Retail Channel Monthly $ Update – June Final & July Advance

In May 2020, the Retail market began its recovery after hitting bottom in April. The road back has been long and complex and Consumer spending behavior continues to evolve. Now, the virus is resurging so we will continue to track the impact on the recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – about 2 weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the Final Retail Report for June and then move to the Advance Retail Report for July. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

Both reports include the following:

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This will be more detailed in the “Final” reports and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2020 and 2019
  • Current YTD change – % & $ vs 2020 and 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

First, the June Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January & February but they took off in March, setting a new all time $ record. In April $ fell but they rebounded in May to another record high. Now, in June another $ dip. Here are the major retail groups. (All Data is Actual, Not Seasonally Adjusted)

The final total is $3.5B more than the Advance report projected a month ago. All groups but Auto were up slightly. The specifics were: Relevant Retail: +$2.3B; Gas Stations: $1.4B; Restaurants: +$0.1B; Auto: -$0.3B. Sales vs May were down in all but Gas Stations and Total Retail $ were the 2nd highest month of all time. Total $ales broke $600B for the 1st time in December and has now done it 5 times. Auto still has the strongest recovery and is in fact prospering – annual YTD growth rate since 2019 is +13.1%. Except for the spending dips vs May, for the first time since the recovery began, all groups, including Restaurants, were positive in all other measurements.

Now, let’s see how some Key Pet Relevant channels were doing in June.

  • Overall– 6 of 11 channels were down vs May but all were up vs May 2020 and 10 vs May 2019. In YTD $, 10 were up vs 2020 and 10 vs 2019. 9 were up vs both. June was the 5th biggest month in history for Relevant Retail.
  • Building Material Stores – Their amazing lift continues. The ongoing surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed but Building and Farm stores are still going strong. Sporting Goods stores have a similar spending pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. April & May $ fell slightly but rebounded in June. YTD they are +51% vs 2019. That’s an Annual Growth Rate of 22.9%!
  • Food & Drug – Supermarkets were +$77.7B in 2020. $ are down vs May but YTD are on par with the 2020 binge. They are still up 15% vs June 2019 and 14% vs YTD 2019. Drug Stores were +$17B (+5.7%) for 2020. Their $ rose in June after monthly declines from a record March. Now all measurements are positive and YTD $ are +7.4%.
  • General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. In April, sales in all but $ stores declined but they bounced back in May. In June, sales dipped for all but they are going strong. $ Stores and Clubs/SuperCtrs are leading the way with a combined annual growth rate of +8.4%. These channels promote value. Their success vs both 2020 and 2019 reinforces its importance in Consumer spending decisions.
  • Office, Gift & Souvenir Stores– $ increased slightly from May and were +41.6% vs June 2020. The pandemic hit them hard. They are still down vs 2019 – monthly and YTD. Recovery is a long way off, but things are improving.
  • Internet/Mail Order – Their $ increased slightly in June as the pandemic continues to foster this channel’s growth. In June of 2019, their YTD growth was +13.3%. Now, their avg growth rate is +20.6% – a 54.6% increase.
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 total sales were up +11.6%. Their June $ were up slightly from May and another all-time record. YTD sales are +30.5% vs 2020 and +39.3% vs 2019. Very strong!

Relevant Retail began recovery in May and reached a record level in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. June $ are down but virtually all channels are showing growth. The key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, here are the Advance numbers for July.

2020 was a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell from their December peak in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $641.5B. June $ fell but the rollercoaster ride continued as July $ bounced back to become the 2nd biggest $ month in history. Auto and Relevant Retail, the leaders of the recovery, were down from June but all the major groups were positive in all other measurements for the second straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a factor in some increases. However, consumers continue to spend “big bucks” and the overall Retail marketplace has strongly recovered.

