It’s a dog’s (and a cat’s) life

Petcare is one of the fastest growing and most potentially profitable categories. Andy Marino finds out about it from Mars Petcare UK’s Nick Foster

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Nick Foster

Either we are a nation of shopkeepers, as Napoleon allegedly characterized the Brits, or else we are a nation of fanatic animal lovers which, come to think of it, Napoleon might also have said.

Or perhaps we are both, in which case selling pet products in convenience stores would be the perfect image for the UK.

For example, consider the following facts: fifteen years ago the country had 11,000 vets. There are now 27,000 of them, getting on for three times as many, despite the fact that they must undergo longer training than regular doctors, of whom there is an increasing shortage.

The lockdown which began in March this year saw GP surgeries close across the country as sick people were told to use the phone and fend for themselves. But not Rover and Tiddles: the nation’s veterinarians stayed open for business throughout, tending to sick pets. Britain knows a real emergency when it sees one.

A similar preference for the welfare of the nation’s pets was expressed in retail. Consumers have been devoting more of their budget to their little buddies for some time now and the terminology has tracked the movements of our modern devotion to animals in the home.

Not so long ago you were a mere pet owner, but we have since lost the undertones of the slave-plantation and species-ist supremacy. Now we are all, apparently, mummies and daddies instead.

Likewise thousands of pounds, entire college funds and nest-eggs, next-year’s holidays and new cars, will be happily splurged on mending a broken cat-limb or treating a diseased dog-liver.

Don’t even mention pet insurance.

The Great Pet Takeover has been an astonishing and relatively quick social transformation – and it is likely that retailers have not taken full advantage of its revenue possibilities.

One person who knows more about supplying the best food and the tastiest treats to our most precious companions is Mars Petcare’s UK’s Category and Marketing Director, Nick Foster.

He joined the Mars graduate programme after university and says he never looked back, and if you ever have to define the perfect job, this could be it.

“It’s kind of hard, when you get to work with dogs every day – dogs in our offices, sat underneath the desks where you can just say hello and take them for a walk – to leave that world,” he admits.

“I  went into pet care about 13 or 14 years ago and I have just loved every minute of it. I’ve done roles in supply chain, sales and marketing, worked a couple of times with the convenience sector – I really like getting out there and talking to people who own their businesses and finding out what makes them tick,” says Nick.

The new Mars Petcare research, “The Rising Power Of Pets In Pandemic Britain”, that has just been published demonstrates that Nick certainly knows what makes the category tick, and the implications are enormous for the Convenience channel. As he says: “Pets hold real power.”

A few statistics to whet the appetite for petfood sales: the basket spend of petcare shoppers is over a quarter more than shoppers who live only with other humans, while petcare sales growing cumulatively at 2.5 per cent are beating the average of 1.9 per cent across FMCG – again, by about a quarter.

Not good enough yet? Petcare total revenues, at £2.9 billion, are three times higher than from the baby and toddler aisle, and if that doesn’t persuade you, pet care outstrips even chocolate confectionery, which is worth just £2.4 billion. And petcare people spend more on other things, too.

“We know indeed that people who buy petcare shop more categories,” says Nick, “so if you have a good petcare offer you can capture that shopper who will then reappraise the rest of your store as well. So it’s a really important category to get right, and if you do get it right then you lock that customer in for fifteen years! It’s not like baby stuff where after four years you move out of the baby and toddler aisle altogether, you know.”

As always, directionality is more important than just numbers, and in that respect, Nick informs us that by 2025 one third of pet owners – sorry, mummies and daddies – will be millennials, and that ownership, especially of smaller dogs in urban environments, is increasing – and that smaller dogs survive longer than big ones (with a Yorkie living nearly three times as long as a Great Dane).

Britain – and especially its younger generations, who are having fewer babies – is going totally animal crackers. “The category across the board has outperformed FMCG for many years now, and it continues to grow consistently,” he says.

Cat Flaps R Us

It is not just the recent increase in sales that is important, Nick explains. He also points out that as a category, petcare is a bit special: “We are in the fortunate position of being relatively recession resilient,”he reveals, which is good to know as the lockdown is extended into 2021.

“One of the great advantages we have in petcare is that it’s a relatively affordable luxury,” he says. “There’s an economic theory – I don’t know if you have heard of it – called ‘the lipstick effect’, where people forego big expensive luxuries like holidays to buy smaller longer-lasting luxuries, which petfood typically does quite well in.”

Animals always have to eat, of course – we won’t let them starve just because of hard times – and they are now treated better than ever, which helps.

