German online market: Is there room for growth for all?

The trend curve of online retail is ‘smiling’ again. After 8 consecutive quarters of declining online consumption in Germany, the market is finally turning around.

Hopes are particularly high in the pet supplies sector. Can the industry once again prove that it can grow faster than the overall market?

Long way back to normality

Germany, Europe’s largest economy, is now in its fourth year of a severe consumption crisis. First came the COVID-19 pandemic, followed by an inflation shock and then 2 years of recession. Consumer confidence? Completely shattered.

For a long time, e-commerce was no exception. By last year, the industry’s total revenues had fallen back to 2019 levels and have stagnated since then.

The only exception was online sales of fast-moving consumer goods (FMCG), which include groceries, drugstore items and pet supplies.

Over the past 3 years, this segment has performed significantly better than the overall market, managing to maintain steady growth rates. The question, however, is whether that is enough.

Reaping what was sown

For pet supply retailers, 2025 will be a decisive year in many ways. To understand why, we need to take a quick look back. The fact that the pet supplies sector outperformed the broader market during the crisis had multiple causes.

While most online retailers focused on cost-cutting and restructuring business channels, many pet care specialists took the opposite approach.

They invested counter-cyclically, aiming to expand their online market share massively once consumer sentiment improved. Additionally, the market saw broader diversification.

Meeting growth expectations

Alongside online pure players, manufacturers and traditional retail chains increasingly launched their own e-commerce platforms, expanding online offerings for consumers.

Now, many of these companies face a critical question: can they meet the high growth expectations and withstand the ongoing consumption crisis quickly enough? The primary goal for many is to scale their sales channels as quickly as possible while ensuring profitability.

Looking at the past few quarters, this strategy seems to be paying off. The German online pet supply market reached a new record volume of €1.9 billion ($2B) for the full year 2024 – a modest but important 5.4% year-on-year increase.

Today, 1 in 4 euros spent on pets in Germany is spent online. Accessories and toys account for 30% of revenue, while the bulk (70%) comes from pet food sales.

More discerning pet owners

A key factor supporting the growth of online pet supplies is a significant shift in pet owner buying behavior. Germany has the highest density of supermarkets and drugstores in Europe, so the nearest place to buy pet food is usually just minutes away.

For years, this meant that German consumers had little incentive to purchase pet supplies online. Most of these purchases were simply part of their routine shopping trips to bricks-and-mortar stores.

However, traditional shopping habits are now changing, partly because mainstream supermarkets have failed to keep up with the trends shaping the pet supply industry.

One major trend is premiumization, with many customers preferring to buy pet products from specialized retailers rather than adding them to their regular grocery shopping.

Unlike supermarkets, online retailers offer a variety of additional services, such as pet health consultations and specialized food for pets with specific dietary needs.

From insect-based protein to gourmet dog popcorn, the wide assortment meets the expectations of increasingly discerning pet owners who are more conscious of their pets’ individual needs.

Making the most of social media

Another missed opportunity for supermarkets is social media. The connection is obvious: few customer groups are as active on social platforms as pet owners.

People love sharing stories about their furry family members online. Yet, social media is almost exclusively leveraged as a sales channel by online retailers, not by traditional supermarket chains.

Examples like these illustrate that e-commerce has done more than just move the pet supply business online. The digital marketplace has become attractive to consumers because it provides added value and allows retailers to interact with their customers in new ways.

This does not mean that bricks-and-mortar stores should be written off – quite the opposite. When pet owners prefer to shop in-store, they are increasingly bypassing supermarkets in favor of specialized, large-format pet stores that combine the advantages of both online and offline shopping in an omnichannel approach.

This hybrid model, which integrates digital convenience with in-person expertise, could be the key to long-term success in the evolving pet supply industry.