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The pet adoption boom went bust: As the number of new pet owners normalizes, Chewy and Petco are looking to healthcare and services to drive growth.

Retailers turn to returnless refunds to cut costs and boost loyalty: Amazon, Walmart, and Chewy are among the companies that rely on flexible returns policies to keep shoppers in the fold.

Shoppers are least likely to trade down in the baby, pet care, and beauty categories: On the surface that鈥檚 good news for Chewy and P&G, but consumers are cutting back in other ways.

The company has an average price advantage of 14% over rivals like Target, Best Buy, Chewy, and Nordstrom. Walmart came closest to matching Amazon鈥檚 prices with just a 5% price difference on identical items鈥攁lthough that was slightly higher than last year鈥檚 4% gap.

Inflation has hit pet owners hard: Petco and Chewy recognize that many of their customers are pulling back on discretionary spending, which could hinder growth in fiscal 2023.

Sometimes two is better than one. Especially when trying to capture consumer attention in a world of seemingly endless options. Here are four retail partnerships we think could occur in 2024, ranked from most likely to happen (e.g., Pinterest and Ikea) to least likely (e.g., Chewy and Blue Apron), and why we think they make sense.

Despite bankruptcy rumors, Carvana will be the fastest-growing retail ecommerce company in the US both this year and next year, according to our forecast. In second place this year is Chewy, signaling the strength of category-focused retailers.

The heartiest performers鈥擝est Buy, Costco, Chewy, Lowe鈥檚, and Etsy鈥攚ill just hold on to their low-single-digit ecommerce market shares. And others鈥攊ncluding Apple, Target, The Home Depot, and Macy鈥檚鈥攚ill track very slight declines. Temu, TikTok Shop, and Shein are shaking up the agenda.

Ecommerce has become a dominant sales channel in the pet industry, fueled by convenience and a broad range of online offerings. By 2028, nearly half of pet products sales will come from ecommerce.

Despite the retailer鈥檚 resounding lead, over 10 companies surpassed the 1 billion impressions mark鈥攊ncluding specialized players like Ulta, Chewy, and Home Depot鈥攕howcasing the scale that these networks can offer to brands, as well as the opportunity to attract advertisers outside their respective niches.

But pet retailer Chewy will also have a decent showing this year. In 2023, Chewy will be the second fastest growing ecommerce company after Carvana. Its online sales growth of 11.0% year over year in 2023 will exceed the industry average of 10%. But momentum will soon fade after years of strong growth. In 2024, we expect Chewy will see its first year of single-digit sales growth.

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Among the 16 major ecommerce retailers that we track, only Walmart and Chewy will perform better than overall US ecommerce this year, and seven will see their sales shrink. Most of these 16 retailers will lose some of their share of total retail ecommerce sales, with Walmart standing out as the only notable exception.

The D2C play: Chewy, one of the fastest-growing large ecommerce companies in the US, will grow 11.0% this year. Other D2C brands like Bark and The Farmer鈥檚 Dog have gained popularity. 鈥淭hese smaller brands can really find their place by doing a lot of personalization, which I think works much better online,鈥� said Davidkhanian.

Chewy grew its net sales by 12.8% year over year (YoY) to $2.43 billion. Petco experienced its 15th consecutive quarter of comparable sales growth, increasing net revenues by 3.2% YoY to $1.48 billion. Smucker鈥檚 pet food sales grew 13% YoY in its quarter ending July 31, 2022, scoring points with customers seeking value.

While grocery and consumer packaged goods remain the core of retail media鈥檚 growth, many specialty retailers have been jumping on the bandwagon, including Best Buy and Chewy. The channel鈥檚 growing popularity has also produced retail media partnerships between brands, publishers, and media platforms.

While Amazon, Walmart, Apple, and eBay will remain the top three US retail ecommerce companies by sales this year, more category-driven etailers like Carvana and Chewy are moving up the ranks. Carvana has been up and down in recent years, according to our 鈥淭op 15 US Ecommerce Companies Forecast鈥� report. In the years prior to the pandemic, Carvana鈥檚 sales grew by triple digits.

鈥淲almart is going to lean even more into the pet industry and forge a partnership with 颁丑别飞测,鈥� said our analyst Becky Schilling. 鈥淲almart opened their veterinary and grooming space in a store outside of Atlanta last September. And when it comes to market share, we know that people spend a lot on their pets.". Our forecast expects pet product sales to grow 6.1% to $83.28 billion.

Lessons from Chewy, Target, and Alo Yoga on resonating with customers in 2024. Methodology: Data is from the October 2023 CivicScience as cited in company blog. 4,440 US adults ages 18+ were surveyed online during August 18-23, 2023. Data is weighted according to the US Census.

Zak, are you investing in Walmart partnering with Chewy? Zak Stambor:. Yeah, I think it's a great idea. As Walmart expands its store count, it's leaning into larger stores.

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But the category isn鈥檛 immune to economic pressure as several pet-related retailers, including Petco and Chewy, recently noted a growing share of customers trading down to lower-priced foods.