“That’s largely because pets are becoming members of the family now, whereas twenty years ago a pet was just a pet to have in the home,” Nick says.

But in addition to sales simply holding up, the lipstick effect has meant that the petcare spend has increased not just by volume but through premiumisation: “If times have been tough through Covid or recessions, what we have seen is the premium items of our portfolio outgrow the more economy end of it, because people want to have that treating moment for themselves as well as for the pets.”

The lockdown has served only to accelerate that trend, just as it has accelerated so many others. Premiumisation was already there, scratching at the door, as the pet phenomenon grew over the past few years. Now premiumisation is inside the house and up on the sofa.

“I think it’s where developing our understanding of pet nutrition is important, and we put that into our products – which ultimately helps those pets live longer lives. And I think as people are beginning to understand their own nutrition more, they are also looking for those products within the pet food industry,” explains Nick.

“If you eat a real, natural-based diet personally, you want to replicate that for your pet – and then they will likely shop in the natural sectors of pet food, and that is where the premiumisation can come. Healthy nutrition is a more premium area than your economy-level nutrition that you might buy.We are seeing that across the board. As people are paying more attention to their own nutrition, their own diet, they are replicating that with their animals.”

Again, lockdown has only magnified the intensity of this move towards pet cherishment and self-identification.

“I think people’s lives are changing and they are leading busier and I would suggest more hectic lives than ever,” Nick explains. “And I think they are starting to really count on their pet companions as exactly that – companions – and they are seeing the mutual benefit there is for both the pet and the person” – so that in treating their pet, people are cheering themselves up.

“That means people are making sure they are rewarding their animals with the best possible nutrition they can buy, and that’s obviously helping them live longer and better lives. So there is a big change in our lifestyles: we are living in cities more and we are living more in-house where pets are helping tackle loneliness.”

The lockdown, of course, has concentrated that loneliness and the need for companionship and doggy-cuddles – animals must have been acting to keep a large proportion of the population sane as they were trapped in their apartments over the summer, or working from home.

We have research we commissioned which shows that pets can help reduce blood-pressure and stress in people, so I am sure pets have been playing a huge role in people’s lives through lockdown, helping them get through very difficult times – especially people who were isolated,” Nick says. “They helped people to keep a certain level of normality.”

And in the next piece of good news for convenience retailers, the lockdown has meant that pet owners are overwhelmingly spending their larger and premium petcare budget in local shops instead of supermarkets.

“What we observed from a sales point of view was a real uplift through lockdown; and again what we saw was, first, some channel-shifting, where we watched Convenience outgrow the grocers, which was a great result for your readers, I imagine,” Nick says.

“Will it stay that way? I guess that will be down to whether we can keep the retention in the stores. I think what we have now demonstrated to people through this is that their local stores can have a good offering of petcare. I think if your readers can keep that ongoing then there is no reason why customers will switch back to supermarkets and their old shopping habits.”

I wonder aloud how much has been lost to online sales during the pandemic – but Mars Petcare doesn’t sell direct to consumers (DTC) any of the products you can stock in-store, he reassures me, only specialised brands such as James Wellbeloved.

Nick thinks it is the big stores, which are trying to make a profit online, that will be the ones to lose the footfall, not the local convenience stores. “What we are hearing from people, and especially online, is that a lot of people have tried online for the first time and that they are staying with it,” he says. “And if we asked them the same thing about their experience in convenience retail, it would be really interesting to find out what the feedback would be.”

The numbers say the customers have been very pleasantly surprised by what they find in their local stores, and not just the products but the service and atmosphere, too.

Loyalty and strays

The big discussion just now is around “retention” – can convenience keep all the extra traffic generated in 2020, into the next year? Can the petcare category help to retain them and will they come when we call? Nick thinks so.

“What we have seen is excellent growth in the channel and we have really driven penetration of shoppers into those stores. And what they have done once they are in there is they have bought the pet food they would have bought in the other stores.

“So we have seen great growth in cat care and treats, for instance, now growing at ten per cent in Convenience, and dog care and treats growing at nine per cent, while the total market is at six per cent.”

We are now getting to the practical nub of the issue: how can independent retailers cash in on this cat and dog bonanza that according to all the trends and figures, looks as if it is going to continue?

Traditionally, small retailers have not showcased the full range of what is available for pets, and instead left it to specialists or supermarkets, who have more space.

“Those are areas that maybe convenience retailers wouldn’t have had so much range on previously, but which grow really well and should be reconsidered for the future,” Nick says.