Total Retail – In March, Total Retail hit $633.1B, a record for the most spending in any month in any year. In April, $ales dipped to $625.5B but were still $218.3B more than April 2020 – a record increase that was more than double the size of last year’s record drop. In May, sales set another new record, $641.5B. In June sales dipped slightly but rebounded in July to $637.0B, the 2nd biggest month in history. Moreover, the current YTD average annual sales growth rate since 2019 is 9.2%, the highest ever in records going back to 1992. Total Retail has not just recovered. It is stronger than ever.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 2 straight months. Last February YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily in April and May. Sales dipped slightly in June but were still strong vs 2019 & 2020. In July the $ turned up. YTD their $ are plus 30.5% vs 2020 and +2.4% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers)   – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and slowed only slightly in April>July as sales exceeded $134B in all 5 months, by far the 5 biggest months in history. To show how well consumers responded to their campaign you just need to look at the data. This group has exceeded $110B in monthly sales only 13 times in history. 11 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +12.8% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow in April > July to a record $53.7B, 38.1% above July 2020. They have been positive in all measurements vs both 2019 and 2020 since March. Their comeback continues but there is another factor that must be considered – inflation. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, the July 2021 prices were 41.8% above July 2020. That means that the 38.1% year over year $ lift in July was actually a decrease in the amount of gas sold. YTD Annual Avg Growth Rate Since 2019 = +4.2%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. When you look at the individual channels in this group, you see a variety of results due to many factors – non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December ($407B). They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February but set monthly records. In March they turned sharply up and then down in April. They bounced back in May then fell in June. July was down slightly from June, -$1.5B (-0.4%) but was still the biggest July ever and the 6th largest month on record. We should also note that that while December 2020 is still #1, March > July are five of the seven highest $ months of all time. The Relevant Retail Market has exceeded $366B in monthly sales 7 tImes in history. 6 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 now stands at +10.3%. Through July all but Department Stores continue to be positive in all measurements vs both 2020 and 2019. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus never ending “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. July $ were down slightly from June and none of the increases were “off the charts”. However, it was still the 6th largest month in history for Relevant Retail outlets. The groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in only 4 of 13 channels were down vs June but all were up vs July 2020, vs July 2019 and YTD vs 2020. Only 1 was down YTD vs 2019 and they were only -0.1%. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.3%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 15 consecutive months. The group set an all-time record of $407B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month. March > July were 5 of the 7 biggest of all time. Essential channels are still the primary drivers:

  • Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
  • Food & Beverage – Grocery– Restaurant $ are improving but consumers continue to eat & drink more at home.
  • Bldg Materials/Garden/Farm– Their “Spring” lift continues unabated as consumers focus on their home.
  • SuperCtrs/Club/Value/$ Strs – They keep the GM channel positive. Value is still a major consumer priority.

Regarding the Individual Large Channels (Includes YTD Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales rose in July and all other numbers are positive. YTD Department Stores $ remain up vs 2020 but are down -0.1% vs 2019. Their problems began before the Pandemic. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores has remained near the current 8.6%. These stores are still the key to this channel.

  • YTD Avg Annual Growth: All GM = +7.1%; Dept Stores = -0.07%; Club/SuprCtr/$ = +8.6%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In June/July they beat 2020 $. The Health, Personal Care group finished 2020 at +1.8%. 2021 has started even better. Although July was down -1.0%, YTD they are +10.2% vs 2020 and +9.9% vs 2019.

  • YTD Avg Annual Growth: Grocery = +6.9%; Health/Drug Stores = +4.9%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > July have been spectacular for all these channels. The increase in Clothing vs July 2020 was not “off the chart” but was still +45.8%. All of these groups were up vs June and they remained positive in all measurements vs 2020 or 2019 for the 5th consecutive month.

  • YTD Avg Annual Growth: Clothing = +4.8%; Electronic/Appliance = +3.6%; Furniture = +10.2%

Building Material, Farm & Garden & Hardware – Their Spring lift began on time in 2020 and has never stopped. They have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April then trended down May > July. They are still +16.4% YTD. Avg Annual Growth = +14.1%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021. January > July set monthly records and March had the most $ of any non-December month in history. July YTD they are +39.0% vs 2020. Avg Annual Growth = +17.5%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March sales took off and the channel set a new all-time monthly record of $14.39B in May. However, they beat that record in June with $14.41B and now July with $14.65B. Their YTD sales are now 36.2% above 2020 and 26.0% more than 2019. Their recovery has become very real. YTD Avg Annual Growth = +12.2% (4th Best)

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and every month in 2021 has produced record $. July was -3.7% vs June but still +3.7% vs 2020. Their YTD $ are +16.9%. YTD Avg Annual Growth = +18.0%

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. March>July became the 5 biggest $ales months in history with the 5 largest year over year monthly sales increases ever. The total increase was +$701B, which totally dwarfs the -$174B decrease from March>May 2020 which caused so much concern. At yearend 2020, Restaurants, Auto and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but overall, they led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has grown even more positive. In June and now July, all major groups, including Restaurants are positive vs both 2020 and 2019. The details show that the recovery in Relevant retail has become real for virtually all channels and monthly sales continue to set records. Retail has recovered so the question is, “Will the resurgence of COVID negatively impact Retail?”

