Monday, 17 December 2018
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The Pet Retail Market Is Hot And Getting Hotter By The Day

(Photo by Getty Images)

Everybody seems to “Walkin’ the Dog,” to borrow the line from the rhythm-and-blues classic. There are now more pet-owning households then there are those with children, some 84.6 million strong as compared with 52.8 million with kids, or 41.4% according to Statista.

Today nearly 70% of all U.S. households own a pet, with dogs by far the most popular pet, according to the American Pet Products Association. Some 60.2 million households own dogs, compared with 47.1 million that own cats. (Note: households that own both dogs and cats are counted in both groups.)

And for those pet-owning households, pets have really become full-fledged members of the family. According to another APPA survey, 90% of the 1,200 pet owners surveyed said, “Pets are family.” Admittedly that was a self-selected group to survey, but you get the idea.

People who own pets take their responsibilities as pet parents very seriously. That adds up to quite a lot of money, some $72.1 billion in the U.S. this year, up 8.1% from 2016. Pet food gets the lion’s share of this spending, or about 42% of the total.

But increasingly everything that people need for themselves, they also need for their pets, so they are willing to splurge on luxuries like beds, toys, clothing, travel accessories, gifts and grooming services, along with the necessities including collars, leashes, bowls, medicine and veterinary services.

Pet health insurance too is booming. Though small today, only about 2.1 million pets are insured or 2% of the 89.7 million dogs owned, the North American Pet Insurance Association reports the number of pet insurance policies written grew 23% from 2016 to 2017.

While the pet-products industry has tracked modest ~4% growth over the past several years, my expectation is it will really start on a roll over the next couple of years. Why? Because of Millennials.

Millennials are the #1 pet-owning generation

Millennials have just overtaken the aging baby boomers as the biggest pet-owning generation . Some 35% of pet owners are millennials, as compared with 32% of boomers. Millennials are on their way up in terms of income and spending, while boomers are trending down.

But its not just millennial’s numbers and future spending power that will give a boost to the pet industry, it is their overwhelming passion for their pets.

A recent survey among millennial pet owners conducted by Zulily, the online retailer that is part of Qurate Retail Group that also owns HSN and QVC, uncovered some eye-opening findings that show just how devoted millennials are to their pets.

The e-commerce company Zulily was founded in 2009 by former Blue Nile executives Mark Vadon and Darrell Cavens with an initial focus on children’s clothing and merchandise aimed at young “tech-savvy” mothers.

Early success led the company to expand across the range of products to meet all family member’s needs, which with 6.4 million active customers includes a predicted 4.5 million pet owners. 

Naturally Zulily’s family focus extends to pets. “Our customers are purchasing pet products year-round and love to involve their pets in every aspect of their lives, from birthdays to walks in the park to even thematic kitchen and home décor – since they are seen as an extension and beloved member of the family,” explains Kerry Gibson Morris, Zulily VP of merchandising, noting that the company currently offers some 250 brands for pets. 

Pets are family

The Zulily pet survey proved that millennials treat their pets like family — or even better — with 42% of pet owners saying, if given a choice, they would rather snuggle up with their pets than their romantic partner.

Pet parentZulily

And 82% view pet parenting as preparation for having a baby. Since this generation is delaying child-bearing unlike any before, that means they will have more extended time and money to pamper their pets before babies come.

One of my boomer friends has a pet that suffers terrible separation anxiety when she is away. For millennial pet owners, it is the reverse. They suffer anxiety when separated from their pets.

Over 80% of millennials say they frequently worry about their pets when they are apart even when running short errands. Some 70% would be willing to take a pay cut if they could bring their pet to work every day. And 65% say being separated from their pet for a week would be worse that doing without their cell phones.

Pets deserve treats

Since pets are millennial’s four-legged children, they deserve all the same treatment other family members get, including gifts. More than half (51%) of millennials buy gifts for their pets once a month or more. Holidays, birthdays or just any day, pets deserve a treat.

Speaking of gifts, pet-parents also like to purchase pet-themed items for themselves. Some 83% of millennials buy cat or dog-related merchandise, including t-shirts and clothing with pet images, mugs and cups, door signs, welcome mats and calendars.

And besides pet-themed clothing, Zulily reports that millennials are going even further. They are buying clothing that doubles as carriers for their pets, such as pet-pouch hoodies and slings. Zulily reports a 622% increase in sales of pet hoodies this year on its site and says it often sells out of these hoodies almost immediately.

The well-dressed pet

Pet-pouch hoodieZulily

Buying clothes for their pets is increasingly popular, with 60% of millennials saying they are likely to buy sweaters, coats, dresses and other fashion for their pets. It is an especially strong category for Zulily, which reports 33% YoY growth in pet products and accessories on its site.

