Specifics of merchandising in pet stores

When it comes to managing the inventory for pet products, we must emphasize that the industry is very competitive.  Regardless of its type and size, it has a huge range of goods. However, the industry continues to grow rapidly and is thus a field of opportunity.

The global pet care market has grown to $261 billion in 2022, up from $245 billion in 2021. Experts estimate that a compound annual growth rate (CAGR) of 6.1% will see this figure rise to $350 billion by 2027. Growth is even taking place and is predicted in the future in the mature markets of North America and Western Europe and is expected in all three main industry verticals: the pet food market (the largest niche), the pet services market (grooming, raising, training, care), and related products and accessories for pets (clothing, food bowls, collars, carriers, etc.).

Even the Covid-19 pandemic did not negatively affect sales growth in the pet industry, which is not the case for many other industries. Judge for yourself: Due to the Covid-19 pandemic, 12% of adults with children under 18 have adopted pets, and 21% of pet owners spent more money on them during the coronavirus pandemic.

So, the industry is thriving, promising, and still open to new players. Finding your niche is the key to success. Since mass-market brands offer products with little differentiation, offering exclusive niche products will help you stand out from your competitors. 

Let's emphasize that, despite the fact that merchandising is a separate business process in your operation  with separate employees responsible for it, it should be considered in close connection with assortment and inventory management, promotional activities, tracking and analyzing the actions of competitors and industry trends (both local and global), etc. Only a comprehensive approach will ensure the sustainable development and prosperity of your business, even if it is a small neighborhood pet store. if 

However, in this article, we will focus on merchandising and its trends, what role it plays in the success of a pet store, and what features it has.

Define your niche and focus on it

Do not try to cover the needs of all animals; just focus on a few. After all, regardless of whether you have a cat or a dog, a bird or a fish, a hamster or a turtle, all these pets need healthy food, hygiene support, a place to live, various accessories, and more. Of course, dogs and cats far outnumber other pets. This often makes it more difficult for owners of other animals to find the right product for their pets than for dog and cat owners. Help them by "specializing" your outlet. Target your buyer's needs by analyzing trends in your location and sales figures. Add something unique to your store's assortment and distinguish it. You should not buy the same assortment as your local competitor. 

Work with local producers – they often offer unique products at favorable terms for you and can support you with promotional materials and activities, thus setting your store apart from the competition. 

Plan layouts and design planograms to indirectly influence customer choices and increase your desired turnover, sales, and more.

Create and affect feelings and sensations

Although there has been a real boom in the e-commerce segment of the pet market in the last few years (of course, this was significantly affected by quarantine restrictions), physical stores are holding their positions quite confidently, and this trend will continue in the future.

Raw and natural animal feed is becoming more and more popular.  Therefore, do not forget about the smells characteristic of fodder: place them in well-ventilated areas. Invest in quality refrigeration equipment that will serve as a showcase, as well as (if possible) samplers of products. Merchandisers must regularly monitor the attractiveness and freshness of all their products.

Fun fact: Over 50% of cat and dog owners give their pets a Christmas present or treat, and about half of the dog owners and about a third of cat owners celebrate their pet's birthday. A quarter of pet owners even celebrate Halloween with a gift for their pet. So, you can collect data about special dates in the lives of your regular customers' favorites, supplement the standard assortment with special offers, and create holiday promotional campaigns and themed areas.

If you have small petting zoos in your retail chain, be sure to monitor their cleanliness and animal health.

The general atmosphere in the store should be pleasant and friendly to encourage customers to return and make repeat purchases.

Zoning and display of goods are the cornerstones of merchandising

The planning and zoning of the store and the efficient display of goods requires special attention. If possible, these issues should be considered in advance, at the stage of investment in the creation of a retail outlet, its design, retail equipment, and staff training. The store (assortment) should be zoned by animal species, age group, product groups, and price segments. This may seem like a very simple task, but, for example, only dog food can be divided into:

• Regular, natural and organic canned food for dogs.
• Fresh minced meat, bones, by-products.
• Dry kibble for adult dogs and puppies.
• Wet food for adult dogs and puppies.
• Treats.
• Dietary and medical-prophylactic supplements.

