KANSAS CITY, MO. — The pet products landscape is in a continuous state of evolution, and the COVID-19 pandemic served as an accelerant for some key trends in this industry including pet health and wellness, e-commerce and retail channel shifts. David Sprinkle, publisher and research director at Packaged Facts, touched on these areas and more in his presentation at Global Pet Expo Digital Access on March 24.
Sprinkle coined his presentation, “After the Reset: Pet Market Outlook & Trends” referring to repercussions of the COVID-19 pandemic and “the way that it has reset the pet market really across the board,” he said.
According to Packaged Facts’ “US Pet Market Outlook 2021-2022,” 95% of pet owners consider their pets — dogs or cats — to be part of their family. This humanization of companion animals has translated directly to the premiumization of pet foods, treats and other products in terms of quality, ingredient and formulation claims, and price points.
“This is especially evident with pet food, especially evident with fresh pet food, with pet food that you would literally eat yourself, with new formats including treat bars that really follow human food formats,” Sprinkle said, adding this humanization is also evident in certain products and services, such as pet grooming.
“That trend has really been accelerated and deepened by COVID-19,” Sprinkle said.
And it is likely to continue accelerating, as pet ownership in the United States grows. Out of the pet-owning households across the country, Packaged Facts shared 18% of those households increased their pet ownership — by adding a pet to their household — and just 4% decreased pet ownership.
“In our estimates, 54% of households owned pets [in 2019], gaining three percentage point to 57% in 2020,” Sprinkle said. “…Our sense is that 7% of households overall gained a number of pets either by becoming new pet owners or by adding to their numbers of pets, and a lot of the acquisition has been multi-pet owners adding to their pet menagerie.”
He noted that the “stories” behind pet adoptions from animal shelters is likely different from the pet additions and acquisitions from other sources, as well as the overall pet population growth Packaged Facts has reported.
Nearly 30% of pet owners reported their spending on pet food increased in 2020, while just 5% reported decreased pet food spending, according to Packaged Facts. Among current pet-owning households, 35% increased their total pet spending in 2020, while 7% reported decreased overall pet spending.
"The way consumers spend has been transformed," said David Sprinkle, Packaged Facts.
“The way consumers spend has been transformed, so you’re not simply competing within a product category with a similar product on a shelf, you’re competing with products and services and with hybrids of products and services that are really new and innovative,” Sprinkle said. “So you’re really competing across the market.”
This omnimarket experience has in many ways redefined the way pet owners search for, find and purchase pet products and transcends retail channels and product categories, Sprinkle said. Bigger players in the industry, such as Mars Petcare, have been doing this for a long time, Sprinkle said, but it’s becoming more commonplace.
One example of this is the emergence of accelerator and incubator programs that operate to engage, propel and support early-stage pet industry companies from all corners of the industry. Another example is entities like Walmart entering the pet insurance and pet prescription space to grab a share of this growing industry.
An omnimarket experience
The pet retail landscape was certainly altered due to the pandemic, with e-commerce gaining speed at the expense of mainstream and pet specialty channels.
“In terms of shopping patterns and COVID-19… 34% of pet owners agree that when, where or how they shop for pet products changed significantly in 2020,” Sprinkle said.
Nearly 40% of pet owners reporting they did less in-store shopping for pet products due to COVID-19. Fifty-two percent of pet owners said their level of in-store shopping for pet products stayed about the same, while 9% said they did more shopping in-store despite the pandemic.
As for e-commerce, the majority (54%) of pet owners said their online pet product shopping level stayed about the same, while 40% said they did more online shopping for pet products due to COVID-19. Just 6% of pet owners reported shopping less online for these products.
It’s also important to note that many pet owners shop both in-store and online, as well as use curbside pickup options, rather than limiting themselves to one particular purchasing method, Sprinkle said.
“Seventy-three percent over the course of 12 months did still buy pet products in store,” Sprinkle said, “but not far behind is internet and/or smartphone at 63%. Internet alone [was] 54% of pet product shoppers… in-store and by internet or smartphone [was] 41%.”
The vast majority (94%) of respondents said their pet product shopping was done either in-store or online through the internet or their smartphone. Eighty-one percent reported shopping in-store or using curbside pickup options, 34% said they shopped online and did not use at-store pickup options, and 22% said they shopped online and not in-store.
“We’ll continue to talk about brick-and-mortar versus online, but it’s become much more complicated than that,” he added, “in that you have a set of shopping behaviors and then you have a sense of where the products are coming from, and those are really diverging.”
Relatively new services including curbside pickup, autoship subscription services and direct-to-consumer purchases are “completely changing the landscape,” Sprinkle said. This trend toward omnichannel purchasing behavior follows more longstanding trends for overall consumer purchasing in the United States.
The internet as a resource
The internet has become not only a point of purchase for pet products but also a resource for comparing prices, conducting product research and exchanging ideas and reviews.
Roughly 42% of pet product shoppers said they use the internet to purchase pet food products, 43% use it to compare prices, 36% use the internet to research products, 20% to exchange ideas on socials media, and 21% to set up autoship or subscription deliveries for pet food.
On the other hand, 40% of pet product shoppers report using the internet to purchase pet treats, 33% use it to compare prices, 29% to conduct product research, 18% to exchange ideas on social media, and 15% to schedule autoship or subscription deliveries for pet treats.
“Certainly, social media is a big part of the picture,” Sprinkle said, in terms of lifestyle signaling and for product information.
Sprinkle also noted that direct-from-manufacturer, or direct-to-consumer purchases, are “very much in the wings of autoship,” with 14% of pet product shoppers opting for this method to purchase dry or canned pet food, pet treats and snacks, and pet vitamins or supplements.
“Again, it’s not just whether you’re buying in store or buying online – it’s a lot of ways in which relationships and information sources and influences are being shifted,” Sprinkle reiterated.
Sprinkle ended his presentation with some top-line takeaways and outlooks for the industry.
Packaged Facts predicts the overall retail pet product sector will reach $94.6 billion in sales by 2025, with e-commerce making up 53% of sales in the total market by that time.
He also shared that the COVID-19 pandemic has encouraged dog and cat owners to pay more attention to their pets’ health and wellness, including anxiety and stress levels, immune system health, and even making changes to the products they currently buy in order to support pet health and wellness.
Other continued trends, as shared by David Lummis, senior pet analyst at Packaged Facts, include humanization and premiumization, human companies crossing over into the pet space, more natural formulations, increased focus on sustainability, veterinary “retail-ization,” and growth in digital pet care.
Within the realm of premiumization, Sprinkle touched on pet food and supplement personalization and customization, as well as “smart” and luxurious durable pet products. Loyalty and membership programs and subscription ordering are expected to continue growing in the pet product space. “Local as the new natural” is also a trend projected by Sprinkle, as retailers establish themselves not only as a valuable member of communities, but a valuable stakeholder in promoting pet welfare, care and holistic wellness.
“Keep in mind that, with all the digitalization of life, there still is a huge and important role for local,” he said. “I think in some ways you could say local is the new natural.”