Pet food and pet care, ever growing markets and evolving shelves.

This is a sector that has become strategic for large scale retail and generated a turnover worth about 1,900 million Euros.
2015 Assalco-Zoomark report, published last May, confirmed that Pet industry keeps growing exponentially compared to what is happening for many other product categories.
Specifically, the more performing segment seems to be Food, and particularly snacks (functional ones and those to be eaten between meals), followed by single-dose wet and dry pet food and the segment of dietetic products and products for pets suffering from certain diseases seems to be also increasingly growing.
In the last few days GDOWEEK published a focused report on pet industry and its related trends, by asking some Italian suppliers to have their say on topics such as the definition of product range and the creation of a department display in the Italian market, made up of «a demanding audience, who wants to take care of their pets in a responsible and informed manner», as Mauro Landini, Conagit Vice President, exactly said.

Display creation

Pet market, featured by a great dynamism, is driven by innovation which leads to a constant evolution of category display, especially for ‘Premium’ items.
According to Fabrizio Maggiore, Pet food manager of Megamark, «such feature, on the one hand caused display to be increasingly more attentive to the specific needs of pets and, on the other hand made maintenance of product ranges more complex». Moreover, he continued to say, «display systems are now experiencing bad times, as the constantly growing market is not matched by an accordingly proportional increase in dedicated spaces within stores. In our display PL plays a leading role, like typical brand drivers of this category and more innovative drivers».
The trend of large scale retail, as Alessandro Visentini, Category Non Food of Migross, witnessed, is then to favor the natural growth of Pet industry, providing also great opportunities to new segments, like Organic and ‘Premium’ products. If it is true that a deeply differentiated product range, ever more similar to the product range officials say specialized stores, together with more convenient prices, helps retailers to acquire new customers; it is equally true that this entails also an increase in the space dedicated to such sector within the outlet, often to the detriment of other departments.

Category Management systems

A detailed picture regarding how product range is arranged and managed through category management procedures is provided by Mario Favaretto, Grocery Purchase Manager of Unicomm: «First of all, what we are doing is analyzing how much the turnover of ‘Cat-Dog-Accessories’ products accounts for out of the total amount of Pet products. As of today, ‘Cat food, litter and accessories’ account for 60%, while ‘Dog food, hygiene and accessories’ account for 38% and the outstanding 2% is related to ‘Other pets’ products».
Therefore the choice of the product ranges within the assortment of the store is up to the retailer, even though such choice is however limited. Favaretto continued to say – the shelf is indeed «unfortunately full of Top Brand category products». Specifically, as to the ‘Cat wet food’ segment, the leader and co-leader of this segment account for the aggregated rate of 69%, with the other brands sharing the outstanding percentage. There is the same situation as to ‘Cat dry food’, accounting for 70% of sales out of the three main brands and PL accounting for 22.5%. By contrast, the ‘Dog Food’ category allows retailers to differentiate more product range, as the latter is the holder of the main brand for this segment, both for wet food (39%) and dry food (33,5%).

Specific channel features and growth prospects

Although large scale retail is now offering a widely differentiated product range, the specialized dedicated channel has more available space, which is a factor that more than other could affect product range and marketing dynamics; on average, the different brands on the shelf of a specialized store are indeed 1944, compared to 477 on the shelf of hypermarkets. The surplus of product differentiation provides a more focused performance, niche-based results and exclusive product lines, which large-scale retail does not have.
It is universally accepted that the purchase price of a product is higher on average in the specialized channel rather than in the large-scale retail channel.
Space has indeed its impact also on the competitiveness of prices and promotions. Any hypermarket has almost 15/20 items on offer at the same time and its leaflet shows just a dozen of them, obviously because of the generic and large supply.
The specialized store is able to have more than 100 items on offer, with different price ranges that are sometimes more competitive than supply chains’. Also in this event, size and space are important and enable specialized stores to get brand items at favorable unique conditions.
But product range and promotion are not the only driving factors specialized channel has. A feature customers appreciated very much is the skilled and committed personnel, qualified and able to answer any kind of question. This gives specialized stores an attractiveness that generic stores cannot ever have.
Performance depends on space, but not only that, as Alessandro Fortini, Key Account Manager di Vitacraft Italia, said: «…the main problems for category display in large scale retail sector may be attributable to the very poor depth of product range, due to a lack of space on the shelf and unsatisfactory rotations. This is to be added to the lack of assisted sales, which rather features the specialized channel, with indeed a generally high price».
In order to improve growth in this sector it is necessary to increase rotation frequency, giving in this way more dynamism to Pet products’ offer, in line with the distinctive innovative boost of the sector. In order to get this, according to Rinaldo Franco, the retailer shall implement an increased review of product range and improve product range efficiency. More rotations will allow accessories to be on the shelf too, which are today marginally handled by large scale retail sector and will certainly lead to an increase in profitability.

SOURCES
Assalco-Zoomark 2015 report
GDOWEEK – “Lo scaffale Pet food evolve senza tregua”

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