Pet supplies offline and online: how is the category developing?

Starting from the second quarter of 2020, there has been a significant drop in real incomes of the population, which was superimposed on a sharp jump in the dollar. This negatively affected sales throughout the FMCG sector. The customer has also changed. Describing changes in shopping preferences, NielsenIQ’s retail vertical customer business partner, Acting Region Manager, noted that prior to the pandemic, large purchase missions were losing popularity, customers were looking for promotional offers, but they were also interested in the atmosphere in the store, and they were willing to pay extra quality money. The online sector has been growing, but its penetration has been low, mainly due to consumer concerns about the quality of products sold online.

The pandemic and the change in the usual lifestyle have significantly affected consumer preferences: purchases for the future have become a mass phenomenon, interest in private labels and promotional offers has increased, and the immersion in the digital environment that occurred during the quarantine period gave a significant additional impetus to the development of online commerce. These trends have also affected the pet products market, where the online channel has grown significantly. The main jump occurred in March last year, when severe restrictive measures were introduced in many regions, then growth slowed down, but still, the average growth of the online channel was about 70% per year. In fact, it was the only channel with double-digit sales growth. The overall growth for NielsenIQ audited pet product categories from 2019 to 2020 was 3.8%. At the same time, significant changes are observed within the channels. For example, the share of sales of fillers decreased by 1.3% in modern retail, by 5.6% in animal specialties, but increased by 97.4% in online channels. Everything grew in online channels - pet treats (39%), dog and cat food (53.2 and 88.1% respectively), and pet products (73.7%). Buyers go online to find a lower price and buy the most from the comfort of their homes, save time and make it easier to ship large and heavy packages that are inconvenient to transport on their own, he said. The choice of an offline channel is primarily influenced by the location of the store - buyers tend to make a purchase as close to home as possible - as well as the ability to purchase goods for both the family and their pets at the same time. An essential factor for buying offline is also the shopping experience, when it is possible to examine the goods in the store and get professional advice. Pet products are more likely to end up in the online shopping cart than offline: from May to September 2020, the share of orders with such products remained almost unchanged - 39% and 38%. We can talk about the formation of a sustainable model of online behavior. While offline, the share of purchases with pet products decreased in the same period from 32% to 26%. At the same time, the online channel is characterized by a rarer frequency of purchases, and the average purchase price online is almost twice as high as offline. It is also characteristic that the price per kilogram of food for cats and dogs (both wet and dry) is the highest in the zoo specialty channel. First of all, due to the presence of a professional and premium assortment there. From the point of view of price segmentation, if we refer to the low price segment those feeds that have a price index below 80% relative to the average price in the category, and to the high segment those that are 120% higher, then the middle and especially high price segments dominate in animal specialties and online channel. The assortment that the buyer sees and buys in different channels varies. For example, online sales of dry food in bulky and heavy packages are very high. The outflow of buyers from modern retail and animal specialties occurs primarily in the segments of more expensive feed and larger packages, and this, accordingly, leads to an increase in the average bill in online channels.