The overall trend continues to be value for money, which doesn’t necessarily mean spending less, but less frivolously. Pet-related spending will continue to increase from 2009 levels though as pet owners breathe a sigh of relief that the world didn’t end in 2009. Trends include:

1. Pet parents continue to spend on supplies and OTC medicine thoughtfully

Spending on pet supplies and over-the-counter medicines was projected to increase 5.1% in 2008 from $9.8 billion to $10.3 billion according to the American Pet Products Association (APPA) but it turned out to be more modest growth of 2% to $10.0 billion, a major slow down from the 6+% increases of the recent past. The APPA projects continued growth of 2% in 2010, although I would not be surprised if it bounced a little higher in the range of 4%.

People will continue to spend above and beyond on their pets as the population ages and pets take the place of children at home; however, pet parents will continue to focus their dollars on quality necessities, such as food, leashes, and bedding, or low dollar frivolities such as the Pet Snuggie. High-end specialty pet stores are going to feel the pinch as the casual shopper won’t be dropping in as much and I expect we will see a drop in numbers of these stores in 2010 as the economy slowly improves but not fast enough to save all these stores.

2. Pet services for your pets continue to grow

According to the APPA, $3.2 billion dollars was spent on pet services in 2008, projected to grow over 6% to $3.4 billion in 2009. I don’t think anyone will be particularly surprised to see this growth continue for several years to come, particularly as retail behemoth Wal-Mart expands its pet grooming facilities further into its stores.

Pet parents are including their pets in their own lifestyles so visits to the spa, exercise regimes, and restaurants have become more common in urban areas. With the recession and decline of investment capital, my impression is that the number of day care accommodations are growing in number more modestly than prior to the recession; however, the business of doggie day cares continues to be a profitable one.

3. Growing interest in pet health care

While growth in pet supplies might be “languishing” in the 2% range, veterinary services are projected to grow 9.9% in 2009. I wouldn’t be surprised to see actual growth a little lower (veterinary inflation slowed significantly in late 2009 according to the US Bureau of Labor Statistics from about 7% early in 2009 to just over 4% 6 months later) but I still expect growth in the 6-8% range. Pet lovers continue to want the same treatment options for their pets as they can get for themselves and veterinarians are able to supply it.

4. Pet insurance continues to move towards the mainstream

We estimate the size of the US pet insurance market to be $332 million in premium in 2009, up from approximately $272 million in 2009 (a 22% increase) and I expect it to reach $400 million in 2010. We project that the market will grow to $600 million in 2013. There are 10 pet insurance companies in the US selling under 14 brands. The pet insurance market is seeing an increase in interest from private equity investors looking to get in early on the huge market potential. It remains to be seen if any of them open their check books in 2010 though.

5. Teacups join the tea party

If 2009 was the year of the “hybrid”, 2010 will be the year of the “teacup”. Puppy mills are turning their attention to “miniaturizing” certain breeds or passing off genetic misfits as a one in a million dog rather than the sickly pet they no doubt will be. Celebrity dog owners have not helped in that respect, carrying around their petit-pooches in their designer purses, and driving their admirers to want smaller and smaller dogs. Here’s hoping that this craze will be short-lived to spare the lives of these poor little dogs.

The business environment continues to challenge in 2009. Pets have drawn the attention of large retailers and institutional investors who have been expanding into the pet space. Savvy small businesses will take advantage of change to successfully place themselves uniquely in the market. Trends here include:

6. Pet businesses and non-profits thrive socially.

Social networking was not new in 2009 but the successes of the early adopters such as @PetsitUSA and @petrelocation are driving more and more pet businesses online. Pet-related small business owners have always known the power of numbers and are turning online to get noticed, one shopper or one business partner at a time, on Twitter, Facebook, and LinkedIn. Many rescue organizations are using social networking as part of their funding drives such as the ASPCA and The Humane Society.

7. Larger players get larger.

Target and Wal-Mart are both expanding their pet selection and in the case of Wal-Mart, their services. Big box pet specialty retailers, such as PetSmart, continue to grow and PetSmart recently saw 9+% growth in its pet services, fueled by grooming services and new pet hotels. If PetSmart is feeling any pinch from Wal-Mart’s entry into pet grooming, there is no evidence of it at this point.

