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How Recession Resistant Is the Pet Category?
When asked what they would cut first to reduce monthly spending, only 3% of pet supplement shoppers said they would cut pet-related expenses, according to a recent survey.
The rate was lower than any other category surveyed.
The survey was completed by MarketPlace, a St. Louis-based brand strategy firm, and it showed that while pet supplement shoppers are most likely to cut nonessential categories like entertainment (64%) and apparel (38%), 19% said they would cut their own food expenses, 8% would reduce transportation costs, and 5% would spend less on healthcare.
“Many pet parents consider their pets family, and these relationships influence their purchase behaviors and priorities,” said Nicole Hill, executive director of strategy at MarketPlace, in a statement.
The findings come as Nestlé, Colgate-Palmolive, and General Mills are lately finding their fastest growth in premium pet categories amid inflationary pressures.
Hunter Williams, partner at consulting firm Oliver Wyman, told FreightWaves, “Part of the recession resilience of [the pet industry] is that people don’t like to sacrifice the quality that they’re providing to their children — furry or not.”
Nearly half (46%) of pet owners spend the same or even more per month on their pets as on their children, according to a recent survey from Ally Financial.
Last fall, Morgan Stanley Morgan Stanley predicted 8% annual growth in the pet industry through 2030 as the pandemic pet craze added 5 million pets to U.S. households since 2019. About a third of the most-recent pet adoptees were found to be 18- to 34-year-olds, and they tend to spend more than other age groups on food, treats, and care for their pets.
“As Millennials become homeowners, delay having children and increasingly have smaller families, they tend to spend more on their pets than older pet owners do, especially on premium food and services,” said Simeon Gutman, a Morgan Stanley analyst. “The increase in ownership during the pandemic was driven primarily by this cohort, and they are likely to accelerate the trends toward treating pets like humans and providing premium care. As a result, the COVID benefit to the pet industry likely has a long tail.”
Discussion Questions
DISCUSSION QUESTIONS: Has the pet category become more recession resistant over the pandemic? Do you see millennials and Gen Z entering their prime pet-owning years as the biggest factor driving the pet category forward?
Poll
Loading …BrainTrust
Zel Bianco
President, founder and CEO Interactive Edge
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
Changing economic circumstances affect every category, including pet care. However, pet products are a lot more resistant to recession than many others; and shifts happen only at the margin, such as consumers buying slightly fewer pet toys. Many pet products, such as feeding and hygiene, are essential so consumers can’t cut back on volumes. There is also a lot of reluctance – more so than for human food – to trade down and switch brands. A lot of this is psychological. People are extremely invested in their pets – and probably become more so during times of economic difficulty as pets are a comfort – so purchases are driven by emotions not pure economic calculation. On top of all of this, younger pet owners are really avid spenders (more so than older generations) and this is currently helping to fuel growth in the market.
We can start the answer by asking the question (I a permitted by the laws of Moses to answer a question with another question): ‘Who thinks that 3% is a big number?’ This can be an expected result of the survey. We refer to it as an outlier. As Neil Saunders aptly points out (he always does), pet owners are invested in their pets. Consumers can stretch a little more time out of children’s clothing but they will not starve their pet.
Good points Bob! Most pet purchases are not discretionary (food, prescriptions, vaccinations, etc.) and will be recession-proof. The place where consumers can cut is on pet toys, grooming and apparel. For children, there are more ways that parents can cut spending, such as clothing, dining out, toys, etc. Based on these factors, pet spending is more recession-proof than spending on children.
As the article states, pets are treated like family members – I dare say, sometimes better than family members and more loved than family members. The challenge in the pet care category will be competition. There are so many more pet care companies now than there ever, and it will be increasingly difficult to cut through the noise of “good for your pet” benefits. Gen Z and millennials are indeed crazy about their pets, but boomers are as well and they will continue to be the drivers in this category for years to come.
Pets are decidedly family members and pet parents are committed to the health, wellness, and care of these “children.” I do not see the category waning in the predictable future as more millennials and Gen Z fuel its continued growth.
Of all the categories that ‘boomed’ during the pandemic, the pet category is about the only one that didn’t see the upward trend of sales go backwards. And, for good reason. Just like you can’t stop feeding or clothing your kids, you can’t stop feeding or looking after your pets. It’s true that those under economic negative pressure may have to cut back on just about everything. But for most, Fido will never know a recession is even happening.
You’re absolutely right, Kevin. Once committed, pets become part of the ongoing budget regardless of economic conditions.
A big driver of growth in pet supply consumption is the increase in pet ownership. If that cycle begins to shift based on recession fears or other demands for income, then consumption for pet products will decrease. How has pet ownership changed in the last five years and where is it headed (pets per household)? Will people with pets buy less for their pets? Maybe not significantly. But will people have fewer pets?