PET STORES – A 30 YEAR HISTORY from 1987 to 2017

Pet Products are sold seemingly everywhere today – 160,000 retail outlets of all kinds – clothing stores, supermarkets, gas stations, the internet. That number climbs to over 200,000 when you add in the services outlets. However, when you think of the beginning of this colossal industry, you must think of the independent pet store as the seed that became the mighty oak. We will take a look back to 1987 to see where this channel was and how it has evolved through the years.

The data in this report is courtesy of the U.S. Census Bureau. Their Economic Census is done every 5 years in years ending in “2” and “7”. The early years have only basic information but since 1997, more detailed information is readily available. In 2017 they did change some classifications which will make a few comparisons no longer possible.

Let’s get started. Here is a detailed chart on some key measurements and a graph of their growth from 1987 > 2017.

The little chart has a wealth of information, and the graph shows the spectacular overall results. First, the number of stores almost doubled but the key factor was that the sales per store is 7.4 times greater. The number of stores increased but superstores and chains became the dominant type. This is evident by the fact that the number of employees per store is 2.3 times more in 2017 than it was in 1987. Add this to the attitudinal conversion of pet owners to pet parents, with an ever increasing personification of their pets and you get 13.5 times more $.

Now let’s drill deeper. Sales increased +$16.99B (+1249%). How much of the increase was real or just due to petflation?

The annual growth rate in “full” $ was 9.0% from 1987 to 2017. Pet Food and Supply prices went up 77.5% during this time. This is an annual inflation rate of 1.9% which is better than the overall 2.6% CPI rate during this period. This made the “real” growth rate 7.0%. That’s damn good and means that 77.3% of Pet Store $ growth has been real. However, this doesn’t tell the whole story. On the chart you see that real growth flattened from 2007 to 2012. This was largely due to the fact that Pet Food and Supply prices increased an incredible 17.0%. (8.2% per year) from 2007 to 2009. Coming at the onset of the recession, this drove consumers to look for value. The result was that consumers moved strongly to other channels. Pet Stores’ share of total pet products sales fell from 39.0% in 2007 to 33.1% in 2012 and Total General Merchandise took over the top spot in Pet Products sales. All the Food and Supply prices have fallen or at least flattened out since 2009. Total Pet Products inflation from 2009 to 2017 was 1.1%, an annual rate of 0.13% – almost nothing. As a result, “real” sales for Pet Stores returned to a more normal path.

Now, let’s take a look at the progress of the key contributing factors over the years in 5 year segments.

  • 1987 to 1992 – The Number of Pet Stores grew significantly – from 5475 to 7150 (+30.8%). The number of employees per store is about the same. Superstores and chains were just getting started so these were mostly traditional sized stores. The amount of sales per store increases 50% as American’s love for pets truly begins to show. The result – sales basically double in 5 years.
  • 1992 to 1997 – The rise of Superstores. Note the 37.1% increase in employees per store. They are being built and they generate significantly more volume per store – +76.6%. The result – sales more than double in 5 years. In 1997 Pet Stores pushed Supermarkets out of the top spot in Pet Products sales, with 40% of all $.
  • 1997 to 2002 – Superstores continue to rise but at a cost to the independents. The net result is 692 fewer outlets (-8.3%). The Sales per store increases 50.8% which reflects the higher percentage of larger format stores. The total channel sales growth rate slows markedly from the previous 10 years, but sales were still up +38.2%.
  • 2002 to 2007 – The channel bounces back with a 15.2% increase in stores – most of which are chains and superstores. The per store sales goes up another 30.5%, reflecting this change. The result – sales grow 50.3%. They continue to hold their ground in the overall marketplace, with 39% of all Pet Products Sales.
  • 2007 to 2012 – Huge price increases…plus a major recession. There is no growth in the number of stores, but an even higher percentage are superstores. The overall channel sales growth – +29.9% – exactly mirrors the per store growth. Also consider:
    • The overall pet food and supplies category (in all channels) grew 50% from 2007 to 2012.
    • Actual Pet Store Sales from 2007-2012 was only up 6.6% – (Factoring in the huge price increases)
    • The result – Pet Store Sales grew but had a big loss in pet products market share – down to 33.1%
  • 2012 to 2017 – Inflation essentially ends, and more outlets are opened, +13.5%. Per store sales were also up slightly, +9.8%. This produced an overall sales increase of +24.7%. Products were +27.7% which resulted in a minimal gain in market share to 33.3%. This is small, but significant because Pet Stores and $ stores were the only brick ‘n mortar outlets to gain pet products market share in a major consumer movement to the internet.

