More than two-thirds of Australians now own a pet according to Animal Medicines Australia’s latest Pets in Australia study, with 69 per cent of households across metropolitan, regional and remote Australia now home to one or more pets.
Data from buy now pay later (BNPL) provider Zip shows that pet purchases have also increased by 118 per cent in the last three years from February 2020 to February 2023, with in-store transactions increasing by 180 per cent.
Anthony Dean, Marketing Director at Mars Petcare Australia, says more P&C retailers are exploring how they can take advantage of growing opportunities within the category as pet owners seek even greater convenience with their pet care purchases.
“Mars Petcare has seen considerable growth over the past few years in the P&C channel and is now exploring how the company can strengthen its relationship and broaden its involvement with a tailored shopper offer.
“The ability to purchase with ease and without having to navigate busy supermarkets for quick in and out purchases are compelling to a lot of shoppers.”
Dean adds that changes in consumer behaviour during COVID as well as the rise in Australia’s pet population have contributed to growth in this sector.
“Generally, we know that pet food growth is well ahead of other categories in the supermarket, growing seven times faster than confectionary and baby products. At Mars Petcare Australia, we’ve seen strong performance in our cat food products which is reflective of the rising cat population that is growing at nearly 4 per cent per year.”
Mars Petcare is responding by expanding its production capacity to meet demand for new cat owners.
“We’re building a new cat food factory in Wodonga, Victoria that will allow us to produce single serve pouches of cat food,” Dean says. “We’re also seeing increased demand for convenience with pouch products representing half of the wet cat food market and growing at nearly 10 per cent per year.”
Ryan Price, Growth Specialist at Queensland-based brand-partner Evonic, says today’s pet owners share a very different relationship with their pets compared to 20 years ago, which is affecting their purchasing decisions.
“Even within the last five years, we’ve seen a shift in pet owners seeking high-quality, holistic products and also being willing to pay more for these products.
“Brand equity is now more prominent and more important for a pet owner making a purchasing decision, compared to owners 20 or 30 years ago who would have fed their pets leftover scraps or a cheap bag of biscuits from the supermarket,” says Price.
The fact that pet owners consider their pets as part of the family is reflective of the growing range of pet care products on the market, according to Dean.
“When it comes to pet food, pet owners want to know they’re making choices that have a positive impact on their pet’s health and wellbeing, with many citing the pandemic as the catalyst to review their own choices as well as ones made on their pet’s behalf.
“Consumers are also looking for brands and products that are aligned with their values. This means they’re seeking out information on whether products are made locally, and if they’re from reputable companies. For these reasons, we’re seeing greater interest from P&C retailers who would like to explore Mars Petcare’s product offering and how it can meet their individual needs,” Dean explains.
Opportunities for P&C retailers
Price says the opportunity for convenience retailers lies in the fact that people love their pets more than ever.
“If you look at the last five years, people have really begun to appreciate what a pet is. Twenty years ago, a pet was an animal you kept outside. Now they are part of the family. We’re noticing a real connection between a human and a pet like never before.”
This change in relationship is affecting the retail market as well.
“We’re seeing more aisle space dedicated to pet products than confectionary in major retail shops. It’s a real indication that there is an opportunity out there for convenience retailers to take advantage as well.”
While this can come with its own set of challenges, Price says convenience retailers have an advantage.
“Convenience retailers have an advantage when it comes to opening hours and locations. It’s not always easy to access a larger supermarket, but it is easy to duck up the street to the local servo to buy a treat for your pet.”
“The challenges lie in what a convenience retailers’ pet product range might look like and becoming their current customers’ go-to destination for repeat pet purchases.
“Traditionally products are cheaper in larger supermarkets than they are at a convenience store. Evonic aligns with our supply partners to ensure there is price parity, so whatever the larger supermarkets are selling, convenience retailers have the opportunity to sell it for the same price and make market leading margins.
“The last thing you want is a consumer not making a purchase because they think they can get it for cheaper at the supermarket. Evonic’s strategy is around strengthening the convenience retail offering.”
Ben Whyatt, CEO of dog-treat manufacturer Doggylicious, says P&C retailers must be fully committed to their petcare offering to see results.
“The products need to fit the consumer needs. For example, purchases traditionally made through P&C are impulsive, so you won’t have consumers in store looking for new products,” says Whyatt. “Consumers will be looking for a convenient and a recognisable product.”
Doggylicious is set to launch single-serve dog treat specifically for the P&C market this year.
“The product will feature a new packaging option that provides flexibility for dog owners wanting to give their dog a treat while on the move,” says Whyatt.
“We’re also launching a Doggylicious Dog Advent Calendar this year just in time for Christmas. We see the advent calendar as a great opportunity for P&C retailers to offer an incremental purchase for dog lovers.”
Whyatt says bundling pet products with other human snacks could also be a potential opportunity.
“The bundle deals could appeal to families putting together a last-minute movie night; along with a bag of popcorn and some ice-creams, why not throw in a treat for the dog as well.”
According to Price there isn’t a one-size-fits-all approach when it comes to selling and positioning pet care products in store.
“Convenience stores don’t have endless aisle space like the larger supermarket and what works well in one store or one location, might not work in another,” Price says.
“During our first few months in the P&C market, some stores outsold our products while some didn’t sell anything at all. As is often the case with new categories, it can take a little time for the habits of the consumer to change and transition to buying a product in a different format because they’re used to buying it elsewhere.”
Dean says it’s imperative to have the right curation of pet food products that fit the store and the shelving space.
“Whilst there is a growth in the pet food category in P&C the customer needs and shopping habits vary for each store and area, so retailers must ensure they are using the space in the best way possible,” Dean says.
“For example, treating products for when pet owners are travelling with their pets – or they’re simply purchasing a treat for themselves and having the option to choose something for their pet. It’s important to consider the role pet food plays in store and choosing the right products for your demographic of pet parents, for example care and treats, wet pet food, and kibble.
“In the P&C area we know there is certainly a need for even greater convenience and pet owners requiring pet food that is easily accessible and, in some cases, easy to serve such as grab and go meals in single serve trays which is why our innovation team is looking into different offerings for the channel.
“Positioning is important so customers are aware of the offering. This includes utilising clear signage and navigation as well as the space you have in the store. Options could include using the forecourt area for dry dog food to allow for greater accessibility, which we know some P&C retailers are doing,” Dean says.
“Reviewing the space available in store for the products is another consideration. If the product is too bulky or inconvenient for the customer to grab from a low shelf, then it will deter rather than enhance repeat purchase.”
Price says the trick to selling petcare products is to create a destination for consumers in the store.
“We’ve just launched three different high-impact display stands that designed to help consumers identify or locate the product while they are in the store,” Price says. “We are now in talks with retailers around creating pet bays and homes in store. Ultimately we want to create a destination for consumers.”
While everything always sells well from a counter location, Price says it’s not always the most ideal location when it comes to petcare products.
“We’ve noticed some consumers don’t want to make a purchasing decision within a few seconds which is what primarily happens at the counter,” Price explains.
“Often, and especially when it’s a newer category, consumers like to spend a bit more time browsing, reading the information labels or even touching and feeling the product. We have everything from a floor stand to a wing or hanging unit to a counter display and work with retailers to identify potential display areas, depending on the size of the store.”
This article was written by Lizzie Hunter for the October/November issue of C&I Retailing magazine.