Pet Age Staff //January 10, 2019//
By: The Pet Business Professor
According to John Gibbons, president of A GPS for Pet Businesses, pet products spending was $49.69 billion in 2017.
We looked at the Total Pet Spending for 2017 and its key demographic sources. Now we’ll start drilling down into the data. Ultimately, we will look at each individual segment but the first stop in our journey of discovery will be Pet Products – Pet Food and Supplies. This classification accounted for $49.69B (64.4%) of the $77.13 in Total Pet spending in 2017. This was up $7.35B (+17.4%) from the $42.34B that was spent in 2016. We have seen that this lift was driven by the market expansion of premium foods along with deflated prices in Supplies. Value was the key driver. Food and Supplies are the industry segments that are most familiar to consumers as they are stocked in over 200,000 U.S. retail outlets, plus the internet. Every week over 21,000,000 U.S. households buy food and/or treats for their pet children.
Pet Food spending turned around in 2017, +$4.61B, while Supplies built on a trend that began in the second half of 2016 to increase spending by $2.74B. We’ll combine the data and see where the bulk of Pet Products spending comes from.
We will follow the same methodology that we used in our Total Pet analysis. First, we will look at Pet Products Spending in terms of the same 10 demographic category groups that were responsible for 60+% of Total Pet spending. A couple fall below the 60% mark for Products, but they are very close. Then we will look for the best and worst performing segments in each category and finally, the segments that generated the biggest dollar gains or losses in 2017.
Although the biggest spending groups are the same for Pet Products as for Total Pet, there are subtle differences in market share and performance. Money still matters most but how you earn it matters less. Pet Products Spending is definitely becoming more diverse across occupations, # of earners and education levels.
Spending on Pet Products has been on a roller coaster ride since 2015. Many consumers upgraded to Super Premium Food and cut back on Supplies in 2015. In 2016 they value shopped for Food and Spent some of the saved money on Supplies. In 2017 there was increased availability and value in both segments. Consumers recognized the opportunity and spent $7B more.
In 2017, on the surface, big changes weren’t immediately apparent. The demographic groups responsible for most of Pet Products Spending were the same as those in 2016. However, there were changes in their spending share rankings. Marriage and Everyday Workers moved up while the number of Earners and Higher Education became less important. These were the first indications of a movement towards more spending equality in certain demographic categories. In terms of their performance, Income, Homeownership and Marriage still came out on top. However, there were now 5 groups with 120+% performance as Age Group entered the club. Total Pet has the same 5, Plus Higher Education.
When we looked at the performance of individual segments, changes started to become more apparent. Two of the new top performers were notable – 1 Earner – 2+CU’s and Rural Areas. However, when we looked at the biggest gainers in $, that’s when the changes really stood out. Many winners – Blue-Collar, 1 Earner – 2+CU’s, HS Grads w/some College, $40>69K and Rural are real evidence that spending is becoming more demographically balanced across America, especially in income, occupation and education. There was also a big spending lift in less densely populated areas.
This data raises another issue. Spending money on Food and Supplies is an absolute necessity in Pet Parenting. Obviously, your pet needs food every day so you must buy it regularly and often. Although Supply items are often more discretionary in nature, there are plenty of supplies that are necessities and many more that improve the quality of life for Pets and Pet Parents. Because of this necessity, the spending behavior on Pet Products can be an important reflection of the percentage of pet ownership in a demographic category. The APPA reported that the percentage of Pet Parenting H/H’s rose from 65% to 68% in 2017. We originally attributed the food spending increase to upgrades. Perhaps there were 2 trends going on. The Spending data provides supporting evidence for both an upgrade and new pet ownership. It also helps to identify the participants, or should I say, new Pet Parents. The Food Segment analysis should be interesting.
See the full report here.