To test how resistant pets are to a recession, you have to have a recession. There is no recession today, and there’s no consensus among economists or pundits on whether one is on its way. Pets are like children to millennials and Gen Z and they will be treated as such. Our love affair with our pets was fueled by the pandemic and has only increased since. I believe investments in our pets will continue unabated with pet health taking center stage as these pets age. Petco sees this, too, striking a deal to co-locate Petco shops within Lowe’s stores and acquiring pet healthcare provider Drs. Foster and Smith.
So, the pet category is stronger than ever. Every age group is going all-in on their pets, and now that even includes pet clothing and accessories. So, make sure your dog’s outfit matches with its other accessories, and make sure it’s a good fit, too. And, by the way, there’s an app for that.
The key is Hunter William’s statement that “…people don’t like to sacrifice the quality that they’re providing to their children — furry or not.” At our house that is true for our chickens, cats, dogs and humans. As an industry, the pet industry is no different than any other and must find new sources of growth, new pet parents. I believe existing generations and their well documented wealth, will continue to be pet parents and pass that passion (and their wealth) to new generations. Finally, let’s not forget that COVID also had some negative side effects as “pet owners” returned their pets when conditions improved and as a result, many shelters were overwhelmed.
This is a double edged paw; household/family pets have long been a driver for sustained category growth–chewy, bark box, petco services, food fresh options and the list goes on. While pet owners will continue to spoil their furry children, donations to rescues and abandoned animals are not immune to tougher financial times.
I remember reading a study that found women take more time choosing gifts for their pets than for their significant others. Pets are important. Cutting back spending on them is a tough call. As my colleagues have already pointed out pets are family.
Next week Rich and I are speaking at SuperZoo, a huge trade show devoted to all things finned, feathered, and furry. The breadth of product available to keep pets happy and healthy is mind blowing. People will cut back out of necessary but this industry will continue to grow.
We are empty nesters and refer to our dog as our “favorite child” (just like the Chewy ad), so I can relate to the survey results. I think the wave of pet adoptions post-pandemic has added to the spending spree on our new family members, and the work-from-home phenomenon (while it lasted) is another factor to consider. Many office workers spent a lot more time with their dogs underfoot (or their cats keeping their distance), and that kind of forced togetherness has also contributed to these sustained spending habits.
Eight percent annual growth for the next seven years is an outsized growth rate. Today’s category growth is being pushed by a 12% to 15% increase in pet ownership during the pandemic. I am sure that has plateaued.
The other issue is the psychology. Unlike children, a pet owner feels more responsible for a pet than children. Not because they don’t feel responsible for their childrens’ well-being but because the pet can’t care for themselves. When asking about cutting back on pet purchases, we should also ask if you would cut back on purchases for your baby.
Pet spending is one of those rare categories that only goes in one direction — up! During the last recession consumers cut back more on purchases for themselves than for their pets. Pets products and services are not only recession proof, but they cross all demographic lines. From Boomers to Gen Alphas, spending money on pets is universal.
I could not agree more. On an overall basis recessions only help the Pet Category. It is also a category that continues to grow in the average ticket prices with fresh food, electric fences. Social media is also a great driver.. who has not seen a fun video of someone with their pet.
The short answer is “yes”. Having overseen the Pets category during my time at Groupon Goods, as well as a pet parent myself, I have seen the data that not only is Petcare a growth business, but that consumers prioritize their pets needs within their weekly grocery budget.
The pandemic only served to solidify this trend, and the move to more premium products appears poised to continue for the foreseeable future. Key for retailers is winning the pet food and pet treats category spend, as those consumable products serve to engage a consumer and enable them to consider purchase more discretionary purchases like pet beds, containment, accessories like leashes and collars and more. Bundling with pet-services like grooming and vet services has truly helped pet specialty brands like Petco and PetSmart.
I would happily buy cat food and litter instead of new apparel (especially since the fashions are unappealing) for myself, if budgets were tight. I suspect most people would do the same.
It should be noted the difference between the poll and the question(s) is in the phrasing recession”proof” vs. recession”resistant”; I think that’s an all-important difference: altho we occasionally see stories about people spending lavishly to send Fifi to a salon every week, for most people the spending is an irreducible minimum, plus a little extra. The latter may be reduced during a Recession, but former will not. And I think the difference between the two is relatively small; certainly compared to something like raising a child, or vacation spending (where the entire amount may be discretionary).
This article in the WSJ may suggest otherwise as one in five pandemic’s pets are ending up in shelters. https://www.wsj.com/articles/overwhelmed-animal-shelters-look-for-solutions-125a7d8f