The apocalypse in pet retail

The retail apocalypse 

There has been much written about the ‘retail apocalypse’ occurring in retail throughout the world. Although the press may be sensationalizing a bit, the facts according to a recent report from Goldman Sachs support very rapid growth in global online retail. In 2012, global on-line represented 5.5% of global retail sales. In 2017, online represented 11.8% or $2 trillion (€1.7 trillion). By 2020, the forecast is 16.3% or $3.3 trillion (€2.8 trillion).

According to Packaged Facts, online pet in the US market grew to approximately $4.5 billion (€3.8 billion) or 9% of pet product sales in 2016. 

This compares to 2014 when online sales were just 4% of total sales. Customers love the convenience, low prices, and great service they experience from most of the major online pet retailers around the world.

Global markets

Amazon is moving fast in the US market and beginning to flex their muscle around the world. According to One Click Retail, Amazon sold $2.2 billion (€1.9 billion) in the US pet category in the trailing twelve months ending in October 2017. 

This represents a 33% increase over the previous twelve months and positions them as the third largest pet specialty retailer in the US behind PetSmart and Petco. Chewy.com, which sold to PetSmart earlier this year for a record $3.4 billion (€2.9 billion), is reportedly competing neck and neck with Amazon and Walmart’s Jet.com is ramping up their focus on the pet category.

In Europe, Zooplus has begun investing more on customer acquisition and reported a 22% increase in their Q3 2017 sales tracking to €1.1 billion ($1.3 billion) in 2017. This makes them the third largest pet specialty retailer in Europe. In China, T-Mall, JD.com, and Boqui.com are all growing at rapid rates with Euromonitor reporting a whopping 30% of total pet care sales online in 2017. 

Offline vs online 

Offline retailers are moving to defend their market share, but the speed at which online has taken share has put many retailers on defense. 

Many of the pet specialty regional chains which have formed a stronger relationship with their customers over the years are now focused on solving for the convenience that online offers. 

Some are partnering with Instacart for home delivery, offering their own home delivery, or in-some cases building their own online store. Petco and PetSmart both have redesigned their store formats with an emphasis on services.

Pets at Home, a 445-store pet specialty retailer in the UK, is a good example of a pet specialty retailer that is transforming itself to serve the rapidly changing expectations of the pet parent. Their model focuses on an integrated store, offering a unique combination of products, services, and expertise under one roof. Over 28% of their revenues are spent on grooming and veterinarian services. The training and knowledge of their store associates is world class. 

They have implemented in-store Pet Pads for expanded range ordered for their customers and are growing their click and collect as well as their pure online business. They recently repositioned their pricing, with very strong results, to more effectively compete with online.

Focus on the customer

The pace of change in pet retail is exhilarating. As manufacturers, distributors, brands, and retailers we have to remember that in the digitized economy the customer is in charge. As their channel preferences evolve it is up to us to devise and implement strategies that grow the overall industry. Offline stores have a future, but as part of the larger pet eco-system that improves our service to pet parents and in the end improves the lives of pets throughout the world.