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Consumers are seeking healthier options for their pets.
The pet department at Straub's Market in Clayton, Mo., spans 16 feet at most in this specialty grocery store, one of four Straub's locations in the St. Louis market. Yet customers who shop Straub's pet aisle find a well-curated array of organic and natural products.
"Our store is so small that our pet category is pretty small," says Donna Hermeyer, grocery manager. "But we do carry organic pet foods for cats and dogs, including products from Purina and Iams and Castor & Pollux. More and more customers are asking for these kinds of healthy products, so if I find a supplier who can deliver them, we'll try our best to get them. We try to get anything our customers want — and they want healthy food for their pets. Natural is all the rage right now."
Experts predict that trend will last through 2013 and beyond.
"As in past years, we will continue to see a rise in healthier, greener pet products and services over the coming year as consumers become more and more educated through the proliferation of information available through the Internet," says Leslie May, founder of Blue Ridge, Ga.-based consultancy Pawsible Marketing (pawsiblemarketing.com).
A big boost, in fact, is in store, according to Natural, Organic, and Eco-Friendly Pet Products in the U.S., released last November by Rockland, Md.-based Packaged Facts.
According to the report, U.S. retail sales of natural pet products totaled $4.1 billion in 2012, reflecting a compound annual growth rate of 17 percent over the 2008-12 period. Despite the economic downturn, annual sales growth has consistently been in the double digits, and the market is forecast to jump by 32 percent in 2013, the report shows.
Tracking the Trend
Several factors are propelling pet parents toward foods and accessories that fall into the healthy/organic/natural category.
May traces the peak in interest to a 2007 pet food recall. "That's when people started asking, 'Is there a food we can safely feed our pets?'" she says. "That was the start of greater awareness."
That awareness coincides with a dramatic shift in the way people think of their pets.
"The industry is changing day by day, and what is truly happening, especially over the past five to eight years, is that pets have crossed over from being just pets to being family members," notes Dan Barton, nationally known pet expert and author of "Stop Your Bitchin' and Start Making Real Money: The Honest Truth of What it Takes to Succeed in the Pet Industry." "People have a burning desire to provide the best of everything possible for their pets."
May concurs: "Pets are becoming baby boomers' kids!"
Growing the Category
Specialty pet stores have owned the market for healthy pet products in the past. But the growing interest in the category has created an opening for savvy grocery retailers that want to capture market share.
Some 38 percent of pet owners, after all, believe natural/organic brand pet products are often better than standard national-brand products, while 63 percent are very concerned about the safety of the pet products they buy, an August 2012 Pet Owner Survey from Packaged Facts notes. Those are the customers that stores like Straub's — where approximately half of the pet category space is dedicated to healthy/organic/natural items — want to attract.
"Big-box stores and supermarkets already committed to the pet-loving market will continue to grab market share and expand shelf space, concentrating on consumer demands of healthier products for their pets," May predicts. "In the past, I would never go to my local grocers for pet products, because there was nothing to see, but I go to them now, and I live in the middle of nowhere [in Georgia]."
Barton agrees that stores are stocking more SKUS and increasing the category overall, but says that retailers must do more to understand the healthy products they purvey.
"There is often a disconnect. Many times, the person buying the products doesn't really understand what real organic products are, for example. They look at it more like, 'I need 14 SKUs by lunchtime today,'" he explains. "This represents a huge opportunity for the industry."
To truly build the business, grocery retailers must become more educated about ingredients in the pet foods they're purchasing, and "become passionate about it" the way specialty pet shop owners are, Barton advises.
"With pet specialty and mass-market brands increasingly looking alike, product differentiation is key," says David Sprinkle, research director for Packaged Facts.
In natural pet food aisles, the hottest trends include grain-free and human-grade products. On the pet care side, eco-friendly products abound, with various companies increasing their commitment to sustainable packaging and production processes, Sprinkle notes.
Among recent developments, Hill's is reformulating Science Diet as a natural product line, Nestlé Purina is coming on strong with Purina One Beyond, and Walmart has launched Pure Balance as its first natural store brand, according to the Packaged Facts report.
Knowing your customers, of course, must also play a role.
"You have to cater to the demographics of your area. I'm not in a high-income area, and my local stores have organics. When I lived in Tennessee, I shopped at the same regional chain, but there was no holistic food," May says. "Independent pet stores have always been at the forefront, but more grocery stores and big-box stores are catching up."
Ultimately, retailers' reason for playing catch-up is simple, May concludes: "It's consumer demand."
"Big-box stores and supermarkets already committed to the pet-loving market will continue to grab market share and expand shelf space, concentrating on consumer demands of healthier products for their pets."
—Leslie May, Pawsible Marketing