Inflation has been a hot button topic for the last two years. And though the pet industry has demonstrated some resiliency to rising prices, the effects of inflation can still be felt by pet retailers and consumers. Andrea Binder, NielsenIQ contributor and SuperZoo speaker, discusses these effects in detail to paint a clearer picture of the current state of the pet industry.
How Inflation Is Impacting the Pet Industry
The economy has been in flux for years, with inflation rates soaring in 2022. Consumers are seeing some relief in 2023, but prices are still steadily on the rise. So far, consumers have spent 36% more than last year as inflation continues to impact every store product section.1 For many, it’s hard to take care of themselves or their families amongst skyrocketing prices, and many have animal companions to take care of as well.
Though CPG prices are slowing, they’re still well ahead of the expected inflation range. In terms of pet industry inflation, average unit prices in the pet care department saw a 17.6% increase in the past year, with pet food seeing a 21.8% increase, pet supplies seeing a 9.8% increase, and pet treatments seeing a 3.9% increase.2 With these price increases occurring across the industry, pet owners must find new ways to stretch their money.
Here are a few pet consumer trends NIQ is seeing:
Private Label
‘Value for money’ is a growing, overarching pet consumer trend. As a result, more and more pet owners are buying private label products across the store — which provides a 10% savings vs. national brands on average — as a key savings strategy.1 If pet retailers have a well-established and diverse selection of private label offerings, they will benefit from this shift.
This value-for-money trend is alive and well in the pet space. National brands in the pet care department saw an 18.6% increase in average unit prices, while private label pet care only saw a 12% increase. This is reinforced by the fact that national brands saw a 6.3% decrease in unit sales, while private label brands only saw a 4.6% decrease in the past year.2
Shifting Channels
Pet consumer trends also show a shift in where money is being spent, with shoppers seeking out the best prices. With inflation still running high, consumers are taking the time to really weigh their options before making purchases.
Though in-store shopping is still more popular than online overall, pet care saw a 2.8% increase in online buyers from the previous year. With online shopping giving the consumer a more convenient way to hunt for the best price, online buyers saw more growth than in-store buyers across most available channels. With this, the drug channel and the club channel saw a 13.3% and 14.7% increase in online pet care buyers, respectively. The mass merchandise channel also saw a small uptick in online buyers with a 3.9% increase. 3
Additionally, varying assortment across channels is more important than ever to drive consumers to certain stores. If pet retailers carry items that show up in stores across channels, shoppers are more likely to choose the store with the lowest price.
Bulk Buying
With rising prices and lingering supply chain concerns, consumers have started buying more in bulk to get a better value for their money. Consumers know they'll need essentials like pet food consistently; buying more significant portions less often can help protect consumer wallets rather than buying small portions more frequently.
In 2022, bags of dry dog food between 15.5 and 28 pounds saw a 15% increase in dollar sales compared to the previous year; bags over 28 pounds saw a 20% increase; bags below 15.5 percent only saw about 13% growth. Similarly, bags of dry cat food between 15.5 and 28 pounds saw a 26% increase in dollar sales compared to the year before, and bags over 28 pounds saw a 27% increase.4
Though buying in more significant portions may not be the most convenient, pet owners are employing this cost-saving strategy on products they know they'll need daily.
Promotions
With the higher costs of living comes the need for deals. As a result, promotional sales continue to trend higher than non-promoted growth. With 50% of shoppers willing to stock up when their brand is on sale, promoted prices are a key basket driver for pet retailers.1 Though the pet retail industry notoriously has fewer promotions than other industries, the promotions consumers find have been taken advantage of.
Pet care overall didn’t see an increase in unit sales with promotions attached. However, pet supplies bought on promotion still increased by 12% in the past year, while pet supplies bought with no promotion decreased by 7%. Pet toys specifically saw a 9% increase in promotional buys, and dog and cat treats saw slight decreases in purchases without a promotion. 5
With consumers looking to save money wherever they can, it makes sense to buy non-essential items on promotion or skip non-essential items altogether if no promotions are available.
Essentials Only
Another way pet owners save some money is by cutting non-essential items like toys, accessories, and treats out of their budget. Pet toys saw an 11.8% decrease in unit sales, and dog and cat accessories saw an 11.1% and 4.7% decrease, respectively. Even dog and cat treats unit sales are down, with a 4.4% and 1.4% decrease, respectively. 2
Unfortunately, this decrease in unit sales is paired with an increase in dollar sales as average unit prices have risen. As a result, consumers looking to save money have seemingly dropped purchasing items their pet doesn’t necessarily need.
Pet consumer trends make it clear that pet owners have become savvier with their money in the past year — but are these cost-cutting strategies here to stay? Unfortunately, as U.S. CPI slowly deflates, CPG prices are not seeing the same trend; we do not expect shoppers to return to their previous spending habits soon.
Explore the Industry’s Most Critical Topics at SuperZoo
The education sessions at SuperZoo 2023 center on the industry’s most pressing topics. If you want to learn more about how pet industry inflation and pet consumer trends are impacting the retail space, check out these two sessions:
Pet Store Financial Performance: Using Data to Navigate Market Conditions
The WPA Retail Operating Performance Survey is a yearly benchmarking study that gathers essential information and insights based on pet store financial data. Hear from retail panelists as they discuss:
- Key findings of the report
- How to use historic date to guide future operations
- The ways companies have been impacted by recent economic conditions
- What to expect as we look ahead
Retail Panel — In Good Times and in Bad — Managing Your Business
In this session, you will learn the insights and tactics you need to take your business to the next level, no matter the circumstances. Led by pet business owners, you’ll get an inside look at how they responded to and navigated challenges to create success for their business.
There’s plenty more where that came from! Join us at this year’s big event to access expert-led education, explore the newest pet products ready to hit the market and network with industry peers and suppliers. The ultimate pet retail event awaits this August in Las Vegas.
- April 2023 CPG Inflation Report
- S. xAOC + Pet Latest 52 Weeks Period Ending April 29, 2023
- TOTAL U.S. Pet Care Retailers, April 30, 2022-April 22, 2023
- NIQ US Pet Review 2022
- S. xAOC Latest 52 Weeks Period Ending April 29, 2023
About the Author
About the AuthorAndrea Binder; Vice President, North America Pet Retail
Andrea has been with NIQ for 10 years, supporting retailers across a wide variety of channels and store formats, most recently leading NIQ’s Retail Pet Vertical. Andrea has a strong background measuring the retail marketplace as consumers shift to purchasing online, store formats continuously evolve and product innovation moves rapidly. Andrea is a Minnesota native where she lives with her family and their adorable black lab, Breezy.
NIQ, the world’s leading consumer intelligence company, reveals new pathways to growth for retailers and consumer goods manufacturers. With operations in more than 100 countries, NIQ delivers the most complete and clear understanding of consumer buying behavior through an advanced business intelligence platform with integrated predictive analytics. NIQ delivers the Full View(TM). NIQ was founded in 1923 and is an Advent International portfolio company.
For more information, visit NIQ.com.
Meet Andrea Binder at SuperZoo
Join Andrea Binder and her colleague Samuel Jay Smith for a data discussion on trends across the pet industry at SuperZoo 2023! For more about SuperZoo's leading education program for pet retailers, see the complete Education Schedule and Pricing. Registration is now open, and it's FREE to register in advance for qualified retailers, distributors, and pet services.
August 15, 2023
The Full View of the Omni Pet Channel and Shopper
Learn more from pet retail experts at SuperZoo 2023, North America’s largest pet retail event! Register today at www.superzoo.org.
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