Dogonomics: From Mass Retailers To D2C Startups, Pet Care Is Booming

Whether it’s Walmart or Wagable, Chewy or Cat Person, the mix of retailers and service providers looking to take a bite out of the $100 billion petcare industry has never been bigger. With an estimated 11 million more pet owners today than before the pandemic, the trend is not only set to rise, but will also likely change as legions of dog and cat owners start easing back into their previous routines.

“We are bullish for the coming year, projecting [pet care industry] growth of 5.8 percent — well above the historical average of 3 to 4 percent,” American Pet Product Association (APPA) CEO Steve King said of the group’s State of the Industry report, which highlighted a year of record sales that topped $103 billion.

As much as the COVID era brought unprecedented change for individuals and businesses, for most of the pet care industry, it was a year of adaptation and growth.

“This past year presented a host of challenges that resulted in consumers across the country turning to their pets for comfort and companionship,” King said. “Interestingly, the product trends we are seeing in the pet care community mirror those of consumers – a desire for a healthier lifestyle, increased focus on fitness, turning to supplements for improved well-being and technology playing a larger role in everyday life.

With the exception of groomers, dog walkers and kennels, which saw a sharp 21 percent drop in business during COVID, this year is forecast to see across-the-board sales gains, albeit at growth rates that are down from recent record levels.

According to the report, pet foods and treats, which account for roughly 40 percent of total category revenues, will grow another 5 percent this year, down from almost 10 percent growth in 2020. At the same time, vet care and products, which account for about one-third of total sales, are pegged to rise about 3 percent this year, after posting more than a 7 percent surge during the pandemic.

Supplies, OTC medications and live animals (such as fish or hamsters) are expected to grow almost 6 percent this year, second only to the 7.4 percent rebound projected for the grooming and walking category.

Like an Annuity

With a total addressable market consisting of 63.4 million dog owners and 43 million cat owners, it’s no surprise that the pet care business is attracting scores of new entrants, as well as renewed urgency and focus among existing players. Between surgical and routine veterinary visits, food and treats, boarding, vitamins, grooming and toys, APPA said the average dog owner spends about $1,400 per year on their pups, with the cost of owning a cat pegged at about $900 annually — and most owners have multiple pets.

According to Petco CEO Ron Coughlin, the combination of new and existing pet owners who are increasingly devoted to their furry friends and willing to provide them with the very best food and care has created a powerful long-term dynamic that will outlast the pandemic.

“For our business, [this trend] provides an annuity. It’s not like a home gym that you get, and then you don’t get another one for five or 10 years. You’re going to have to feed, groom and vaccinate that pet for the next decade, so it’s an annuity for our business,” Coughlin told investors in the wake of his company’s first earnings report in March, after its IPO in January.

Further fueling the uptrend is the fact that pets and their owners have had a year to get used to their new routines, and it seems that many people have come to like them. According to research conducted for animal pharmaceutical firm Boehringer Ingelheim, as much as pets made the pandemic bearable, they also changed people.

To that point, Boehringer Ingelheim’s survey found that 55 percent of pet owners said they will feel guilty when they go back to work, and 38 percent said they are considering getting a second cat or dog to keep their existing pet company if/when they do. In addition, 13 percent said they made a career change during the lockdown as a result of having a pet.

Big Dogs vs. Little Dogs

Seizing this consumer shift, mega-merchants such as Walmart are increasing and refining their exposure to the pet trend, as the big-box retailer last fall began offering new services, including pet insurance, dog walkers and pet sitters, and then just last week launched a new line of private-label premium dog and cat food.

“We’re constantly evolving to meet customer needs and support new trends, and one that continues to grow is the humanization of pets,” Walmart’s VP of Pets Melody Richard said in a blog post. “We’re treating our pets like we would any other member of our family, and that means giving them high-quality, premium products that help promote health and wellness.”

This humanization factor is not only playing out in serving animals higher-quality foods and nutritional supplements, but is also resulting in lifestyle changes, as reflected in the growing number of people who expect to bring their pets along with them wherever they go.

“If you take a look at some of the hotel chains, you see that they’re literally advertising dog-friendly hotels, so I think there’s something to that. It’s not just about outdoor dogs anymore,” said Debby Richman, the founder of Wagable, a new subscription service that ships a curated box of seasonally appropriate goodies each month. “When you see the advertising of dog destinations, you’re seeing that it’s not about the dog or the kennel, it’s about the person with their dog.”

Given that pet owners actively chat with each other about pet products and services, the “dogonomics” uptrend (or “cat-conomy,” if you prefer) is fueling itself.

“Now that people have appreciated their dogs, whether they adopted them or stayed home during COVID, people are absolutely discovering new opportunities to spend time with their dogs, both inside their house and outdoors,“ Richman said. “One of the wonderful things that happens with dog owners is that they like to share and comment on dogs and dog experiences on social media.”