With Halloween fast approaching, pets are getting into the trick-or-treat action as well, with pet costume sales up over 50% this year at Zulily.

Group costumes are this year’s hot costuming trend where groups of friends, families and their pets dress us as characters from favorite movies or stories, like Harry Potter or Star Wars. There’s increasing popularity of group costumes whether it’s friends or families – there’s a sense of camaraderie and inclusiveness,” Zulily’s Morris shares. We’ve seen an increase in variety of pet costumes so that your furry friend can be everything from Darth Vadar to an Ewok, to a walking panda or pirate, to colorful flowers, elephants, frogs, crabs, cows and more.

Star Wars Ewok Pet CostumeZulily

Of the more than 175 million Americans that will celebrate Halloween this year, nearly 20% will dress their pets for trick-or-treat, according to the National Retail Federation.

“One of the biggest trends this year is the growth of spending on pet costumes ,” said Phil Rist with Prosper Insights which conducted the Halloween study for NRF. “Out of the 31.3 million Americans planning to dress their pets in costumes, millennials (25-34) are most likely to dress up their pets, the highest we have seen in the history of our surveys.”

Millennials looking for expertise in pet purchases

When it comes to buying items for their precious pups (and cats), millennials favor retailers that understand their needs. Nearly two in three millennials (63%) find expertise is lacking in the big-box pet stores, grocery stores and mass retailers.

“Younger shoppers are quite discerning when it comes to the products they consider good enough for their pets,” said Nathan Richter, senior partner at Wakefield Research which conducted the Zulily study.

“This is not the generation looking for one-stop-shop convenience, so retailers need to be sure they have an optimal mix of high-quality and specialty products,” Richter continued.

On the other hand, as a digital-native generation, millennials do plenty of research online to find the best products. Some 77% say online retailers increasingly fill the bill for pet products like toys, accessories and food, while they favor in-store shopping for treats, bedding and clothing.

Reading the tea leaves, notably the online shift in pet food sales which has grown its share to 21%, Nielsen just announced it acquired GfK’s Pet Specialty Point-of-Sale (POS) business in order to support a growing range to pet-centric businesses in the U.S. This acquisition doubles Nielsen’s coverage of the pet specialty segment by adding neighborhood pet specialty, as well as veterinary clinics to its existing base of grocery stores and mass merchandisers.

“We are excited to bring our holistic view of the pet care landscape to the U.S. retail and manufacturing community,” said John Tavolieri, president, U.S. FMCG and retail at Nielsen in a statement.“We look forward to continuing to grow our capabilities to provide a more localized and omnichannel pet measurement view.”

Luxuries for Rover and Lulu

Besides Zulily which has found an eager audience for pet products, other companies are tapping into the “pets are family” trend with luxuries to indulge Rover or Lulu, as well as luxuries for pet owners to make their lives with their pets more fulfilling.

For the anxiety-prone millennial pet owners, Dogtopia offers upscale doggie daycare, boarding and spa facilities in over 75 retail locations across the country, with its franchise model based on retail center locations.

PetSafe has a growing range of high-tech pet products to make pets and their pet parents happier and safer, including a Smart Feed automatic feeder, electronic smart door, self-cleaning litter box, training collars and electronic pet fences. PetSafe is a division of Radio Systems Corporation, which also offers the Invisible Fence brand.

And Wild One, just introduced a line of comfortable, stylish and durable pet accessories including collars, leashes, harnesses, carriers, beds and bowls. The materials are chosen for functionality, as well as being less susceptible to chewing.

Launching first online, Wild One will open a pop-up shop in NYC’s Nolita neighborhood this coming Saturday, October 20 to continue through January 2019.

Lots of barking, no bites

Market research firm Euromonitor said the pet products industry reached $110 billion in global sales in 2017, with the U.S. the trendsetter and largest market by far.

“Premiumization” is the trend driving growth in specialty products and brands across the wide range of items for pets, most especially for food.

“Millennials have emerged as a major driver for growth in the US, especially in dog food, as this demographic is more likely than any other to view their dog as a member of their family,” Euromonitor states. “Consequently, this group is trading up to foods that match their own dietary trends, including premium and less processed pet food.”

But while this premiumization trend applies most especially to food, it cuts across all other categories as well. Millennials rate the things they buy for their pets against the same yardstick they use to buy things for themselves. Only the best will do for Rover or Lulu.

Note: This article was updated with news from Nielsen which was announced after its original posting. 

Source: https://www.forbes.com/sites/pamdanziger/2018/10/18/the-pet-retail-market-is-hot-and-getting-hotter-by-the-day/

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