The Pet Economy Kicks Into Overdrive

The surge in spending on pets – and explosion of new products, services and unique “experiences” to help quadrupeds and their owners bond more closely – is at an apex, tracking to break U.S. records this year.

Retailers, manufacturers, entrepreneurs and inventors are clamoring to win a leadership position in the U.S. pet economy, with sales projected to exceed $75 billion this year, up from $72.5 billion in 2018 and a doubling of 2005’s $36 billion, according to the American Pet Products Association.

Several forces are driving this engine with the most rocket fuel coming from millennials, the largest pet-owning age group that is willing to spend big. Millennials expect to spend more on their dog over the course of its lifetime than they will spend on their own lifetime medical care, according to a TD Ameritrade survey. Further, 79% of pet-owning millennial homebuyers would pass up an otherwise perfect home if it didn’t meet the needs of their pets, Realtor.com research found. Other factors feeding the pet economy:

• Wellness: Humans’ growing focus on healthy choices is spilling over to their pets.
• “Humanization”: Valued on equal footing with biped family members, pets are increasingly viewed as deserving of human-quality food.
• Big brands stepping up: New initiatives and partnerships at Petco, Walmart and Target woo pet owners in novel ways, while premium products claim more shelf space at big box, grocery and dollar stores.
• Safety concerns: Frequent recalls of commercial pet food stoke interest in fresh and premium alternatives along with better transparency about ingredients.

“What we see happening is a transition from pets being ‘man’s best friend’ to ‘family’s favorite child,’” Petco chief merchandising officer Nick Konat, told CO—. “ People want to take the best care of their pets, like they are a member of the family.” He does not view this mindset as a trend so much as a movement that’s been building over time as people integrate pets more fully into daily life — the workplace, dining, shopping and celebratory occasions.

What is new, Konat said, is millennials’ outsized influence. “They see pets as their children,” he said. “They are driving this even more than we have seen in the past, and demanding higher quality products.”

Red Archer Retail CEO Chris Walton agreed. “Pets have become almost their ‘starter kids.’ Whether it’s giving them clothing to wear, [pet-safe] wine or cannabis to try, they are part of the family,” he told CO—. Walton, former head of Target’s Store of the Future project, will soon launch a retail technology lab in partnership with Xenia Retail and people are asking if pets are allowed in that workspace. “No one would have asked that 10 years ago,” Walton said.

Petco: Aiming to be a trusted adviser on pet nutrition

Petco is responding to pet owners’ demand for quality products and services on a number of fronts as it vies to become a trusted adviser on pet nutrition: As of May 2019, Petco removed products containing artificial colors, flavors and preservatives from store shelves and online.

“It’s the right thing to do,” Konat told CO—. “The data that drove this for me is that 95% of customers believe a pet diet is critical and essential to their health, yet over 50% say it is confusing to find the right food to meet the needs of their pet.” Though Petco’s ban on artificial ingredients may cost the chain $100 million in annual revenue, Konat said sales of wellness brands Origen, JustFoodForDogs and Freshpet have seen double-digit increases since Petco’s November 2018 announcement.

Another major Petco initiative is a new store-in-store concept: fresh pet food kitchens designed as open exhibition spaces where shoppers view meal preparation by JustFoodForDogs staff trained in pet nutrition, using ingredients that are USDA-certified for human consumption. Gleaming stainless steel and fresh produce displays of broccoli, cauliflower, russet potatoes and carrots enhance the ambiance created by JustFoodForDogs, which operates the Petco kitchen. JustFoodForDogs also operates its own stand-alone shops, store-in-store shops inside Pet Food Express stores and veterinary clinics, amounting to 137 locations nationwide.

JustFoodForDogs CEO Carey Tischler said the healthy food choices owners make for their pets is an extension of wellness decisions they make for themselves. Pet owners demand greater transparency about what they are feeding their pets today, he added. “There is a growing mistrust in what larger food manufacturers are putting into food, or what they are trying to pass off as going into food,” he told CO—.

And frequent product recalls exacerbate the situation. “There is a steady diet of recalls coming out of the industry. By my count, there is one almost every five to six days, which is almost unheard of for any sector feeding anyone,” Tischler told CO—. “As consumers are becoming more educated, they are looking for better options – options that are not sold through marketing, but sold through meaningful change.”

Food made with quality ingredients is not a “gourmet” treat, Tischler said, but rather a healthy lifestyle choice. Consumers spent $33 million on human-grade pet food in the past year, Nielsen reported.

From a Walmart pet pharmacy to BarkPark’s exclusive clubhouse

Walmart jumped in big time with its May 2019 announcement saying it would add more in-store veterinary pet clinics, launch its first online pet pharmacy with low-cost prescriptions and free shipping, WalmartPetRx.com, and expand its offering of nutritious pet foods.

In a blog post, Walmart’s senior vice president of retail Kieran Shanahan wrote: “More and more, customers are caring for their furry friends the same way they care for themselves, opting for more organic and grain-free food options and giving their pet vitamins and supplements.” He detailed Walmart’s expanding assortment of premium brands like Blue Buffalo (acquired by General Mills last year for $8 billion), Greenies and Hill’s Science Diet. Walmart plans to reach 100 clinics in the next year.

Seeing pets integrate more fully into owners’ daily lives, stores are expanding pet-friendly policies. Meanwhile, products humans already enjoy are now modified for pets such as cannabis-based treats to ease anxiety, pet-safe cocktails for shared happy hours, fitness trackers, IoT-enabled litterboxes and mobile apps for socializing, modeled after Tinder.

Bark, parent company of subscription-based pet retailer BarkBox, embraced the experiential movement with its first BarkPark in Nashville and plans to open more, Bark’s marketing vice president Allison Stadd told CO—. The members-only, landscaped green space features a dog-centric design and offers owners’ Wi-Fi, comfortable seating, events and entertainment, and an opportunity to socialize in a clublike atmosphere.

“BarkPark is intended to be a much needed ‘third place’ for dogs — just like parks and bars and restaurants and movie theaters are for people,” Stadd said. “It’s a reflection of our mission to create both products and experiences that create insane dog joy.”

As its core business, BarkBox ships a curated selection of personalized toys and treats to its 650,000 subscribers each month. Once reliant on other companies’ goods, Bark now creates more than 430 new products each year, sold through its website, BarkShop.com, Amazon and retail partners including Target’s 1,800 stores.

Expect more new pet innovations as furry companions’ role in daily life grows, providing the counterbalance to technology-driven behavior that can be isolating.

“Pets are a natural way for people to engage around the family and with other people — to get a more social aspect of living that maybe isn’t as easy to attain as it was before,” said Red Archer’s Walton.

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