Trends in the Pet Industry - MBA Thesis

Trends in the Pet Industry
Linda Evans
MBA 592
Dr. Jennifer Edmonds

Agenda
 Introduction
 Pet Industry Trends
 Pet-Related Expenses
◦ Food Expenses
◦ Pet Supplies
◦ Veterinary Expenses
 Humanization of Pets
◦ Pet Insurance
◦ Pet Travel
◦ Funeral Services
 Other Accommodations
◦ Pet Boarding/Day Care
◦ Pet Grooming
◦ Pet Training
 Conclusion

 Pet Expenses
Introduction
 Pet Ownership:
Year Pet Ownership %
1988 56%
2015 65%
1994 2015 2016
$17B $60.3B $62.8B
 46% of households own more than 1 pet

Introduction
 What is the Pet Industry?
38.3%
23.9%
25.4%
3.4%
9.1%
Food
Supplies
Veterinary Care
Animal Purchases
Pet Services

 Most commonly owned pet?
Consumer Trends
31% 5%27% 25%
 Pet Ownership by Demographic Groups
6%
16%
17%
25%
22%
11%
5%
< 25 25-34
35-44 45-54
55-64 65-74
> 75

 Pets as part of the family
 Feelings toward pets now
◦ 60% stronger feelings vs. as a child
◦ 67% care more vs. parents
 Reasons for these trends
Consumer Trends
2011 2016

 Supermarkets to pet retailers
 Market share:
Retail Trends
37.2%
23.3%
39.5%
PetSmart
PETCO
Other
Year Revenue
2016 $18.5 billion
2021 $21.6 billion
 Estimated Revenue:

PetSmart vs. PETCO
 Established 1987
 1,400 Stores (U.S., Canada,
Puerto Rico)
 2016 expected revenue =
$7.2 billion
 Offerings:
◦ Consumables
◦ Hard goods
◦ Pets
◦ Services
 Established 1965
 1,400 Stores (U.S., Mexico,
Puerto Rico)
◦ Unleashed
◦ Dr. Foster & Smith
 2016 expected revenue =
$4.5 billion
 Offerings:
◦ Food
◦ Supplies
◦ Pets
◦ Services

 Definition
◦ Edible items purchased for pet consumption
◦ Expected expense of $24 billion in 2016
◦ Annual expenses:
Food Expenses
Expense Type Dogs Cats
Food $269 $246
Treats $61 $51

 Consumer Trends
◦ Natural Products
◦ Health Conscious
◦ Special Needs
 Retail Trends
◦ Places to purchase
 Pet Retailers
 Grocery Stores/supercenters
 Veterinarian offices
 Online
◦ Expanded food selection
Food Expenses

 Definition
◦ Necessary vs. Luxury Items
 Consumer Trends
◦ Environmentally friendly
◦ Demand for new products
 Clothing
 Furniture
 Retail Trends
◦ Broad offerings
◦ Medication
Pet Supplies

 Definition:
◦ Visits to the veterinarian for medical services
◦ Average Expense per year:
 Consumer Trends
◦ Advanced health care
◦ Decreases in visits to the veterinarian
 Retail Trends
◦ Vet locations/prescriptions in retail
◦ Specialized Training
Veterinary Expenses
Vet Expense Dogs Cats
Routine Visits $235 $239
Surgical Visits $551 $398

 Definition
◦ Similar to human insurance: deductibles, co-
pays, etc.
◦ Differences
 No network of veterinarians
 Pay first, reimbursed later
◦ Other:
 Waiting periods
 Pre-existing conditions
Pet Insurance

 Consumer Trends
◦ High Vet Expenses leads to demand for
insurance
 Average pet claim: $547
 80% of pets will experience a medical emergency
◦ Pets considered family
 Retail Trends
◦ 10 U.S. Insurance Companies
◦ Employer offered pet insurance
Pet Insurance

 Definition
◦ Expenses related to transporting a pet from
one location to another
 Consumer Trends
◦ Willingness to travel after a pet
◦ Taking pets on the road
◦ Demographics
 Retail Trends
◦ Airplanes
◦ Hotels
Pet Travel

 Definition
◦ Services performed after a pet’s passing
 Consumer Trends
◦ Humanization of pets
◦ Emotional expression
 Retail Trends
◦ Pet memorial offerings at funeral homes
◦ Keepsake offerings
Funeral Pet Services

 Definition
◦ Locations that care for
pets while owners are away
 Consumer Trends
◦ Pet humanization
◦ Effects of socialization
 Retail Trends
◦ Local Offerings
 Assessments/applications
◦ Pet Store Offerings
 Upgrade options
Pet Boarding & Day Care

Pet Grooming
 Definition
◦ Products/services related to cleaning a pet
◦ Annual Expenses:
 Dogs = $83
 Cats = $33
 Consumer Trends
◦ Humanization – Health & Hygiene concerns
◦ Awareness of ingredients
◦ Demographics on grooming
 Retail Trends
◦ Products to use at home
◦ Grooming at pet stores
 Expanded offerings

 Definition
◦ Teaching skills for obedience and safety
 Consumer Trends
◦ Busy schedules
◦ Humanization/Proper behavior
◦ Increase in Training Careers
 Retail Trends
◦ Training classes
 Different Levels
◦ One-on-one training options
Pet Training

 Summary
◦ Pets are part of the family
◦ Expression of emotions
◦ Busy schedules
Conclusion
 Opportunities
◦ Millennial spending
power
◦ Pet travel
◦ Restaurants
◦ Colleges
◦ Technology
 Challenges
◦ Online competition
◦ Recessionary
periods
Opportunities Challenges
 Effect on business

References
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 Boncy, J. (2012). Pet retailers bite back. Retrieved July 24, 2016 from
http://www.petbusiness.com/November-2012/Pet-Retailers-Bite-Back/
 Carter, B. (2016). IBISWorld industry report 45391: Pet stores in the US. Retrieved May
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 CATCH Canine Trainers Academy (2016). Dog training careers are on the rise. Retrieved
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References
 Conway, A. (2016). Top 40 pet global food companies: 2015 data now available. Retrieved
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we-treat-dogs-the-same-way-children-in-our-modern-families
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 DogVacay.com. (2013). State of pet travel in the U.S. Retrieved July 15, 2016 from
https://dogvacay.com/img/infographics/dogvacay-state-of-pet-travel-us-2013.png

References
 Embrace Pet Insurance. (2016a). Facts & statistics on the US pet insurance industry.
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 Embrace Pet Insurance. (2016b). Pet business trends 2013. Retrieved August 6, 2016 from
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23, 2016 from Wilkes University EBSCOhost.
 Grant, A. (2012). Veterinarians scramble as retailers jump into pet meds market. Retrieved
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References
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References
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major-growth-to-keep-up-with-increasing-demand-for-pet-products/
 Kirillova, K., Lee, S., & Lehto, X. (2015). Willingness to travel with pets: A U.S. consumer
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EBSCOhost.
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References
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References
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References
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References
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 Young, L., & Gutner, T. (2004). A suite for Fido. Businessweek, (3879), 129. Retrieved July

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