Through the years, pet Stores have grown larger in size but paused their growth in numbers from 2007 to 2012, largely due to the great recession. During this recession period, their growth in revenue slowed to +29% and did not kept pace with the overall market in the Pet Food and Supplies category, so they lost some market share. However, they bounced back in the 2012 to 2017 period, with more stores and a total sales increase of 24.7% (Products $ were +27.7%). Although this was the smallest $ percentage increase in history it was very significant. The Pet Products marketplace is incredibly competitive, and a new major player is now in the game – the internet. Pet Stores, with their vast array of pet products and services and $ stores, with their value and convenience were the only 2 brick ‘n mortar retail channels to gain share in Pet Products in what was a tsunami like movement of consumers to internet shopping. It shows that Pet Stores have not lost their appeal and that they are both resilient and adaptable in changing circumstances.

Now, let’s look deeper into the retail sales numbers for Pet Stores for trends in specific Product segments. There is sales data from the U.S. Economic Census back to 1987. From 1997 on the data gets reasonably detailed. As I said the Census Bureau changed their product classification system in 2017. This will keep us from doing some comparisons to earlier years. However, I have built a chart which is inclusive of both systems to maximize our ability to compare specific data.

The chart contains all available data. The 2017 numbers are highlighted to indicate the % change from 2012.

  • Green = 10%> Increase
  • Blue = <10% Increase
  • Pink = Any Decrease

Here are the details which are followed by specific category observations for each 5 year period.

Observations 1992 to 1997

  1. Data was limited in 1992 but we saw strong growth in store count as superstores and other chains rapidly expanded.
  2. Sales in Pets and Pet Products more than doubled, +103.9% as Pet Stores became the #1 “go to” channel for Pet Products. Over 95% of Pet Stores’ total sales came from Pets and Pet Products in both 1992 and 1997.
  3. There was a hint of growing diversity as Pet Services $ grew by 260% and A/O revenue more than doubled. Pet Book sales also doubled as they reached what would be their all-time high in $.

Observations 1997 to 2002

  1. The store count fell 8% due to the loss of many independent stores. Total revenue increased 38% but the $ per store increased 50%, which reflects the dominance of the larger stores.
  2. Pets and Pet Products $ales increased +36.2%, which was slightly less than total revenue so their share of Total Pet Store $ dipped to 93.8%. This came from a combination of factors.
  3. The number of stores carrying live pets (nonfish) fell -11.8% but sales increased +32.5%. Obviously, the sales were becoming more concentrated. Fish and aquarium supplies was a different story. The numbers are bundled but Total Aquarium (Fish & Products) fell -28.5% in store count and -12.7% in $. This Category became markedly less popular.
  4. Pet Services continued strong growth, with a 53% increase in store count and a 267% increase in sales. A/O revenue increased +19.6%. Books were available in 40.2% more stores but began their long revenue slide -24.9% in $.
  5. Non Aquarium Pet Supplies increased sales $1.0B, +48.8% to $3.1B, which allowed them to slightly widen their razor thin lead over Pet Food as the #1 category in Pet Stores.
  6. Pet Food sales increased sales by $0.9B, +42.9% to $2.9B. We should note that in 1997 and 2002 Pet Food was carried in 2% fewer stores than Pet Supplies. However, there is no doubt that Food is the primary driver in most pet store consumer visits. It is the most “needed” category for Pet Parents. That’s why it’s put at the back of the store.
  7. Pet Store offerings became a little more diverse. However, 78.7% of Pet Stores’ total revenue in 2002 and 89.5% of the increase from 1997 came from Pet Food and Non-Aquatic Pet Supplies. They are the key categories.

