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The Pet Care sector has experienced tremendous growth over the last 2 years, mostly in part to the ongoing pandemic. Consumers under lockdown, now working or going to school from home, decided the time was right to bring a four (or 2) legged friend home as a companion.
American Pet Products Association reports that Pet ownership increased by about 70 percent during 2021.
Rover.com surveyed over 1,000 American cat and dog owners with 93 percent responding that their “pandemic pet” had improved their mental or physical well-being over the last year and more than 80 percent said it made working from home more enjoyable.
You’d think that pet adoption (from shelters and humane societies) was up in 2020 vs. 2019, but the opposite is true: approximately 20% fewer pets were adopted. The reason is because of the demand – a smaller pool of animals was available. Shelters saw a decrease in intakes, as fewer owners decided to surrender their pets (that’s a good thing, for the animals). Successful spaying and neutering programs also helped to keep stray populations in control. Switching to virtual versus physical appointments meant fewer potential adopters. Almost 450,000 fewer animals were adopted in 2020 compared with 2019.
eCommerce Reaps the Benefits
In a survey, 35% of pet parents say they’re spending more on their pet and pet supplies over the last 12 months.
Almost one-fifth of all pet care sales occurred online, while the rest were made in-store. According to research firm Packaged Facts, online pet product sales make up an impressive 30% of the total pet care market, mostly accelerated by changing pet care preferences and new pet ownership during the pandemic.
eCommerce is a perfect fit for the pet sector due to convenience, good value (and free shipping), broad choices, and clear product comparisons and reviews.
In fact, online pet product sales make up 30% of the total market, according to market research firm Packaged Facts, a number that has grown exponentially from a measly 8% back in 2015.
Who Are the Big Players?
Excluding Amazon, Chewy is the top dog in the pet care space, followed by a distant second by PetSmart, and the rest of the pack including 1-800 PetMeds, Petco and Petflow. According to a survey from Packaged Facts, among pet owners who report purchasing pet products online, 59% order from Amazon, 41% order from Chewy, and 33% order from Walmart.
Amazon rakes in more than half the online dollars spent on pets. Amazon also launched its private label Wag brand in 2018.
There’s also a major uptick in luxury pet sales and brand recognition. Milan-based Poldo Dog Couture has collaborated with popular luxury houses, like Moncler and DSquared2. The company’s co-founder Riccardo Gardoni said the brand was born from the need to dress his dachshund Poldo with functional and above all quality products. A multitude of other pet owners feels the same about treating their pets.
Prada is another major player in the luxury pet market. A nylon Prada dog collar is made with the same technical allure as its iconic handbags and accessories, and the hardware is of identical quality. The Prada triangle logo is also clearly visible to make the collar instantly recognizable. There’s also a Prada pupper puffer jacket, featuring the same attention to detail as a human-sized jacket, but comes with snap closures for ease.
Research from eMarketer estimates the global pet market will grow to be worth $270 billion by 2025, of which the luxury segment is worth $27 billion.
However, as many other market sectors have experienced, the pet market is experiencing shipping and logistics issues. Specific to pet food, “labor shortages and rising labor costs, elevated shipping costs and input cost inflation are all impacting third-party producers in consumables,” Bryan Jaffe, managing director of Cascadia Capital said. For example, the cost of containers from China to the U.S. East Coast has increased by 375% and, to the West Coast, a staggering 434%. Rather than improving since late 2020 or earlier in 2021, the rise in costs has only skyrocketed in the third quarter.
Jaffe also added that the cost of chicken, the most common protein used in pet food, has increased 87% for the 12 months ending August 2021, and U.S. production labor costs have increased 3.4% per hour.
Not to mention, according to Pet Food Institute members, driver shortages and labor turnovers have been jumping as high as 15% month by month. The issue is compounded by the fact that the CDL (commercial driver’s license) workforce pool is shrinking.
Room for Growth
Earlier this year, Packaged Facts predicted the overall retail pet product sector will reach $94.6 billion in sales by 2025, with e-commerce making up 53% of sales in the total market by that time.
Globally, the pet care market is predicted to have an estimated 6.1% compounded annual growth rate (CAGR) to $350 billion by 2027. And with numbers from the American Pet Products Association saying that pet ownership in 2021 increased to about 70%, these predictions check out. Moreover, 35% of pet owners said they’re spending more on their pet and pet supplies, including food, over the last 12 months.