Trends & ForecastsDecember 2, 2019

Man’s Best Friend Becomes Retail’s Best Customer

By SHAMONTIEL VAUGHN | Contributing Writer‍

[RETHINK Retail] — Fur baby. Dog mama. Dog dad. From photo frames in pet aisles to hashtags on social media, there’s no denying that people love their pets. Even UPS drivers have some competition (on Halloween at least) when it comes to these four-legged friends.

The American Pet Products Association reports that pet product supplies skyrocketed from $17 billion in 1994 to an estimated $75.38 billion in 2019—with dogs at the top of the list. Of course, the profits are not all Halloween costumes and eye-catching outfits for Christmas postcards. While $31.68 billion of pet earnings are from dog food, the other majority are for primary needs: $18.98 billion for veterinary care and $16.44 billion for supplies and over-the-counter medicine.

And the $6.31 billion for “other services” and $1.97 billion for live animal purchases should also be catching pet retailers’ attention.

 

Pets are making a ‘doggone’ impact

Families are evolving. Single-mother households have decreased from 63 percent in 1980 to 51.23 percent in 2019, according to Statista. Meanwhile single-father households have slightly risen from 36 percent in 1980 to 38.58 percent in 2019. Married households have also made some changes. In 1980, 51 percent of households included a married couple. But this year, that number is down to 38.31 percent.

And millennials may be the driving force in the institution of marriage. They’re not only getting married later in life to get to know their significant others better, in hopes of less of a risk of divorce. They’re also holding off on marriage until they’re on better economic footing. (Student debt is one of the largest targets of financial obstacles before heading down the aisle.)

Ironically, although millennials are hesitating on that big family step, Forbes reports that they have bypassed baby boomers as the biggest pet-owning generation (35 percent versus 32 percent). In a Zulily pet survey, 82 percent of millennials view fur babies as “pet parenting” and a way to prepare themselves for an even bigger responsibility—having human babies.

While baby boomers love their pets, the millennial approach is a bit more involved. For example, 70 percent of those surveyed would take a pay cut to work from home so they could be around their pets. And 65 percent would rather go without a cell phone than go without their pets.

 

Pet owners’ buy is bigger than their bite

So with a buying generation that clearly puts their dog first, retailers are taking notice of this new customer base. First things first, they are still paying attention to both the baby boomer generation and millennials.

“Today, the millennial consumer is the largest pet-owning group in the industry,” said Brock Weatherup, the CEO and co-founder of Metamorphosis Partners, a company focused on consumerism and the pet industry. “The boomer, empty nester group was that largest group. [They’re still the] largest spender today, but they’re not the largest number of pet [owners].”

Weatherup, who co-founded Pet Coach before it was acquired by Petco, is using his past experience to help personalize the kinds of products that consumers want and need for their pets. This includes pet travel; helping consumers cater to their pets diagnosed with anxiety; and “activating, engaging and building tools to reach pet parents.”

Technology has been one of the leading factors in making the pet industry more accessible (and profitable) in today’s consumer generation. In the 1840s, the pet marketing industry started with birds. It wasn’t until the 1920s that department stores started embracing the idea of pet supplies. And nowadays, pet owners don’t even have to leave home to buy their pet essentials.

“Obviously Chewy is the biggest story because of the volume of money that they’ve spent in marketing and how aggressive they got over the last [few] years,” Weatherup explained during a RETHINK Retail podcast. “They spent so much money on communicating to the consumer that you could buy pet food online.”

Chewy, which was found in 2011, made $3.5 billion in revenue before the company went public and was purchased by PetSmart in an initial public offering of $8.7 billion.

But according to Weatherup, Walmart is another retailer that shouldn’t be underestimated.

“The biggest factor that I think is having the largest impact over the next several years is actually the power of Walmart and Walmart.com, especially because of their buy online and pickup in store growth,” said Weatherup. “You’ve got a 30-pound bag of dog food or you’ve got a 20-pound bag of clay litter, right? Those things are difficult to make money through the mail system. With somebody like Walmart being able to share and sell those products and have you come pick them up, it’s highly valuable and they can be far more price competitive.”

And for pet-loving consumers who want the best for their animals, finding the best bargain can be an even better way to get closer to their babies — the ones with fur.