Under current and upcoming conditions, as he explains, small ranging is now the wrong attitude. People who buy petfood and pet treats are buying more of it in convenience stores, more upmarket versions of it, and these people are also spending more overall. And there’s going to be more of these consumers as time goes on:

“The crucial thing for me is that you offer a credible range that makes people stop and say, ‘Wow! I can get my pet food here and they’ve got everything I need.’ Some of the feedback we have had, historically (and I am talking four or five years – I used to work in the Convenience sector for Mars), was that ‘I want to buy pouches but in my local convenience store I can only buy canned. I want to buy care and treats, but at my local convenience store there is only a limited range.”

Nick thinks this has to change if store owners want to capitalise on the new upsurge in petcare sales, and he recommends either a one-metre, or if there is space a two-metre dedicated fixture, with impulse positionings around the store to encourage treat purchases.

“What I would say is have a look at these fixtures and offer that credible fixture, which takes into consideration all of the sub-categories, so that you can really take advantage of those people that are in the shop,” Nick says – and mix it up as well.

“Treats and luxury food can be quite impulsive, so they should be positioned carefully in the store or at check-outs. We did a trial with a few retailers where we put dog-care treats clip-strips next to newspapers, with the idea that dog-walkers would go in the store to pick up a paper, see the treats, and buy one of those as well. It worked great and didn’t hurt the newspaper sales.”

Remember that when people treat their pets they pamper themselves, so think of petcare in the same light as confectionery, for example.

“Positioning [treats] at impulsive areas around the store is really added value because people don’t always see the fixture. So again, you are signposting, to say, ‘We have a good pet range – here is the clip-strip with the products on,’ etcetera. At every pet-specialist retailer clip-strips at the check-out is what you see … so that when you go in on a Friday night and you buy a chocolate bar for you and your kids, you also pick up a nice treat for the cat or the dog.”

And remember, the kids will grow up and leave but the pets will stick around

“This is a fifteen year-plus relationship between you and that shopper,” Nick confirms, “which of course is phenomenal for the shop.”

Mutt merchandising

So let’s say a retailer looks around his store and decides that the animal kingdom is currently underserved. What is his immediate next step?

“We service convenience stores with the entirety of our range, from wet cat food to dry cat food, to caring treats to dog food. So it would all be on offer through the wholesaler,” says Nick.

“We do really wide-reaching media to promote the brand in any outlet or store, and what the convenience channel really can do well, I think, is offer that incredible range and proximity to people, which has become even more important as we have been going through the pandemic.

“We are now much more in pouches, much more in luxury products like Sheba and Cesar, and when a customer comes into your shop-owner’s store, they really want to see a credible range that demonstrates the owner really understands the category – and then they will come back for a repeat purchase.”

Nick stresses that Mars Petcare’s new one- and two-metre shelf planograms are a vital guide to anybody thinking of upping their petcare offer.

Especially in cities pay attention to ownership of small dogs, says Nick: “You have more cats in cities, but there is a huge surge in small dogs because they are much easier to have in cities nowadays. They are growing very quickly in numbers. So yes, I think that having a very good offering across both cat and dog products is really important to make it a great offer in-store.”

Nick says that Mars Petcare’s mission is to make a better world for pets. “We believe we have the responsibility to do that at all levels of demographics and affordability. That means our range is wide-spanning. You could go into your store and buy an entry price-point Pedigree or Whiskas canned product which would cost you 60p or 70p, or you could go and buy a 15kg dry James Wellbeloved product we also offer that would cost you nearer £50 or £55.

“We go for the full demographic of products on a real pricing ladder. So your retailers can offer all the way through. With our cat range you could start with Kit-E-Kat, to Whiskas and then Sheba and from there to Perfect Fit and after that Crave. And from there to James Wellbeloved.”

The opportunity for store-owners with petcare right now is fabulous, especially with the prospect of extended or endless lockdowns and economic restrictions. But even despite the pandemic, this is a category that is clearly coming into its own.

“My advice to the convenience channel would be to look at where the market is today and where the market is heading, and transition with it,” says Nick, “because it’s really easy. I know that before I joined Mars Petcare, it’s so easy to think about what you saw in your cupboard, growing up, and the market really has moved a long way from the days where canned food was the number one player.”

He says Mars Petcare offers a whole ladder of price-points, with nutrition and cost improving as you climb it:“But we really do try to offer the best possible nutrition we can at each price point so that it can make your world a little bit better for your pet,” he says.

“I think we have seen that, as people are eating more natural diets, there is a corresponding growth in the natural and premium nutrition pet food market. They seem to be linked.”

A better world for pets – and for Mars Petcare that also means a better world for humans.