Three key trends affecting pet care are health, premiumisation, and E-commerce. Health has become fashionable and ever-present in consumers’ lives, particularly through weight management and general well being. This has impacted the way pet owners interact with their pets, and especially the way they feed them. Premiumisation has been helping to define and generate growth in the industry for many years, however, the many different ways in which it has done so have changed over time. E-commerce is changing the way pet owners are shopping. The wide assortment, as well as the possibility to compare prices, often lower prices, and user reviews are key. In many markets this is also the way to have access to more premium offerings that otherwise would not be available.
The health and wellness trend gripping consumers has been evident for some years, but its form continues to evolve. Pets’ levels of fitness is increasingly being taken into consideration. Healthy and functional ingredients, allergies and intolerances, together with the quality of ingredients and sourcing are also part of pet owners’ expectations.
The concept of health has changed over the years, and it now entails a more holistic and global approach, also including wellbeing, and taking a preventative approach. A change in human eating habits and patterns has been driven by the need to take greater control over what is eaten, its quality and its quantity. This has given rise to a number of product reformulations, changes in packaging either for convenience or for portion control, and a number of “cut-downs”: sugar and salt being the main ones. The rise of intolerance and allergies, or just the idea that some foods or nutrients are preferable, has also led to a rise in free-from diets.
In pet care terms there are obvious similarities. More educated humans are also more educated pet owners, who transpose such concerns and knowledge whilst shopping for their pets.
Key for the development of the industry is a global and wider notion of pets’ health. Healthy and fit means the ideal weight being observed. While affluent consumers in many developed markets realise the importance of such factors, much has yet to be done in terms of education. Many consumers are still unaware of their pet’s ideal weight, and an overweight pet is often not seen as such, and therefore not seen as being at risk.*
Note: * “State of Pet Health Report”, Banfield Pet Hospital, 2017
Premium dog and cat food has been driving players’ strategies for years. Age and breed segmentation have been key to achieving this. For the forecast period toy breed will continue to drive strategies and new offerings, as well as further segmentation in terms of age and lifestyle. Similar to humans, aged pets are an increasing concern as, due to medicine and quality food, pets are living longer. Senior pets have specific needs, and preventative care for senior pets is also taken quite seriously by more affluent consumers, particularly in more developed markets.
In distribution terms, premiumisation, typically more prevalent in pet specialty retailers, is increasingly seen in grocery retailers, which typically are more “mass”. Innovation is expected to come from across a range of differing strategies. On the one hand, gourmet-style food is popular in many markets; on the other, natural and more artisanal food bodes well with younger consumers who are on the lookout for such products.
Rising Power of E-Commerce
Internet retailing is fuelling growth in many markets. China and South Korea are at the forefront of ecommerce developments, with very tech-savvy and digitised societies.
In global terms, internet retailing has seen massive expansion, and this is expected to continue. In markets such as China, brands have set up their own Tmall shops. Also, in Southeast Asia, internet marketplaces have been attracting new clients. This is the case with Lazada Group, in which pet supplies have grown dramatically.
In the US, as technologically-aware millennials became more prominent as pet owners, their proclivity for shopping online has translated into growth in e-commerce for pet care. At the same time, subscription programmes offered by retailers such as Chewy.com or Amazon.com provide great convenience. Chewy.com in particular stands out, providing a high level of customer service to its subscribers. The company sends its customers millions of handwritten thank you notes, holiday cards, empathy cards (upon a pet’s death) and even custom oil portraits of subscribed pets. These efforts create a strong emotional bond with pet owners, co-opting what has been the best defence for pet specialists against e-commerce.
The relevance and even disruptive power of e-commerce was very apparent in the recent acquisition of Chewy by PetSmart, the largest US pet store chained retailer. In fact, recent years showed that ecommerce poses strong competition to pet retailers. Nevertheless, due to the acquisition, smaller brands have already dropped the retailer, as it is now not aligned with their niche positioning.
As health, premiumisation, and e-commerce affect pet owners buying decisions, the industry will grow. Companies and brands will need to incorporate these trends to into their plans to appeal to these consumers.