Each of these groups has its own division and brands, price segments, promotional offers, etc. You should create planograms and use the retail space of the store taking into account this division, the capacity of the shelves and showcases, and the turnover of goods. Zoning should ensure not only high mobility, convenient navigation, and circulation of customers, but also good visibility of goods from all shopping areas of the store. Good product visibility is especially important for stores with a small sales area.

The placement of your store equipment and products should:

• Let the visitor walk through the whole store and see all the goods. In the case of pet products, high-quality and clear navigation is very important, which will help the customer both view the most possible products in  the largest possible area and quickly find what they need if they’re in a hurry or are not interested in additional purchases.
• Let the client easily navigate between logical and intuitive showcases.
• Product categories should be placed from the point of view of maximum profitability.
• The placement of equipment should stimulate impulse purchases and other types of purchases.

The planning of the retail space begins directly at the entrance to the store. This is the zone where customers begin to shift their attention from the outside world to the store's interior. The entrance area should encourage the buyer to make a purchase within seconds, arouse their interest, and make a pleasant first impression. Therefore, the design of the entrance area should be carefully considered as a primary sales point.

Each chain adheres to its own rules for the location of shop windows and shelves. Based on the experience of our clients, we at Leafio would recommend the following:

• The vast majority of people are right-handed, that is, when moving unconsciously, they tend to move from right to left, counter-clockwise, look to the right, and select goods placed on the right. This should be considered when planning equipment placement. 

Be sure to plan the main customer flow path:

• The first 1-5 meters from the passage are the transit zone. It is not worth having key goods here. They are unlikely to be noticed. However, this small free space near the entrance will help customers get used to the space of the store after entering from the street. Don't neglect this aspect of a customer's first impression of your outlet.
• ‘Power wall’ and ‘speed bumps’ – the zone at the beginning of the sales floor. The task here   is to slow down the buyer. It is a good place to place seasonal goods or toys and treats for pets. It also makes sense to use this area to display your most attractive products, such as new arrivals, promotional and discounted items, and special offers. The assortment in this area should be changed regularly and often (as a rule, at least once a week).
• Grid layout, loop layout, or free Flow – the main flow zones. This is the most important part of the retail space, where the display and purchase of the main assortment takes place, especially when the area of the store exceeds 100 square meters. Depending on the configuration of the sales floor,, you can arrange the racks along the walls, which allows customers to walk back and forth, and create "loops", when the customer is forced to walk in a circle and view everything, perhaps several times. Popular "anchor" products are also placed far from the entrance so that customers have to walk all the way through the store. Most often, a combination of these two zoning schemes is used, which is interspersed with promotional zones and POS displays of goods.

Although large promotional zones are not found and used that often or significantly in specialized pet stores, their importance should not be underestimated for drawing attention to the brand or for use as a sale area for discounted goods, etc. Create special layouts for these zones depending on the goals and monitor the impact on sales.

For small or highly specialized stores, the free-flow layout approach is more often used. They usually have a ‘power wall’ to attract attention, but beyond that, there is no clear direction of shopper movement and zoning. This approach allows easy and frequent switching between categories and gives the buyer a sense of freedom of choice.

By the way, you should change the placement of categories on the sales floor regularly, but not very often, so as not to confuse or irritate regular buyers. After all, your task is to create a new experience for them and benefit them with an updated layout. Change locations at least once a year, and maybe a little more often, depending on the proportion and amount of seasonal goods and the rotation of your store's assortment.