Observations 2002 to 2007

  1. Total revenue increased to $11.4B. (+50.3%) as store count grew 15.2%, primarily due to chains.
  2. The sale of pets (non-fish) increased both in number of stores (+8.1%) and sales volume (+17.1%).
  3. In 2007 Pet Foods became the largest segment. Sales were $4.6B, +$1.7B (+59.6%). This was due to the initial move to premium which began in 2004 and the 2007 melamine recall which began the “buy Made in the USA” trend.
  4. Pet Supplies share of $ is much higher in Pet Stores than in the overall market. Sales hit $4.2B, +$1.1B (+37.3%) but the growth rate was below the overall market. This segment is very vulnerable to migration to other channels.
  5. Between 2002 and 2007, Aquarium products came back strong, with spectacular growth in the number of outlets – +25.8% and volume, +$405M (+59.3%). Sales reached a billion dollars for the first time – $1.09B to be exact.
  6. A/O products $ grew +25.6% but Pet Books continued their slide, -21.1%. Their drops pretty much mirror the overall book market as more and more consumers turn to other sources and to electronic formats.
  7. The Service Segment provided by Pet Stores reached $734M, up $427M (+139%) in revenue – Now 6.4% of Total $.

Observations 2007 to 2012

  1. Total revenue hit $14.7B, a $3.3B increase (+29%). However, the store count remained stagnant at just under 8800.
  2. Pets, Food and Supplies sales increased $2.9B to $13.3B. However, this 27.6% increase was considerably below the 50% increase in the overall Pet Products market, which resulted in a large drop in market share for Pet Stores.
  3. Pets (nonfish) were sold in 3% fewer outlets…but the drop in sales was very significant… -34%.
  4. Pet Foods remained the largest segment with strong growth, +44.8%. This $2.1B gain accounted for 63% of the increase in the total $ for the channel. This is probably a reflection of the strength of “premium” pet food sales. Notably, the number of stores stocking pet food exceeded the number stocking supplies for the first time…ever.
  5. Pet Supply Sales increased $0.9B (22.5%). This is less than half of the increase of the overall market and reflects the consumer migration to other channels. Prices deflated after 2009 and more categories became commoditized.
  6. Fish and Aquarium Products had no growth in the number of outlets and only 5% growth in sales. Considering the overall inflation rate during the period (+4.4%), “real” sales were essentially flat.
  7. A/O products growth slowed to +8.5%. Book sales continued to fall and in 2012 were less than half of 2002.
  8. Services were offered in 25% more Pet Stores and sales grew +$0.4B (+54.5%) to reach $1.1B, which was 7.7% of total revenue. Services is a great opportunity to gain business which can’t migrate to the Mass Market channels.
  9. Pets, Services and Channel Differentiated Premium Pet Foods and Products are keys to maintaining the consumer traffic and sales in the Pet Store Channel. The U.S. consumer is looking for value. The generally higher prices on supplies and “regular” food in these stores have encouraged the migration to other channels.

Observations 2012 to 2017

  1. Total Revenue increased $3.6B, +24.7% to reach $18.4B. The store count grew +13.5% to 9984 – almost hit 10,000.
  2. Pets and Pet Products $ was $17.1B, a $3.7B (+27.7%). This was strong enough for Pet Stores to be only 1 of 2 retail channels to actually gain share (only 0.2%) in Pet Products $ against the strong consumer movement to the internet.
  3. Live pets/fish $ grew +$0.23B, +32.9% to $0.9B but the % of stores stocking any live animals fell to a record low 58%.
  4. Pet Food $ales soared to $9.8B, up +$3.1B (+45.5%) and for the first time, in 2017 accounted for more than half of total Pet store revenue – 53.3%. The number of stores stocking pet food was 14.8% more than the number stocking supplies. Pet Food provided 83.8% of the lift in Pet Products $ and 86.1% of the increase in total pet store revenue. Pet Food and more specifically super premium pet food was the primary reason that Pet Stores held their ground and even gained a little share in the overall Pet Products marketplace.
  5. Pet Supplies also increased sales, +$0.3B (+6.3%) but it was far less than food and their share of total Pet Store revenue fell to a record low 39.8%. The number of stores stocking Pet Supplies fell 5% and only 74.1% of Pet Stores stocked Pet Supplies – a record low.
  6. Aquarium Products, excluding live fish, showed some positivity. The number of stores stocking Aquarium Products increased +4.1% and sales increased +$0.1B, +11.2% to a total of $0.9B.
  7. All other products and services has always been a very small part of pet stores revenue but sales have always increased…until 2017 when they fell -16% and their share of total $ fell to 0.9%.
  8. The number of Pet Stores carrying books actually increased by 1% but sales plummeted to $3.3M, which is -89% below the sales from 20 years ago in 1997.
  9. The number of Pet Stores offering Pet Services actually fell -7.2% from 2012 and sales decreased -$30M (-2.7%) to $1.103B. This is a bit of a surprise but it came as a result of competition. Pet Services outlets grew in number, giving Pet Parents more options and better prices. This segment had not yet drawn a significant amount of new users. According to the US BLS Consumer Expenditure Survey, this changed in 2018 and spending skyrocketed. I’m sure that Pet Stores got their share. This segment is an important allure for Pet Parents who want one stop pet shopping.
  10. Pet Stores strongly increased sales from 2012 to 2017 and even gained a small amount of share in the total Pet Product marketplace where the internet cut into virtually every other channel’s business. This was primarily due to the consumer demand for Super Premium Pet Foods, where Pet Stores were the “go to” source.

