pets finding their forever homes is the feel good story we need right now, as the increase in adoption and fostering is both good for the pets and the industry as a whole. A growing population of pet owning households means a growing need for pet food and products in the U.S.
The world is fundamentally recalibrating right now. Consumer habits are changing at pace and understanding those changes will be critical as businesses prioritize how they too recalibrate to meet the changed circumstances driven by COVID-19. Nielsen recently released a new framework that lays out three possible timelines and exit scenarios:
• Rebound: An early return to normal living conditions (schools, workplaces, stores, restaurants etc., re-open) at some point in the third quarter of 2020.
• Reboot: A medium-term scenario that is positioned in the fourth quarter of the year.
• Reinvent: A longer-term view that places the world in a general return to normal living conditions at some point in the first half of 2021.
The framework points to a series of behaviors and habits that will be accelerated in each of the scenarios. In some cases, changes that may have taken years to evolve could be in place in a matter of months.
Sean Simpson is the associate client director of Nielsen’s pet practice.