Retail sector has pet supplies in its sights

Pet ownership surged during the pandemic. This put the pet food and pet products sector in a strong long-term position, as those pets continue to be part of so many households. So it is little wonder that the major supermarket groups have sat up and taken notice.

Lucrative market

Younger owners, in particular, are keen to feed their pets with premium products. That’s why the grocery groups have their eye on this lucrative market. It is an opportunity to leverage the fact that shoppers are in-store for food for both their family and their pets.

A recent study by Bloomberg Intelligence forecasted that pet food revenue worldwide is expected to increase from $320 billion (€300B) today to $500 billion (€468.7B) by 2030. Bricks-and-mortar sales account for nearly three-quarters of pet spending, and while e-commerce won’t outpace, the category will see a significant increase.

Opening pet stores

Italy is the country with the highest number of specialty pet stores in Europe – more than 5,900 in 2021, according to Statista. This accounts for around 14% of the pet food sector, and nearly 30% of dog and cat food is sold through supermarkets, says Italy’s National Association for Pet Feeding and Care (ASSALCO).

Some of the big Italian supermarket chains have launched their own pet store brands. This includes Conad, with PetStore Conad, and Selex, which has the pet store brand Animali Che Passione.

In the US, Walmart has recently opened its first-ever pet services center in Dallas (Georgia) where it offers different pet services – including veterinary care and grooming – under one roof. The retail corporation says it is eager to expand this model to other locations in the future.

Cross-category shopping

Meanwhile, the Bloomberg survey found that 27.5% of US respondents go to either Target or Walmart stores to purchase their pet supplies. No surprise, therefore, that both players have expanded their pet food sections recently, not least because shoppers are coming into stores more regularly amid the upward trends for frozen and refrigerated pet food.

“Since these foods are also more perishable than kibble, they could be another trend that drives even more shopping occasions. To take advantage of this increased in-store foot traffic, retailers should prioritize optimizing the in-store experience for both efficiency and discovery — with a focus on thoughtful merchandising that encourages cross-category shopping,” says Sarah Marzano, Director of retail strategy at Chicago-based market research firm Circana.

Capturing customers

The purchasing power of the large supermarket chains will also allow them to pass on savings to customers, and to run certain lines as loss leaders, given that they would expect to capture additional grocery sales once shoppers are in-store.

Reflecting this, in 2022 UK retailer Asda introduced a dedicated ‘pet zone’ at 4 of its stores. This was a trial featuring refrigerated fresh pet food, premium treats, accessories, toys, leads, collars and grooming products in a bid to help pet parents buy pet supplies as part of their regular weekly shopping.

The idea is to include items in the assortment that would usually only be found in specialist pet stores.

Expanded product ranges

More recently, Asda has also partnered with a number of brands to introduce frozen raw pet food products, including Poppy’s Picnic, Wilsons Pet Food, Billy & Margot, and Nurture Them Naturally. It has installed frozen bays at 6 of its stores, while also offering pet supplements in a deal with pet supplement brand YuMove. According to the company, this marks a “significant milestone” in the evolution of Asda Pet Care.

Other supermarket chains have used pet offers as a marketing tool, with Aldi reintroducing a limited-time offer of dog-friendly ice cream at its stores in the UK this summer. The company claims that searches for #dogicecream had reached 31.8 million hits on TikTok alone ahead of the launch.

Investment in the category

The Woolworths Group supermarket chain in Australia went a step further, when it acquired a 55% stake in Petspiration Group for €375.3 million ($408M) in June. Petspiration owns and operates the 276-store chain PETstock across Australia and New Zealand.

“Specialty pet is a large and growing retail segment in which we have limited presence,” Woolworths Group CEO Brad Banducci says. “The partnership will allow us to meet more of our customers’ pet family needs with a complementary range of specialty pet products and services, and to unlock opportunities across both businesses.”

What seems certain is that Woolworths will not be the last major supermarket group to target the pet food and supplements sector or to expand by acquisition. As they take on specialty retailers, expect the fur to fly.