From Amazon.com to specialty pet stores to pop-up pet vaccination clinics and dog grooming vans, the nearly $100 billion U.S. pet industry has never been bigger, more diverse or more upended. Like everyone else, independent pet store operators have had to roll with the punches. But for the roughly 6,200 indies in the United States, the novel coronavirus pandemic has been just one more challenge in a series of game-changers including the 1980s explosion onto the retail scene of big-box mass merchandisers and pet specialty chains, and the 2000s emergence of e-giants and e-nichers intent on siphoning pet dollars from brick-and-mortar. Long gone are the days when—aside from mass-market national brand pet foods, treats and cat litter, and “Hartz orange” for other pet supplies—independent pet shops had much of the business to themselves.
All four sectors of the U.S. pet industry—pet food, non-food pet supplies, veterinary services and non-medical pet services—are being variously challenged by the pandemic, the economic downdraft of which may continue for years. And the fortunes of the pet industry are intertwined across sectors, with the business operations of key marketers and retailers increasingly spanning not just brick-and-mortar and e-commerce, but also products and services, medical and non-medical, and foods and non-foods. Even so, from the perspective of overall market growth, the industry continues to demonstrate remarkable endurance.
Overview of Sales Performance
Packaged Facts projects combined sales of products and services to grow by nearly 3 percent (compared with the pre-pandemic prediction of 5 percent) in 2020 to $97.5 billion. This aggregate growth in 2020 reflects very solid gains for pet food and treat products (up 7 percent) and non-food pet supplies (up 9 percent), partially offset by modest gains for vet services (up 3 percent) and significant declines for non-medical pet services (down 25 percent).
In mapping sales performance, moreover, the brick-and-mortar versus online divide is at least as important as products versus services. For physical retailers across the board, the online onslaught has meant a dwindling share of pet product sales: from 2015 to 2019, the brick-and-mortar (mass market and pet specialty combined) portion dipped from 93 percent to 78 percent, while the online share more than tripled, from 7 percent to 22 percent. But no retailer type has been harder hit than independent pet stores, which often lack the resources to play defense by wielding multifaceted omnichannel (integrated brick-and-mortar/e-tail) strategies like big-box retailers are doing.
The past five years have been especially worrisome on this score. From 2015 to 2019, independents saw their share of pet product sales cut in half, from 8 percent to 4 percent. And 2020 will likely see another share point slip away as the pandemic helps to boost the e-commerce share another five percentage points.
For independent pet store owners, that’s the bad news. The good news is that, given the challenges of the past few decades and the past few years especially, pet shops have held up remarkably well. As of 2019, independents were chalking up pet product sales to the tune of almost $2.5 billion. Moreover, despite the aggressive expansion of PetSmart, Petco, Pet Supplies Plus and other investor-driven chains, indies still account for close to half of the pet stores in operation. Like all physical retailers confronting the exigencies of the pandemic, indies have had to scramble to retain the business of socially distancing shoppers by implementing “touchless” services such as contactless payment, curbside pickup and home delivery. But the pandemic has likewise made it clear that U.S. shoppers are not about to give up the hands-on shopping experience, especially for high-dollar occasions such as new pet adoption. In the wake of the national health crisis, they are even likely to view their favorite stores more affectionately than ever, especially when local. Nielsen modelling for post-COVID consumer behavior projects that the changes in what, where and how consumers shop will include more local reliance and social solidarity.
The Pet Population Boomlet
The coronavirus-triggered phenomenon most responsible for the pet market’s enviable performance for 2020 and current competitive opportunities is a pet population boomlet created by pet adoption. New pet owners are big spenders on all types of pet supplies in tandem with their new pet acquisition, while also benefiting the market into the future through the steady repeat purchase of pet food, litter and other items in need of frequent replenishment. The uptick in pet adoption has been largely a function of pet owners and their children spending more time at home, and includes first-time pet owners as well as those expanding their pet families with an additional dog or cat or new type of pet altogether.
In Packaged Facts’ April/May 2020 Survey of Pet Owners, 10 percent of cat owners and 9 percent of dog owners reported having adopted a pet specifically because of the pandemic. In Packaged Facts’ August 2020 Survey of Pet Owners, the percentage of pet owners with a dog rose from 73 percent in 2019 to 80 percent in 2020, while the comparable cat numbers rose from 55 percent to 62 percent, and the share of pet owners with pets other than dogs or cats nearly doubled, from 18 percent to 32 percent. Some of the most encouraging numbers in the August survey indicate that approximately two-thirds (63-69 percent) of the pet owners who had acquired a pet in the past 12 months were not just replacing a pet, such as a pet that had died recently, but instead adding on.
As of August 2020, Packaged Facts pet population modeling signals a potential 4 percent growth in the pet ownership household base in 2020, bringing the total number of pet-owning households in the U.S. to nearly 71 million, or 56 percent of households overall.
Along with premiumization (trading pet owners up to higher-cost products and services) driven by the now pervasive “pets as family” mentality, growth in the pet population is essential to market growth—and in some ways more substantively so, in that it spurs actual volume sales as opposed to just dollar sales resulting from higher price points. The effect of this pet population boomlet should be ongoing pet market vitality despite the negative economic impacts of the pandemic.
Other Pandemic-Related Silver Linings
Albeit on a smaller scale than the sales assist created by the pet population boomlet, downturns in some revenue areas are being offset by surges in others. The biggest drag on overall market performance has been from non-medical pet services. Stuck-at-home pet owners have more time and inclination to perform basic pet care tasks that would otherwise be outsourced, such as walking and grooming, and the travel slump puts an especially heavy crimp on pet boarding. Picking up some of the slack, however, have been increased sales of pet products stemming from a number of pandemic-related purchasing behaviors:
• Do-it-yourself (DIY) pet care has posted at least temporary surges due to pet owners delaying non-essential veterinary visits and non-medical pet services, benefiting sales of health-and-wellness-related products across virtually every category, including pet medications and supplements as well as DIY pet grooming supplies.
• For many pet owners sheltering at home, greater engagement with pets has become a welcome way to pass the time and stay healthy, especially while sports and visits to the gym are on pause for many, driving up sales of human/pet interactive toys and outdoor items such as leashes, collars, flying discs and ball launchers.
• Home-bound pet owners with kids underfoot have been challenged to find ways to keep their children occupied and happy. Pets—including new pets and new types of pets—and the associated responsibilities and play times fit the bill perfectly.
• For pet owners working from home, the establishment of new work hours and areas has spurred demand for items such as pet gates, crates and electronic fencing, as well as toys and behavior-activated treat dispensers to keep pets self-engaged.
• Pet owners able to transition to working from home—often white collar and e-connected—have found themselves saving money on commuting, work apparel and dry cleaning, away-from-home meals and premium-priced coffees, and other peripheral workday expenses. Some of these dollars are being redirected into their more pet-centric new normal lifestyles.
• Pet owners unable to socialize with friends and family have turned to their pets even more than usual for companionship and comfort, developing deeper bonds that make them more likely to spend generously on home-based pet health, recreation and pampering.
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