Trends in the Pet Industry

Linda Evans

MBA 592

Dr. Jennifer Edmonds

Agenda

Introduction

Pet Industry Trends

Pet-Related Expenses◦ Food Expenses

◦ Pet Supplies

◦ Veterinary Expenses

Humanization of Pets◦ Pet Insurance

◦ Pet Travel

◦ Funeral Services

Other Accommodations◦ Pet Boarding/Day Care

◦ Pet Grooming

◦ Pet Training

Conclusion

Pet Expenses

Introduction Pet Ownership:

Year Pet Ownership %

1988 56%

2015 65%

1994 2015 2016

$17B $60.3B $62.8B

46% of households own more than 1 pet

Introduction

What is the Pet Industry?

38.3%

23.9%

25.4%

3.4%9.1%

Food

Supplies

Veterinary Care

Animal Purchases

Pet Services

PET INDUSTRY TRENDS

Most commonly owned pet?

Consumer Trends

31% 5%27% 25%

Pet Ownership by Demographic Groups

6%

16%

17%

25%

22%

11%

5%

< 25 25-34

35-44 45-54

55-64 65-74

> 75

Pets as part of the family

Feelings toward pets now

◦ 60% stronger feelings vs. as a child

◦ 67% care more vs. parents

Reasons for these trends

Consumer Trends

2011 2016

Supermarkets to pet retailers

Market share:

Retail Trends

37.2%

23.3%

39.5%

PetSmart

PETCO

Other

Year Revenue

2016 $18.5 billion

2021 $21.6 billion

Estimated Revenue:

PetSmart vs. PETCO Established 1987

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

Puerto Rico)

2016 expected revenue =

$7.2 billion

Offerings:

◦ Consumables

◦ Hard goods

◦ Pets

◦ Services

Established 1965

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

Puerto Rico)

◦ Unleashed

◦ Dr. Foster & Smith

2016 expected revenue =

$4.5 billion

Offerings:

◦ Food

◦ Supplies

◦ Pets

◦ Services

PET-RELATED EXPENSES

Definition

◦ Edible items purchased for pet consumption

◦ Expected expense of $24 billion in 2016

◦ Annual expenses:

Food Expenses

Expense Type Dogs Cats

Food $269 $246

Treats $61 $51

Consumer Trends

◦ Natural Products

◦ Health Conscious

◦ Special Needs

Retail Trends

◦ Places to purchase

Pet Retailers

Grocery Stores/supercenters

Veterinarian offices

Online

◦ Expanded food selection

Food Expenses

Definition◦ Necessary vs. Luxury Items

Consumer Trends◦ Environmentally friendly

◦ Demand for new products Clothing

Furniture

Retail Trends◦ Broad offerings

◦ Medication

Pet Supplies

Definition: ◦ Visits to the veterinarian for medical services

◦ Average Expense per year:

Consumer Trends◦ Advanced health care

◦ Decreases in visits to the veterinarian

Retail Trends◦ Vet locations/prescriptions in retail

◦ Specialized Training

Veterinary Expenses

Vet Expense Dogs Cats

Routine Visits $235 $239

Surgical Visits $551 $398

Veterinary Expenses

HUMANIZATION OF PETS

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 Insurance

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

Pet Travel

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

Funeral Pet Services

OTHER ACCOMMODATIONS

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 Boarding & Day Care

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

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

Pet Training

Summary

◦ Pets are part of the family

◦ Expression of emotions

◦ Busy schedules

Conclusion

Opportunities

◦ Millennial spending

power

◦ Pet travel

◦ Restaurants

◦ Colleges

◦ Technology

Challenges

◦ Online competition

◦ Recessionary

periods

Opportunities Challenges

Effect on business

Questions?

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