The Internet is the new “pet parent,” as a dramatic force reshaping the market landscape, according to research firm Packaged Facts in the brand new report U.S. Pet Market Outlook, 2017-2018.

Packaged Facts found that a large percentage of pet product sales growth is online. In addition, merger and acquisition activity since 2016 — including Mars’ purchase of VCA Inc. and other veterinary practice consolidation, PetSmart's acquisition of Chewy.com, and Walmart’s acquisition of Jet.com — all point to a structural remix of the pet market.

“Ecommerce has accelerated its shift from being a Wild West boomtown toward becoming the market’s retail California,” says David Sprinkle, research director, Packaged Facts, who addressed this topic during his presentation at ECRM's recent Pet EPPS (see video below). “As a result brick-and-mortar retailers and manufacturers are scrambling to regroup to avoid losing ground. Retailers are adapting to compete with the internet’s — specifically Amazon’s — ballooning strength in pet product sales. Brand manufacturers are adapting because their entrenched lock on shelf space is increasingly irrelevant for shelf-stable online purchasable products such as dry and canned pet food or cat litter.”

According to Packaged Facts’ 2017 National Pet Owner Survey, 40% of pet owners buy pet products online, up from 37% the previous year, and notably higher than survey results from 2014. Not only are higher numbers of consumers buying pet products online, but consumers are spending more of their pet product dollars online with an ever increasing number of consumers agreeing that they purchase pet products online more than they used to.

So how are traditional retailers competing aside from beefing up their own online presence? For specialty pet superstores such as PetSmart and Petco, one way is capitalizing on their established relationships with customers who know what to expect from the in-store experience and from the services offered there. Packaged Facts emphasizes that a critical differentiator for pet specialty stores are non-medical pet services such as grooming, boarding, and training. Indeed, as premium products have become increasingly available online, services are what make pet specialty stores stand out.

“Looking at trends more broadly, brick-and-mortar retailers have decided that this is the best way to compete with the low costs and convenience of e-commerce – by offering services and experiences you really only can get in-person,” says Sprinkle.

Supermarkets too are fighting to retain their share of the pet market against pet superstores, discount-driven Walmart, and of course online retailers. Supermarkets are increasing the size and scope of their pet care departments, sponsoring pet contests, running promotions with animal rescue groups and even filling pet prescriptions at stores with pharmacies in an effort to lure pet owners into the store.

This year’s edition of Packaged Facts' Pet Market Outlook includes the latest in market sizing and projections, hot new product trends, as well as data from Packaged Facts proprietary Pet Owners Survey. It includes information about mergers and acquisitions, retail channel trends, and pet owner demographics and spending habits.