Pet owners’ willingness to trade up to higher-priced premium non-food pet supplies will drive the overall market to reach nearly $15 billion by 2011, according to a report by market research publisher Packaged Facts, a division of MarketResearch.com (New York).
“Pet Supplies in the U.S.” estimates that retail sales of non-food pet supplies totaled approximately $9.9 billion in 2006, up 9 percent from 2005, and predicts the market will reflect a healthy compound growth rate of 8 percent from 2006 to 2011 to reach the $15 billion estimate.
With sales of pet products steadily shifting to higher-income households, premium products will continue to drive much of the dollar growth in the market. Households earning $70,000 or more increased their share of aggregate pet supplies sales from 22 percent in 1995 to 38 percent in 2005. Packaged Facts expects this trend to continue for the foreseeable future, with households earning $70,000 accounting for as much as 45 percent of the market by 2012.
As part of this trend, the market will gradually move into higher price points as existing products undergo major improvements in functionality and aesthetics. Packaged Facts predicts products of all types will become available in a wider range of styles designed to be more convenient and to match home décors. Product enhancements will include the use of higher-quality materials, including natural and organic substances, with more manufacturers claiming their products are produced with the same kinds of standards as those applied to products for human use.
Along these lines, fallout from the recent pet food recall will continue to keep a spotlight on the issue of safety in the non-food pet supplies market as well, especially for ingestible products such as chews and supplements, topical products such as shampoos, chewable toys, and auto and air travel products.
The report also shows the number of new product lines and SKUs has risen every year since 1996, with the exceptions of 2001 and 2005. Numbers for both reached record highs in 2006, when more than three times as many new products were introduced than in 1996. With the introduction of 87 new product lines and 249 new SKUs, the first half of 2007 suggests another banner year, with an ongoing focus on premium, value-added items that are healthy, natural and convenient while being increasingly geared toward pet pampering.
Retail sales of pet supplies through mass-market outlets totaled $1.6 million in 2006, rebounding from a sluggish growth trend running throughout the previous four-year period, according to the report. The uptick stems from a 5 percent increase in cat litter, the largest category by dollar size, and a 19 percent increase in the other dog/cat supplies categories. The non-food pet supplies mix in mass-market channels continues to shift toward dogs and cats and away from other types of companion animals.
Packaged Fact estimates that mass merchandisers such as Wal-Mart, Target and Kmart surpassed PetSmart and Petco stores as the leading channel for pet supplies during 2006, having increased their share 2 percentage points, to 28 percent, since 2002. The gains come mainly at the expense of supermarkets and independent pet specialty stores, which collectively lost 6 percentage points of market share from 2002 to 2006. However, the ability of independent pet stores to meet consumers’ growing demand for value-added products and personalized service could turn the tide: With service as one of the top luxury appeals of the new millennium, Packaged Facts estimates there may be a swing back to smaller neighborhood stores.
Other retail sectors, including the Internet, increased their collective share by 3 percentage points, to account for 16 percent of the market in 2006.
Nestlé Purina PetCare Co. (St. Louis), The Hartz Mountain Corp. (Secaucus, N.J.) and The Clorox Co. (Oakland, Calif.) remained the top marketers of pet supplies from 2002 to 2006, accounting for 44 percent of sales in 2006. However, their cumulative share is down 6 percentage points from 2002, reflecting a big drop in Hartz’s share, from 19 percent to 13 percent, while Clorox slipped 14.3 percent to 13.8 percent. Only Nestlé Purina gained market share, although less than 1 percent.
Private label showed the most dramatic increase in market share from 2002 to 2006, rising from 12 percent to 16 percent. Store brands made strong advances in all categories except cat litter, led by dog/cat supplies, with a share that more than doubled from 7 percent to 16 percent.