Retailers of many categories are increasingly betting on pets to help them attract larger crowds.
Lowe’s announced it is expanding its shop-in-shop partnership with Petco, bringing more veterinary care and pet supplies to nearly 300 Lowe’s locations by the end of the year. In its most recent earnings call, Kohl’s also said it expanded its dedicated space for the pet category after testing this format in some of its stores. Walmart, meanwhile, has focused more on the pet category in recent years, when it began adding veterinary clinics to select stores in 2019. This year, it added free access to virtual vets as a perk for Walmart+ members, and is redesigning several of its stores nationwide to feature expanded pet departments, including those in Secaucus, New Jersey and Harahan, Louisiana.
It’s not uncommon for retailers to reevaluate their merchandising strategies and right-size their product assortment. But at a time when people are cutting back on discretionary spending, especially in categories like apparel and home improvement, some retailers are opting to devote more space to pet products to push people to visit stores more often. Retail executives say they’re already seeing increased sales and larger transactions — though it’s unclear how long the bet boom will last.
“While it’s still early, we’re encouraged to see an increase in basket size at these stores, and customers say they appreciate the convenience and ability to reduce the number of stops they have to make,” Bill Boltz, Lowe’s executive vice . president of merchandising, said about the company’s shop-in-shop partnership with Petco in an earnings call.
Lowe’s shop-in-shop partnership with Petco begins in early 2022 with approximately 14 stores. The shop-in-shop partnership gives consumers access to Petco’s private brands and national pet brands, such as Bark Toys and Blue Buffalo.
The pet category has historically gotten more frequent visits from customers, said Brad Jashinsky, director analyst at Gartner. “For many of these retailers and others that are adding a pet category, this is a way to help balance out some of the other categories that may be more seasonal or may go through more similar cyclical period,” he said. “Furniture and home improvement go through boom and bust cycles, but the overall pet category tends to see more stable growth.”
Steady growth may be exactly what some retailers are looking for as sales continue to decline. Department store Kohl’s, which is in the midst of a turnaround plan, reported a 4.8% drop in net sales in the second quarter. Kohl’s doesn’t break down how much revenue it makes from pet products. However, the company said the pet category “delivered a strong sales performance in the second quarter” thanks to the additional space it added in some stores.
“In pet, we expanded dedicated space in the category across the chain following a successful 50-store trial last fall,” Tom Kingsbury, CEO of Kohl’s said in a call with investors and analysts. “Our offerings in this space include things like dog beds, cat and dog clothing, and pet toys.”
After pet ownership increased during the pandemic, it triggered demand for pet products and veterinary services. Some retailers have capitalized on this trend by becoming a one-stop shop destination for pet parents. Walmart, for example, has been actively expanding its pet products and services since 2021 and even launched its own premium private label pet food product called Pure Balance.
As with any merchandising investment, being overly optimistic about the pet category can be dangerous. Liz Papasakelariou, consumer products industry leader for North America at Publicis Sapient, said that to make room for more pet products, retailers need to reduce their assortment in other categories.
“It will be interesting to see what spaces they provide for larger pet sections,” Papasakelariou said. He added that consumers may also feel turned off by retailers who eliminate other categories in favor of pet products. “By deprioritizing others [categories] you might get lost in other traffic.”
In the coming months, analysts said they expect retailers to continue to look at what other niche categories they can grow as they adjust to changing customer trends. Papasakelariou said that if retailers’ investments in pets prove fruitful, they could further diversify their offering by adding categories such as pet health and wellness.
“It’s a good testing ground for retailers to start thinking about diversifying their portfolio,” he said.