Wrapping it up

Pet Stores pioneered the pet industry but they also led the way in trends that have spurred the spectacular growth of the industry since 1987. The rise of superstores and chains provided unprecedented space for Pet Supplies. This was important for existing manufacturers but it was especially important for new companies. There was finally retail space for a “flood” of new products. According to the US BLS Consumer Expenditure Survey, in 1987 Pets Supplies accounted for 13.9% of Total Pet Spending. Then came Pet Superstores and chains. By 1996 the Pet Supplies share of Total pet $ was 23.5%. It has remained near this level ever since. Although larger Pet Stores showed the way, this spurred a radical expansion of pet product distribution across the whole retail marketplace. Another key industry trend was the move to premium Pet Food. Pet Stores led the way again. They had the room for new premium foods, which became increasingly desired by Pet Parents. This trend began in about 2004. The 2007 Melamine recall accelerated the movement as consumers moved successively to made in the USA, then to all ingredients from the USA, next to all natural and now to super premium. Plus, you can add the latest big movement – pet health supplements, often in treat form.

Take a look at the following graph to better “see” the business impact of these trends on Pet Stores.

In 1997, Pets and Supplies $ dominated the channel with 58.2% of the total revenue. Food started to gain ground between 2002 and 2007 when premiumization began. They moved to the top in 2012 when overall Pet Stores lost considerable market share to other channels. Then Super Premium Foods took off and Pet Stores were the “go to” outlet. In 2017, the share of sales for Pet Food had essentially flipped from 2007. The A/O business has always been small but is now becoming insignificant. The Services Segment is small, around 6% of total revenue since 2007, but it is not insignificant. Offering Pet Services makes Pet Stores more of a one stop shopping experience for Pet Parents and is a big positive point of differentiation. This differentiation and the “one stop shopping” that it provides for Pet Parents was a key factor that allowed Pet Stores to hold their market share against the internet wave that began from 2012 to 2017.

There’s more to the story!

Larger format pet stores bundled into chains – big and small was obviously a great idea but more than that, the timing was perfect – for society, for consumer attitude and for the retail marketplace. To take a closer look at this timing, we have to go back over 75 years to the passing of the G.I. Bill in 1944. This rewarded Veterans for their service by providing education and job training benefits to help advance their after service careers. It also offered low interest home mortgages which was a major reason that the homeownership rate for the U.S. rose from 40% in 1940 to 60% in 1960. Also, more space was needed for this expansion which resulted in the creation of the suburbs, a new concept which offered the convenience of urban living with more space for households.

The soldiers returning from World War II also helped create another movement – more children. U.S. birthrates soared from 1946 to 1964, creating the largest generation – the Baby Boomers. Many of them grew up in this new suburban environment – which offered more space in a home that was owned and controlled by their parents. Pets began to be added to the household mix – sometimes in a big way. I am a Boomer. By the time that I was in 3rd grade (1956), my older brother and I had 2 dogs, 2 cats, a canary, a parakeet, a hamster and…a raccoon. In those days dogs and cats were “outdoor” animals. They didn’t come into the house but we let them take refuge in the basement during inclement weather. As we moved into our early teens, we no longer required a babysitter. While our parents worked, we roamed the neighborhood, especially in the summer. Our dogs were our constant companions. In the summer, we spent more time with them than we did with our parents. They became siblings to us so it is no surprise that when we grew up, we bought suburban homes, started families and added Pet “children” to our household.

So the changes in society and consumer attitudes were underway. However, we still needed major changes in the retail marketplace. When Boomers were growing up, Department Stores “ruled”. This channel has never embraced pet products. This indicated that they weren’t in tune with consumers and was an early sign that they would fade. In the 60’s discount stores came into being. First came general merchandise, Wal-Mart, K-Mart, Target. They grew and ultimately progressed to SuperCenters and Clubs in the 90’s. Consumers became used to large stores with a huge product selection. In the late 80’s and 90’s this concept trickled down as large format specialty stores came to the forefront – Toys R Us, Office Depot, Circuit City, Barnes & Noble, etc. Consumers were ready for Pet Super Stores.

