Cheek to Jowl with Pets

U.S. retail sales of pet supplies totaled $11.1 billion in 2011, up 2.0% over 2010.  From a high of 5% in 2007, annual sales gains slowed year to year during the economic recession of 2008-2009 and its aftermath.

Nonetheless, a number of market factors point to a return to healthier growth.  These include the industry’s success in playing up the human-animal bond to drive higher-ticket, sales of premium products, the strong market presence of upper-income households willing and able to spend heavily on pet supplies, and the growing population of pets with specialized health needs, especially senior and overweight dogs and cats.  Another good sign is the ongoing expansion of the pet specialty channel, which indicates increasing interest in all things pet, including at the ever-important superpremium end of the spending spectru

Many of the trendsetting items entering the pet supplies product stream are markedly parallel with human goods, appealing to pet owner as much as pet.  With more Americans treating their pets like members of the family, there’s no question that consumers are receptive to pet products that are “human-style,” whether by virtue of their brand names, benefits claims, or packaging presentations. 

In this vein, pet owners show a high degree of interest in human cross-over brands, which can bring instant confidence and familiarity into pet categories in which there is relatively little pet brand equity, including pet beds (Simmons Beautyrest, Orvis), cleaning products (Arm & Hammer, Bionaire, Febreze), grooming products (Conair, Wahl), supplements (GNC, Standard Process, Bach), travel/containment products (Jeep, Coleman), and apparel (Burberry, L.L. Bean).  A concomitant trend is the increased market involvement of makers of human products, a trend Packaged Facts expects to continue to gain momentum in the years ahead—with brands including Bissell, Conair, Febreze (Procter & Gamble), and Wahl making strong showings at the 2012 Global Pet Expo.

The humanization trend is always apparent in the new products featured at the Global Pet Expo. But particularly evident this year were human-style items that looked exactly like products for toddlers, from car seats and strollers, to safety gates and “cribs,” to rubber and plastic toys, with examples including Pet Gear strollers, Carlson pet containment devices, and Simply Fido pet toys.  Such products give pet owners plenty of human-style design options in the products they choose to integrate into their lifestyles and home décor—or rather, these human-style options make sense because pets are so thoroughly integrated into our lives and our homes.

And what are lifestyles without some celebrity cachet?  The pet market continues to register increased celebrity involvement, with names such as Martha Stewart and Ellen DeGeneres now cheek-to-jowl with brands such as Purina or Petmate.   Will it be long before Olympic champions vie to get their face on a box of Milk-Bone Trail Mix?

"Salonistas" Drive Up Sales in DIY Nail Care Market

Conventional wisdom might suppose an inverse correlation between the sales of do-it-yourself (DIY) nail care products and the use of nail salon services.  In fact, as the mass-market nail care category grew 25% between 2009 and 2010, the market for nail salon services did decline.  According to Nails Magazine Big Book 2011-2012, the nail salon services market fell nearly 5% in 2009, and was still below its 2008 level in 2010.

However, all signs now point to a return to popularity of nail salon services.  According to Experian Simmons National Consumer Study data cited in our recent report on The Nail Care Market in the U.S., an improving economic picture in 2011 resulted in a sharp uptick in the number of women who are frequently professional nail care services.  In 2011 the number of women having two or more manicures in a six-month period (defined as “salonistas” in our report) increased from 16.3 million to 18.1 million, or 11.3%. 

The question facing nail care product marketers in 2012 is whether DIY nail care sales will decline as women return to salons to get professional manicures and pedicures.

Paradoxically, the data strongly suggest that the reverse will be true: the more women go to salons for manicures, the more they buy and use DIY nail care products.

·         One in four (25%) salonistas used do-it-yourself (DIY) nail care products five times or more in the past 30 days, compared to only 15% of other women.  Salonistas are nearly twice as likely as other women to have used DIY nail care products two to four times during this period (39% vs. 22%).

·       Packaged Facts estimates that  the monthly number of DIY uses of nail care increased by 13.4 million in 2011.  Nearly half of this growth (46%) was due to the increase of 6.2 million DIY nail care product uses by salonistas.

Salonistas are at the core of the nailcentric fashion culture that is driving nail care market growth.  Rather than siphoning off dollar sales of DIY nail care products, the post-recession boom in professional manicure and pedicure services will serve to fan the flames of the mass-market nail care market.

Prepaid Cards as a Mutually Agreeable Separation

Big banks are not necessarily beloved institutions, and recessions have a way of  driving them near to the bottom of many consumers' lists. Throw on some questionably timed decisions to add a usage fee onto debit cards—a banking service consumers expect to receive at no cost—and you can kindle a bonfire of indignation. More than ever, consumers are apt “shop and drop” their consumer banking services.  And for consumers who don’t like banks—and who can do without some of the services banks traditionally provide—a prepaid card could fit the bill perfectly.

This may be just fine for many of our largest financial institutions, which are poised to conserve banking margins while continuing to generate revenue with industry-leading prepaid card products. As noted in Packaged Facts' July 2012 Prepaid and Gift Card report, JPMorgan Chase is moving to shed what it determines are lower-profit checking accountholders, many of whom newly fit that description thanks to regulation limiting debit interchange and overdraft fee revenue. In the wings, ready to take flight this summer, is the Chase Liquid prepaid card.   Chase Liquid is positioned to redirect at least a portion of these lower-profit consumer banking customers onto a game-changing consumer prepaid product: very well designed, simple to understand and  use, and yet one that promises solid profits.

With prepaid products like this promising debit interchange rates untouched by the Durbin Amendment, strong cost containment, solid margins on consumers major banks may deem unprofitable, and the means to earn income from the unbanked in the bargain, what’s not to like for a major bank? While we view increased prepaid regulation as a near certainty, we believe Chase Liquid will demonstrate that substantial headroom exists for consumer general-purpose reloadable (GPR) prepaid products providing transparency, a strong product feature mix, simplicity, and reasonable fee structures. We see Chase’s foray as an opening salvo among major banks: with American Express also pushing aggressively into the consumer GPR prepaid field, it’s only a matter of time before other major banks (such as Citi, Bank of America, Wells Fargo and US Bank—none of which have a consumer GPR prepaid presence) follow suit.