Veterinary Spending Report: A GPS for Pet Businesses
By John Gibbons, The Pet Business Professor
Veterinary Services is the second largest segment in the Pet Industry. In recent years, a high inflation rate, over 3.5%, has caused a reduction in Veterinary visits and put spending on a roller coaster ride. In 2016, spending increased 5.6%.
However, in 2017 inflation slowed markedly and consumers responded. Spending reached $20.67B – Up $2.56B (+14.1%) from 2016.
The continued high inflation rate in Veterinary Services has had a major impact on Veterinary spending since the great recession. The “new” value conscious consumer has rebelled against ever increasing prices. They have delayed or eliminated many routine procedures or sought alternative solutions. The spending in this “necessary” segment has become much more dependent on household income. People were visiting the Veterinarian less often, just paying more.
This makes the 7% increase in frequency incredibly important as it indicates a definite change in spending behavior. The why behind this change is a significant decrease in inflation. The CPI for Veterinary Services only increased 2.2% in 2017. This is the lowest rate since they began keeping records back in 1997. In fact, prices in the second half of 2017 only increased 0.7% – incredible. In the first half of 2018, prices are up 1.7%. This seems high but it is actually the same as 2017. We’ll just have to wait and see.