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January 6, 2015

The pet industry continues to be a bright spot in the economy. Growth was mostly up, although the pace was slower than in the previous year.

The 2014-2015 Pet Age Retailer Report was sent out to independent pet retailers all over the country to find out what trends they saw in the industry and more specifically, their store.

Overall growth was mixed. More than 41 percent of stores reported growth (23 percent reporting 1-5 percent growth in profits) and 11 percent reported no change. However, the gross value of dry goods increased in 2012, with almost 20 percent of stores reporting 1-5 percent increases. More than 49 percent of stores reported some increase in the gross value of dry goods while 14 percent reported no change.

Growth Categories

Dogs lead the pack in terms of revenue. Dog food as a whole showed the largest growth in sales among the categories measured, with just over 15 percent of stores stating it was their largest growth category. Grain-free food still showed strong growth but fell somewhat from 2012 when it was the number one response. It was the third biggest growth category in 2013, with all-natural dog treats showing the second largest growth in both 2012 and 2013.

Just over 47 percent of stores that stock dog food said that their dog food business was up slightly and 19 percent said it was up greatly with another 19 percent saying there was no change in dog food sales. And 28 percent of stores said that dog food accounts for at least 50 percent of their gross dollar volume.

Grooming had growth almost equal with that of grain-free food, a substantial increase from last year. All of this shows that although one cannot deny the popularity of other types of pets, dogs still reign supreme when it comes to product sales growth.

Aquarium supplies and LED lighting for aquariums showed reasonable growth but have slowed down from the pace of recent years. In 2012, aquarium supplies and LED lighting were the fastest growth categories for 6 percent and 7 percent of stores respectively. In 2013, they were fastest for 5 percent and 3 percent.

The slowdown in LED sales was not universal.

“We have seen a dramatic increase in LED lighting and a decrease in T5 HO fixtures for this year compared to last year,” said Marcie Rivera, CEO of Wet Spot Tropical Fish in Portland, Ore. “Most of the increase we see is for tanks that are not growing live plants or are growing low light plants. The appeal is the energy efficiency and the fact that this seems the pathway lighting is going. I also think the increase we see might be due to there being more vendors offering LED lighting at different prices and different lighting features.”

“Anything for a planted tank is selling well,” said Rivera.

An equal percentage of stores that stock fish food and supplies reported that these categories were up slightly and were flat—35.4 percent. And 7.6 percent of these stores said that these categories were up greatly.

Other product categories grew less impressively, with only raw food diets being the fastest growth category for more than 5 percent of stores.

Sales of the animals themselves are not huge drivers of growth and only just over 1 percent of stores said that companion animals were the biggest growth category.

While bird toys, bird food and other bird supplies were not huge growth categories for most stores, they do still generate significant volume for many retailers. Sixteen percent of stores reported that these products made up 10 percent or more of their gross dollar volume and 18 percent said that bird supplies accounted for 5 percent of their volume. Of the stores that offer bird food and supplies, over 47 percent said that there was no change in sales within the category.

Cat food and products show a similar trend as birds, in that while these were not huge growth categories, they are money makers for stores. Twenty-two percent of stores reported that cat food generates 10 percent of their gross dollar volume. Cat food brought in at least 20 percent of the volume for 20 percent of stores; over 56 percent of stores that offer cat food reported sales in this category were up slightly or up greatly. Cat supplies were responsible for 5 percent of sales for 29 percent of stores.

Small animal food and supplies and reptile food and supplies make up less of the revenue mix for most stores but generate significant income for others. None of the respondents said that small animal supplies made up more than 25 percent of their volume but more than 23 percent said that these items generated at least 5 percent. However, more than 51 percent of stores that stock these items reported that sales of small animal food and supplies were up slightly or up greatly.

Sixteen percent of stores said that reptile food and supplies brought in 5 percent of their volume and nearly 9 percent said this category generated 10 percent. This category continues to show growth, with 52 percent of stores that carry reptile supplies saying that the category was up slightly and 4 percent reporting it was up greatly.

Livestock

The mix of animals carried by stores showed some changes from 2012.

Freshwater fish and invertebrates were still the most popular category of companion animals with almost 70 percent of the stores that sell livestock carrying these aquatic animals. However, that was down from almost 80 percent in 2012. Saltwater fish and invertebrates showed a similar drop—from over 57 percent to 50 percent—and went from being the third most commonly carried type of livestock to being the fifth.

The percentage of stores carrying birds remained steady and those carrying small animals and exotics had a small uptick from over 54 percent to 57 percent. Reptiles and amphibians experienced a drop from 60 percent to 52 percent.

Mixed-breed kittens, mixed-breed puppies, and registered puppies were all sold by slightly more stores in 2013 than in 2012. Of these, mixed-breed kittens had the biggest jump with over 5 percent more stores carrying them. The number of stores carrying registered kittens was virtually unchanged at 4 percent.

Stores and Services

The percentage of store owners planning to make physical improvements to their stores dropped slightly from 58 percent to 55 percent. This still means that more than half of all respondents are planning improvements, indicating the pet industry strength. The most common store improvements planned are decorating and cosmetic changes (50 percent) and/or remodeling the facility (41 percent).

Ancillary services, such as grooming, delivery and aquarium maintenance accounted for 50 percent or more of the gross dollar volume for just over 24 percent of stores. Within the next two years, 29 percent of stores plan to add ancillary services to their stores. Of the services they intend to add, the most popular is delivery service at 32 percent, followed closely by grooming at 29 percent. In this day and age of Amazon and other online retailers, offering a delivery service is one way for the independent retailer to compete.

Marketing Trends

Respondents spent slightly more on marketing in 2013 than in 2012. Fewer stores spent below $2,000 while a higher percentage than last year spent $2,000-$4,000 and $8,000-$10,000.

Once again, online marketing, email marketing and social media were considered the most effective forms of marketing, although the percentage of businesses who said this was lower than in 2012.

“I would agree with these findings,” said John Cullen, principal at Bulldog Marketing & Sales Inc. “I would add that local SEO is also extremely important for a pet retailer. Google is the new Yellow Pages for consumers searching for pet retailers in their area.”

Regarding other forms of marketing, Cullen said, “I still believe in local cable TV spots, which can be more affordable than people think and are highly localized.”
Looking to the future of pet retailers, the stores site similar challenges to their business in 2013 as they did in 2012. Almost 52 percent said their biggest challenge is competition with big box, mass market, and online stores. The economy itself was the next most common answer, with over 36 percent of stores citing this as a concern. Increasing sales volume ranked as the third most common concern at 36 percent.

 

About the Survey
Statistical data for “The 2014-2015 Pet Age Retailer Report” was compiled by Best Companies Group.

Pet Age sent emails from Nov. 5 to Nov. 24 to more than 15,000 retail owners/managers from the Pet Age subscriber list to complete our Internet-based questionnaire. The 2014-2015 Pet Age Retailer Survey drew 644 valid responses with margin of error of 5 and a confidence level of 99 percent, according to Best Companies Group.
Percentages will not always total 100 because many responses were rounded and not all respondents answered all questions.

The Pet Age Retailer Survey was sponsored by Cardinal Pet Care (Azusa, Calif.), Coastal Pet Products Inc. (Alliance, Ohio), CHOMPER (Milford, Conn.), Legitmutt (Pompano Beach, Fla.), Loving Pets (Cranbury, N.J.), Stewart Pet (Dayton, Ohio),  and Zuke’s (Durango, Colo.).

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