There is one more key element – money. Income has been and continues to be the driving force in increased pet spending. Let’s go back to the key players. In 1991 the oldest Baby Boomers were turning 45. 45>54 is the highest income age group so in the 90’s, the biggest generation was entering their peak earning years. Pet Parents finally had outlets that not only filled their pets’ wants and needs but introduced new ones and… they had the money to buy it all.

The creation and development of larger format pet stores and chains was literally a positive example of the “perfect storm”. It was a great idea, all the elements were in place and the timing was perfect. Pet stores continue to evolve as the does the market. The store size has dialed back a little to make shopping a little more convenient. The channel is also not just huge chains. Small chains and local independents are also strong. The successful outlets are adapting to a virtual world, offering features like BOPIS. However, one thing will remain unchanged and that guarantees their continued success. Pets are very personal. Boomers were the first pet parents but they passed this mantle on to their children and it has now become the norm across the U.S. In fact the relationship has become even stronger as we increasingly personify our pets. This has led to substantial growth in categories like apparel but probably had its greatest impact on categories related to health. It fueled the spectacular and ever growing movement to higher quality, super premium foods and now medical supplements. Pet Parents want and need the opportunity for personal interaction when shopping for their pets, especially when considering any new product. This can only happen in Pet Stores.

Attending SuperZoo 2021? – It is a great Opportunity! But….You Need a Plan!

SuperZoo has now returned to an in-person event. It has been 5 months since the last virtual show so the New Product Showcase is packed with entries. The exhibitor count is down due to the pandemic, but the booths continue to get bigger. To help attendees in working this huge show the floor sections were made more targeted and new sections were created. One thing is unchanged. There is a huge array of exhibitors in every product category.

Consider these 2021 SuperZoo facts:

  • 800 exhibitors
  • 8 “Targeted” Floor Sections: Nature’s Pathway, Rodeo Drive, Groomers, Critter Alley, Health & Wellbeing, Innovation Incubator, Farm & Feed, WPA Good Works
  • 220,000+ sq ft of exhibitor booths; Plus, a 37,000 sq ft New Products Showcase
  • SuperZoo Education: Seminars on Retail and Grooming – 97 hours; 88 separate sessions
  • Almost 5 miles of aisles – just to walk the exhibit floor

Whew! This show is still huge. The show floor is open for 21 hours so…Let’s “Do the Math!”

 If you don’t attend any seminars, visit the New Product Showcase, stop to chat with anyone in the aisles or for food, a drink or to go to the bathroom and maintain a walking speed of 2.5 mph…

You can spend…1 MINUTE AND 25 SECONDS…with each exhibitor…You definitely need a plan!

With a higher concentration of Pet retailer attendees and a commitment to groomers, there are subtle differences between SuperZoo and GPE.  However, like GPE, SuperZoo has attendees from every major retail channel and before being limited by pandemic travel restrictions, attracted a multitude of exhibitors and attendees from around the globe.

Despite the variety of offerings to fill an attendee’s time, SuperZoo is still primarily about Pet Products. New Products are critical to maintaining and growing any business so you must take the time to visit the new product area. Knowledge is power so you should also sign up for any relevant classes. Sometimes it’s not what you know, but who you know that matters most. This makes networking with other industry professionals a priority.

Every business can improve in terms of products. If you are a retailer, what sections of your store are not doing as well as you hoped and need a “facelift” or conversely, what areas are growing and need products to fill additional space? Category managers for distributors and retail chains may only be interested in targeted visits to exhibitors relevant to their “categories”. Representatives may be looking for new manufacturers…in specific product categories. Manufacturers could be looking to find distributors to handle their products or just looking to “check out” the competition. In regard to products, there is always something to see…for everyone! Plus, there are 330 Exhibitors at SZ 21 that weren’t at GPE 20.

SuperZoo is a great place to review products but Business Services, everything from Private label to POS, have also become increasingly important. In fact, 1 out of every 7 exhibitors offers some type of Business Service. Attendees can now “Leave no stone unturned” in their quest for business success. SuperZoo is about gathering information and making decisions to improve your business – whether they are made on the spot or put on your “must do” list. Your only real limitation is time. How do you make the most effective use of your time on the show floor? Here’s a suggestion.

