Trends in the Pet Industry

Linda Evans
MBA 592
Dr. Jennifer Edmonds
 Agenda
 Introduction  Other Accommodations
◦ Pet Boarding/Day Care
 Pet Industry Trends ◦ Pet Grooming
◦ Pet Training
 Pet-Related Expenses
◦ Food Expenses
 Conclusion
◦ Pet Supplies
◦ Veterinary Expenses

 Humanization of Pets
◦ Pet Insurance
◦ Pet Travel
◦ Funeral Services
 Introduction
 Pet Ownership:
Year Pet Ownership %
1988 56%
2015 65%

 46% of households own more than 1 pet

 Pet Expenses
1994 2015 2016
$17B $60.3B $62.8B
 Introduction
 What is the Pet Industry?
9.1%
3.4% Food

Supplies
38.3%
25.4% Veterinary Care

Animal Purchases
23.9%
Pet Services
PET INDUSTRY TRENDS
 Consumer Trends
 Most commonly owned pet?

31% 27% 25% 5%

 Pet Ownership by Demographic Groups
5% 6%
11%
16% < 25 25-34
35-44 45-54
22% 55-64 65-74
17%
> 75
25%
 Consumer Trends
 Pets as part of the family

2011 2016

 Feelings toward pets now

◦ 60% stronger feelings vs. as a child
◦ 67% care more vs. parents

 Reasons for these trends

 Retail Trends
 Supermarkets to pet retailers
 Market share:

PetSmart

39.5% 37.2%
PETCO

23.3% Other

 Estimated Revenue:
Year Revenue
2016 $18.5 billion
2021 $21.6 billion
 PetSmart vs. PETCO
 Established 1987  Established 1965

 1,400 Stores (U.S., Canada,  1,400 Stores (U.S., Mexico,

Puerto Rico) Puerto Rico)
◦ Unleashed
◦ Dr. Foster & Smith

 2016 expected revenue =  2016 expected revenue =

$7.2 billion $4.5 billion

 Offerings:  Offerings:
◦ Consumables ◦ Food
◦ Hard goods ◦ Supplies
◦ Pets ◦ Pets
◦ Services ◦ Services
PET-RELATED
EXPENSES
 Food Expenses
 Definition
◦ Edible items purchased for pet consumption

◦ Expected expense of $24 billion in 2016

◦ Annual expenses:
Expense Type Dogs Cats
Food $269 $246
Treats $61 $51
 Food Expenses
 Consumer Trends
◦ Natural Products
◦ Health Conscious
◦ Special Needs

 Retail Trends
◦ Places to purchase
 Pet Retailers
 Grocery Stores/supercenters
 Veterinarian offices
 Online
◦ Expanded food selection
 Pet Supplies
 Definition
◦ Necessary vs. Luxury Items

 Consumer Trends
◦ Environmentally friendly
◦ Demand for new products
 Clothing
 Furniture

 Retail Trends
◦ Broad offerings
◦ Medication
 Veterinary Expenses
 Definition:
◦ Visits to the veterinarian for medical services
◦ Average Expense per year:
Vet Expense Dogs Cats
Routine Visits $235 $239
Surgical Visits $551 $398

 Consumer Trends
◦ Advanced health care
◦ Decreases in visits to the veterinarian

 Retail Trends
◦ Vet locations/prescriptions in retail
◦ Specialized Training
Veterinary Expenses
HUMANIZATION OF PETS
 Pet Insurance
 Definition
◦ Similar to human insurance: deductibles, co-
pays, etc.

◦ Differences
 No network of veterinarians
 Pay first, reimbursed later

◦ Other:
 Waiting periods
 Pre-existing conditions
 Pet Insurance
 Consumer Trends
◦ High Vet Expenses leads to demand for
insurance
 Average pet claim: $547
 80% of pets will experience a medical emergency
◦ Pets considered family

 Retail Trends
◦ 10 U.S. Insurance Companies
◦ Employer offered pet insurance
 Pet Travel
 Definition
◦ Expenses related to transporting a pet from
one location to another

 Consumer Trends
◦ Willingness to travel after a pet
◦ Taking pets on the road
◦ Demographics

 Retail Trends
◦ Airplanes
◦ Hotels
 Funeral Pet Services
 Definition
◦ Services performed after a pet’s passing

 Consumer Trends
◦ Humanization of pets
◦ Emotional expression

 Retail Trends
◦ Pet memorial offerings at funeral homes
◦ Keepsake offerings
OTHER
ACCOMMODATIONS
 Pet Boarding & Day Care
 Definition
◦ Locations that care for
pets while owners are away

 Consumer Trends
◦ Pet humanization
◦ Effects of socialization

 Retail Trends
◦ Local Offerings
 Assessments/applications
◦ Pet Store Offerings
 Upgrade options
 Pet Grooming
 Definition
◦ Products/services related to cleaning a pet
◦ Annual Expenses:
 Dogs = $83
 Cats = $33

 Consumer Trends
◦ Humanization – Health & Hygiene concerns
◦ Awareness of ingredients
◦ Demographics on grooming

 Retail Trends
◦ Products to use at home
◦ Grooming at pet stores
 Expanded offerings
 Pet Training
 Definition
◦ Teaching skills for obedience and safety

 Consumer Trends
◦ Busy schedules
◦ Humanization/Proper behavior
◦ Increase in Training Careers

 Retail Trends
◦ Training classes
 Different Levels
◦ One-on-one training options
 Conclusion
 Summary
◦ Pets are part of the family
◦ Expression of emotions
◦ Busy schedules

 Opportunities
Opportunities  Challenges
Challenges
◦ Millennial spending ◦ Online competition
power ◦ Recessionary
◦ Pet travel periods
◦ Restaurants
◦ Colleges
◦ Technology
 Effect on business
Questions?
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