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April 24, 2019

By: The Pet Business Professor

According to John Gibbons, president of A GPS for Pet Businesses, we have seen that the key demographic factor behind increased pet spending is income. At the same time, the demographic that attracts the most broadscale interest and media attention is the spending by generation. Although we can’t  bundle these two together. The U.S. BLS has again produced a report that combines the two most popular and impactful spending demographic measures – income and age group. To get the required sample size, they combined the data from 2016 and 2017. As you recall, total pet spending averaged over $70B during this period . Unfortunately, due to the complexity of this report, we only have the numbers for total pet, not for the individual industry segments.

Even this “simplified” report requires a rather complex analysis. We have endeavored to keep it as simple as possible to make it easier to visualize and comprehend. The data are segregated into the following groups:

Age Groups

  • 25 to 34 – All Millennials
  • 35 to 44 – 85% Gen Xers; 15% Millennials
  • 45 to 54 – 75% Gen Xers; 25% Boomers
  • 55 to 64 – All Boomers
  • 65 & Over – 6 yrs of Boomers + older groups

Income Groups

  • Under $30K
  • $30K to $49K
  • $50K to $69K
  • $70K to $99K
  • $100K & over

Now let’s get to the spending. This groups pet spending by income group so we can see if age matters:

  • <$30K – This group represents almost 1/3 of all U.S. households and obviously has a financial struggle. The over 45 group has fewer children and is more likely to own a home, so they have more money and space for pets.
  • $30K>49K – This is the only income group to regularly increase spending with age which puts the 65+ group on top. The average retirees’ income is $40K. Once they reach this level, the financial pressure is reduced, and they can increase their focus and spending on their pets.
  • $50>69K – Every age group increases their Pet Spending but there is a big lift in the over 55 groups. Apparently, this is a significant income threshold for them in terms of pet spending. We also see an incredible lift in the spending by the 25 to 34-year-old Millennials. This could relate to that dip in the number of children that we noted earlier.
  • $70>99K – We have reached middle income. The over 55 groups show another big increase and in fact the spending of the 55 to 64-year olds reaches the “stratosphere”. Last year they were the overall #1 pet spending age/income group. This year they are very close. The 25 to 44 group is still feeling strong financial pressure. The spending increase by the 35>44 yr olds slows and spending by the 25>34 yr old Millennials dips slightly – more children?
  • $100K+ – $100K is a magic number. At this level pet spending explodes for all but the 55>64-year-old group. Their number dips to $1100 but is still equal to last year. Undoubtedly the most significant increases came from the 35>54 group. With some relief from financial pressure they focused more on their pets. Although 35>44 won the overall title with $1462, 45>54 was only $18 behind ($1.50 less per month). The only group under $1000 is the 25>34 yr olds. However, their average income is 20% below the others so $800+ spent on pets is still pretty darn good.

Now let’s look at the same data from the age group view:

  • Amazingly enough the oldest group is the most stable. As their income increases, they show strong, consistent growth in pet spending. If they have more money, they spend more on their pets. It’s as simple as that.
  • The four younger groups have different stories to tell but they have one thing in common. At some point they reach a significant threshold income and their pet spending explodes, sometimes doubling or more.
  • The 55 to 64-year-old Boomers and the 25 to 34-year-old Millennials are the only groups that have dips in spending, but they also have two significant lifts. For both, the initial big increase occurs at $50>69K. The Boomers immediately follow up with another substantial jump at $70>99K. The Millennials lose a little ground then jump 70+% at $100K.
  • The 35>54 group is about 80% Gen Xers. They have two slightly different paths but end up in almost the same place. For the 35>44 group, spending consistently grows but flattens out at $70>99K. When income reaches $100K, their spending almost triples and they finish in 1st Place. For the older 45>54 group, spending growth is minimal until they reach $70K and it jumps +77%. However, it almost doubles at $100K putting them in 2nd place overall.
  • Even with a dip by the Boomers, this view certainly reinforces $100K income as a magic level in total pet spending.

The data in this report strongly reinforce the importance of income in pet spending. It also gives evidence that the younger groups, primarily the Gen Xers, are beginning to step up, especially in their higher income segments. The availability of disposable income results in increased pet spending for every age group. Pet spending really explodes when any group’s income meets or exceeds $100K. For the lower income groups, the amount of available disposable income varies due to circumstances. The younger groups have more pressure due to family size and building a career. The 45>64 age groups have less family pressure. The over 65 folks just need to meet some low minimum income levels. One thing is certain for everyone. When disposable income increases, one of the first places that it gets spent is on pets.

See full report here.

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