There are inviolable rules regarding the display of goods:

• Lay out the product facing the buyer, and the stock of the product deep in the shelf.
• The product must be easily accessible so that the buyer can read the description of the product on the label and quickly find what is needed.
• Do not leave "gaps" on the shelves.
• In addition to brands, price category, and type of packaging, remember to use a pleasant color scheme to go easy on the customer’s eyes.
• The product should not hang from the shelves.
• Monitor the accuracy of the layout, the conformity of the price tags, and the expiration dates of the goods. 

Adhering to the rules of the display is important, not only from the point of view of the visual component but also taking into account the fact that many pet stores have no or very small storage areas. So, shelves and displays serve both as a presentation showcase and as a place to store goods. 

Visual, sensory, and aesthetic components are very important in the shopping experience, and pet products are no exception. Therefore, do everything possible to create a pleasant atmosphere in the store. Neat and logical display of goods, proper appearance and friendliness of the staff, cleanliness, absence of unpleasant smells, pleasant background music – all these encourage the customer to make a purchase and visit your store again.

Related: How does floor planning affect sales?

As you can see, merchandising in the trade of pet products plays an essential role and has many aspects.

Now, imagine if artificial intelligence could help you competently and professionally manage them, namely software solutions for planning retail spaces and managing planograms. These are systems for retail businesses that allow you to automatically generate and optimize planograms, monitor fulfillment, and improve shelf space productivity. Leafio Shelf Efficiency is at the forefront of this type of software. 

With our software development, you will be able to:

• Create data-driven planograms that will attract the attention of buyers and help achieve the necessary performance indicators in your retail network.
• Zone the equipment and create an auto layout based on the parameters you need. So you will be able to automatically create a display by brands, types of goods, their purpose, etc..
• Quickly move categories around the sales floor and promptly rotate the assortment throughout the store chain.
• Control the aesthetics of the layout: in the Leafio Shelf Efficiency mobile application, store employees receive tasks for changing the layout and send you ready-made realograms to your desktop solution. A realogram is an exact virtual copy of a store's shelf space before any optimization has taken place. It should contain the POS data for the category and be analyzed by the planogram software. When done properly, realograms really come alive when opened in planogram software, because you can immediately see the connection between space planning and category efficiency. The planogram determines the final and exact placement and location of products on the shelf. It indicates where and how to place products on the shelf. Planograms take into account aesthetic appeal, category flows, merchandising principles, and last but not least, product sales effectiveness.

In the arsenal of our developments, there is also an automated solution for managing inventory and assortment based on artificial intelligence - Leafio Inventory Optimization

It is a software complex built on a modular principle, which can be integrated with Leafio Shelf Efficiency or complement it, forming correct orders of goods for stores and warehouses without human intervention.

Think globally, act locally

At the beginning of this article, we paid a lot of attention to the trends. Follow them both globally and locally, because they are also special and can be very different from other industries. For instance:

• Millennials are the largest group of pet owners (almost a third), followed by Baby Boomers (29%), and Gen Xers with 26%. Z and Builder are also pet owners;
• More and more pet owners are looking to focus more on not only keeping them fed, but also keeping them healthy. 69% of Millennials choose natural or organic products for their pets. 43% of dog owners and 41% of cat owners purchase premium food for them;
• 68% of Millennials are willing to spend more on eco-friendly pet products.

In addition to global trends, it is important to monitor those specific to your chain of pet stores. Collect, analyze and use data to understand customer demand and behavior and create product layouts based on this information. In turn, Leafio's solutions and experts will help you to do it quickly, efficiently, and without mistakes. 

Optimization of merchandising is a continuous and complex process, at the heart of which, surprisingly, is simplicity. It is the main principle of any shop. Easy and thoughtful product placement will improve sales, whereas a confusing, unsystematized, unclear, chaotic display of products distracts buyers from purchasing.

A clear and thorough approach to merchandising in the pet industry, which takes into account the behavior of customers, can increase your sales by at least 10%, and competent display of products – by another 15%. And we at Leafio know how to do it and will be happy to help you.