By Jacinthe Moreau
Published: 2020.01.21 08:30 AM
While the overall business of pets is booming to the tune of $76 billion annually in the U.S., independent retailers face new challenges from a host of disruptive influences reshaping the industry. First, the good news.
Pet ownership has never been larger: 70 percent of all U.S. households own a pet, with dogs by far the most popular at 60.2 million households compared with 47.1 million that own cats, according to some industry estimates. Nearly all of these pet-owning homes consider their “fur baby” to be part of the family.
This trend toward humanization has caused profound ripples in the pet community, especially with millennial consumers who now count as the largest pet-owning demographic. As they delay starting families until later in life, millennials widely view their pets as “starter children” and take their responsibilities toward pet ownership very seriously. As such, they are seeking the very best for their fur babies when it comes to food, apparel, grooming services and more.
When Zappos, a Las Vegas-based online shoe and clothing retailer, polled its employees on the amenities that they’d like in a new headquarters, the greatest vote-getter was doggie day care. A growing number of companies even offer “fur-turnity” leave to their employees and allow pets to visit work.
Pet health insurance is the new hot benefit being offered by some tech companies. Though small today (only about 2.1 million U.S. pets are insured, or 2 percent of the 89.7 million dogs owned), the North American Pet Health Insurance Association reports that the number of pet insurance policies written in the U.S. grew 23 percent from 2016 to 2017.
All of this means that the millennial consumer wants a retail experience that is vastly different from generations prior, and they have a multitude of options with which to achieve this when it comes to both e-commerce and direct-to-consumer retail.
We’ve already discussed humanization and its impact on how and what we buy for our pets, but millennials, with their penchant for personalization, are driving even deeper changes into the retail marketplaces. Everything from how pet food is created and marketed is affected by the rise of the “subscription box,” which curates highly personalized pet products delivered directly to your doorstep, and 23 percent of millennials have a subscription of some sort for their pet, according to BigEye.
With pressures from e-commerce giants such as Amazon, big-box retailers and even your local grocery store, surviving requires traditional brick-and-mortar retailers to lean in to all of this change and create a superior retail experience. In order to compete, stores can no longer just be places to pick up food, but must become highly curated community hubs where pet owners can receive specialized attention for the specific needs of their best friend. Retailers who can provide such an experience will find themselves thriving in this new “millennialization” of pets.
6 Trends To Consider For Your Business
As such, we’ve decided to look forward and give you a year in preview, showcasing retail trends that are representative and emblematic of the sweeping changes that are affecting the pet retail channel as described above.
The Rise of Pet Tech
The market for smart pet products will continue to grow at a brisk pace in 2020. This relatively new category has exploded in recent years to become an almost $600-million-a-year business with year-on-year growth of 11 percent annually in the U.S. Automated feeders, Fitbit-like collars, AI-enhanced robots, gaming platforms for cats designed by cognitive animal scientists—you name it and they’re making it. But retailers will want to pay special attention to those products that serve to enhance people-to-pet relationships, allowing owners to stay connected with their pets even when physically separated. A recent study conducted by e-commerce giant Zulily found that 84 percent of millennial pet owners frequently worry about their pets even when separated for short periods of time. With two-way audio/video monitoring via smartphone allowing pet owners to keep tabs on their fur babies 24/7, peace of mind is now only an app away.
Pets Are Eating Like Their Owners
According to a study conducted by the Michelson Foundation, 47 percent of pet owners polled feed their pets organic food if they themselves eat organic. The same goes for diets high in protein, with 45 percent reporting that they follow the same restrictions for their pets as they do for themselves. All of this follows growing trends in personalization and customization as it relates to pet foods. Next in line because of its exploding popularity are meat-free, often plant-based protein alternatives for pets. According to recent studies, some 35 percent of owners would ditch traditional meat-based foods for a plant-based alternative because of sourcing and safety concerns.
Just a decade ago, consumers would be hard-pressed to find many products catering to canine and kitty dental care. But what was once considered a laughable luxury is fast becoming standard daily care for pet owners. The global pet oral care market will grow by 6.2 percent from 2017 to 2022, to $2.2 billion. It’s about more than just bad breath. Tartar, plaque, gingivitis, periodontitis: just like with their owners, these issues also affect dogs and cats. According to Cornell University’s College of Veterinary Medicine, studies show that up to 90 percent of cats have some type of dental disease, while 80 percent of dogs will suffer the same fate, which can lower the life span of your pet by up to one-third if left untreated.
Just as the human population continues to increase its life span, pets are living longer lives as well. With advances in medical care and treatment, there has been a noticeable increase in households with senior pets. It’s now common for an indoor cat to live to be 18, while a medium-sized dog can count on 11 good years. This has enabled the rise of an entirely new pet sector dedicated to making the lives of older pets more comfortable. As a result, more retailers are carrying pet strollers and joggers, ramps, supplements and specially formulated foods, even for birds. Some websites sell nothing but harnesses, diapers, blind dog halos and other products to help older or handicapped pets live comfortably.
While the “pets as family” trend continues unabated, pet owners are splurging on costumes for their pets as a way of expressing their own individuality. Consumers have spent nearly $500 million this year on costumes for their pets, according to the National Retail Federation. That’s double what they spent just 10 years prior, and pet outfits have become huge business—not just for Halloween, but all year round as pet clothing and apparel has also seen significant gains as owners seek greater personalization in how their pets look. But it’s the costumes that are moving the needle. Some 29 million pet owners purchased pet costumes this year, spending upward of $100 per outfit. Social media, coupled with the ability to pose your pet in adorable surroundings, is seen as the main retail driver.
Attendees of SuperZoo couldn’t help but notice the abundance of exhibitors that featured cannabidiol (CBD) products at last summer’s show, up from four in 2017 to 58 in 2019. Retailers hoping to cash in on CBD are wise to do their homework as vets are prohibited by law from prescribing or even recommending products. Lack of regulation means that quality will vary as well. But the market shows untapped potential. According to the Brightfield Group, pet CBD sales in the U.S. could reach $1.16 billion by 2022. In addition, 85 percent of dog owners and 38 percent of cat owners report that their pet sometimes has anxiety or stress issues, and CBD is claimed to be an effective treatment. Considering that 39 percent of dog owners and 34 percent of cat owners report that they like the idea of CBD products for their pets, it’s important for retailers to do the cost-benefit analysis—and, most important, stay fully informed as the market continues to expand.
Each of the six trends chosen above reflects an aspect of the biggest macro trends facing pets: humanization and personalization. How you incorporate them into your 2020 plan will make all the difference!