The North American pet market – looking back and looking forward

Impressive increases

Euromonitor forecasts for the US and Canadian markets end 2018 were up 4-5%, with the smaller Mexican market up over 8%. Impressive growth for North America but, more importantly, a year of significant change for all aspects of pet retail, with a focus on making pet ownership easier and more rewarding.

Could do better

Petco and PetSmart, the world’s largest pet speciality retailers, appointed new CEOs in June – a clear sign that they were not achieving their expected results. Both companies appear to be losing market share as they struggle to balance a ‘big-box’ strategy with a rapid shift to the convenience of online fulfilment. PetSmart is testing ‘The Groomery’, a high-end services-driven concept, while Petco is testing a ‘Just food for dogs’ store-within-a-store concept, plus a ‘Pet-Coach’ store focused on services.

Online gaining pace

Chewy and Amazon seem to be rapidly gaining market share with very different strategies. The pet expert Chewy offers best prices, widest assortments, great customer service, and the convenience of a free delivery and subscription programme. Amazon is leveraging their vast prime membership database to target food shoppers that buy pet food and accessories. Both companies are gaining market share, with 2018 forecasts of 16-17% of pet food and accessory purchases online.

Keeping your share of the market

Despite the online retail offensive, the independent pet channel appears to be maintaining market share with exclusive brands, improved in-store experience and local brand appeal. Independent Pet Partners has consolidated its neighbourhood market with six acquisitions in a year.

For the past decade, grocery and mass retailers have ‘donated’ market share to the pet speciality segment because they could not access super premium and natural food brands. With Blue Buffalo and Nutro broadening their distribution to high traffic retailers, grocery and mass may hold on to their share of the pet food market.

Private brands were responsible for much of the growth in 2018. In the offline speciality segment, private brand pet food grew by over 15%, increasing its market share and customer loyalty. Both Chewy and Amazon continue to expand their stable of private brand pet foods, with many launches exceeding expectations.

Opportunities going forward

Euromonitor is forecasting another 4-5% growth in the North American pet market in 2019. As millennials take over and Gen Z begins to impact pet ownership, three themes emerge:

• Demand for Convenience: immediacy, location, ease of use and peace of mind.
• Desire for Personalisation: relevance, resonance and products just for you.
• Focus on Experience: engagement and social networking.

Overall, 2018 was a year of disruptive change in North America with strong growth. 2019 is expected to continue along the same trajectory, creating significant opportunities for forward- thinking retailers.