Use the Super Search Exhibitor Visit Planner to make SuperZoo easier and more productive. I initially designed it in 2014 and have updated the data and produced a new version for every GPE and SuperZoo since then…including SZ 2021.

The “update” is not just exhibitor lists but also to the product category offerings for every exhibitor. I reviewed every exhibitor profile on the show site, but I also visited over 800 websites and conducted separate internet searches to “validate” their product offerings. It is not 100% accurate, but it is close.

What does the Super Search do?…It searches for and produces a list of Exhibitors by product categories.

  • From the simplest – “give me a list that I can look at on my phone or tablet in either Booth # order or alphabetically”
  • To the most complex…”can do a simultaneous search for multiple specific product categories, allowing you to personally narrow down the initial results and see the “final” alphabetically or by booth number.

The SuperZoo Super Search Exhibitor Visit Planner does both…and more…and does it quickly! Take a look at the New Quick Start Guide. You will see that it looks complex but is really quite simple.

SuperZoo 2021 Super Search Exhibitor Visit Planner – Quick Start Guide

First: When you download the Excel file, Remember to Enable Editing & Macros!

The SZ 2021 Super Search Exhibitor visit planner is designed to make your time on the show floor more efficient and more productive. With the Super Search you can conduct up to 5 separate and distinct product category searches simultaneously with consolidated results produced in booth # order to facilitate your “journey”. There are detailed instructions for reference and to help you understand the nuances of the tool. However, it is really very simple so let’s get started. Here is the Dashboard where you set up your searches.

On the dashboard, the first things to note are the numerous category columns. There are 8 separate floor sections, 11 different Exhibitor or Animal Types and 33 Dog and/or Cat Product categories. You can search exhibitors for any combination of these.

Let’s take a specific example running 3 simultaneous searches for several Dog/Cat categories:

  • Toys
  • Treats
  • Catnip & Litter (Must sell both)

Now referring to the Dashboard, let’s take it by the numbers:

  1. This column is where you activate each search. Type in a “Y” (Cells C3>C7 will auto-capitalize) This search “line” becomes active.(cell turns green) In our example we are running 3 searches, so we have 3 “Y”s.
  2. Now we enter a 1 in the correct column for each search line. Search Line 1: Toys; Search Line 2: Treats.
  3. In Search Line 3 we want exhibitors that sell both Catnip and Litter, so we put a 1 in both of these columns.
  4. Now we just “click” the Execute Search Button. The searches are done simultaneously, and the results combined into a single list in alphabetical order.
  5. If you would like to view the list in Booth # order, just click the Booth # Sort.
  6. You can switch the list back to an alpha view by clicking the Alpha Sort Button.
  7. To Clear all your search categories and start a new search, click the Clear Criteria Button. Then click Execute (#4) again and you will be back to the full list

Note: Any Search Line with a Y and no 1’s in any column will always deliver the entire list regardless of what is selected in other lines. Change the Y back to an N in unused search lines. Now a sample of the results:

Company A – Has Toys Only; Company B has Dog Treats Only and is also a “Startup”; Company C is on the list for Treats and also has Catnip, but no Litter. This is not unusual as Catnip is often a Treat; Company D has Treats & Toys. Company E has both Catnip and Litter and in fact, actually has it all!

Note: The Super Search highlights your search categories, so you know “why you are there”. However, it also shows all categories that are available. Some might “pique” your interest while you are visiting the booth.

You can review the exhibitors alphabetically then put the list in Booth # order to make it easier to “work”. The Super Search also allows you to “cut down” the list during your review. (Pg 2; Point #11 – “U Pick ‘em” in Detailed Instructions) But First, I suggest that you “play” with the Super Search to get a “feel” for the tool, and then review the Detailed Instructions. With your “play” experience, the detailed instructions will become a “quick read” and a valuable reference. You’ll soon be “up to speed” on the full capabilities of Super Search.

Good Luck and Good “Hunting” at SZ 2021.

Use the links below to download The Super Search (Be Sure to Enable editing/macros/content), the Quick Start Guide and the Detailed Instructions. Then GET STARTED!  

(To save the PDF to your computer Right Click the download link and select “Save Link As…”)

(To save the PDF to your computer Right Click the download link and select “Save Link As…”)

(For the Excel file to work on your computer, be sure to enable macros/editing/content if asked.)

3 more exhibitors cancelled after our Final Part 2. The show is over but I updated the file to create a “For the record” list of SuperZoo 2021 exhibitors for future reference.