8. Customers tell it like it is, whether you like it or not.

Sales of items such as electronics and books have long benefited (or not) from online reviews and passionate customers stating their views on their purchases for good (or bad.) Pet products and services are now catching up with the growing popularity of review sites such as www.petinsurancereview.com, product reviews on Amazon.com, and instantaneous feedback on Twitter. Companies that ignore the impact of these sites are going to be playing catch up in future years.

9. Increased online sophistication from pet-related businesses in ecommerce, design, and usability.

In 2009, several new players joined the pet health and pet adoption space. The web giant WebMD, known for its online human health information, has launched into the pet health expertise websites that appeared in 2008, in an attempt to use its brand and reach to take the top spot in this market. On the other hand, Petango.com, an upstart online adoption database, launched to compete with the dominating market leader, PetFinder. We shall see in 2010 whether these two plays will be successful in their chosen niches. Overall, newer websites are more sophisticated in design and ecommerce, reaching their target audience via web-site usability, SEO, paid search, and word of mouth. These websites are still in the minority of a largely fragmented pet marketplace even in 2010, but this gives a savvy small business an opportunity to stand out from the crowd.

10. Pet-related blogs continue to grow their influence.

The power of pet-related blogs really showed up during the pet food recall in the middle of 2007. Blogs such as Pet Connection, Pet Sit USA and Dolittler continue to provide high quality commentary on all aspects of pet news and issues, and are expanding their reach and depth across the pet web. The number of quality pet bloggers continues to grow and the best are even more accessible on the blog list website Alltop pets.

And one final bonus trend

11. Pets and taxes

There are a few initiatives involving pets and tax. First, the HAPPY Act, the Humanity and Pets Partnered Through the Years Act, which is a proposal to allow taxpayers to deduct up to $3,500-a-year in pet care expenses, including vet care. I would be surprised if it went through but then again, legislators never cease to surprise. On the down side, California would seriously love to tax veterinary services, something it considered in 2009 but removed in the final budget. I fully expect that issue to raise its head again in a year or two although it would be vigorously opposed by pet lovers across the country. Finally, the Pet Health Consortium, a new group lead by AVMA (the American Veterinary Medical Association) to educate Congress and the public on the importance and benefits of pet health insurance, has a primary goal to include pet health insurance as an optional pre-tax benefit provided to employees through Section 125 cafeteria plans. This initiative, should it go through, won’t occur until 2011 at the earliest but we will likely see public discussion in 2010.

The post Pet Industry Trends for 2010 appeared first on Small Business Trends.

The trend will be toward value for money, which doesn’t necessarily mean spending less, but less frivolously. Pet-related spending will level off somewhat in 2009 as pet owners keep an eye on how the downturn affects them personally. Trends include:

1. Pet Parents Spend but More Thoughtfully

Spending on pet supplies and over-the-counter medicines was projected to increase 5.1% in 2008 from $9.8 billion to $10.3 billion according to the American Pet Products Association (APPA) and while that expects a slowdown from the 6+% increases of the recent past, it likely does not take into account the unprecedented decreases of spending in the 4th quarter of 2008. We would not be surprised to see more modest increases in the range of 2% in 2008, continuing on to 2009.

People will continue to spend above and beyond on their pets as the population ages and pets take the place of children at home; however, pet parents will not be rushing to purchase luxuries, but rather focusing their dollars on quality necessities, such as food, leashes, and bedding. High-end specialty pet stores are going to feel the pinch as the casual shopper won’t be dropping in as much. These stores will have to tighten their budgets while crafting a unique shopping experience to keep their loyal regulars happy.

2. Pet Services for your Pets Continue to Grow

More than $3 billion dollars will be spent on pet services in 2008 according to the APPA, which will likely continue to grow in 2009, but at a lower rate than in prior years. Pet parents are including their pets in their own lifestyles so visits to the spa, exercise regimes, and hotel-quality day care accommodations have become more common in urban areas. In the suburbs, Wal-Mart continues to expand its pet section and has even been testing grooming stations in some of its stores. Expect to see Wal-Mart roll out grooming to more of its stores in 2009, taking on PetSmart’s dominance in this area.

3. Dog’s Star on the Rise for 2009?

One of the more human aspects of the Presidential race has been the huge interest in the “First Dog” and what he or she will turn out to be. The passionate discussion certainly draws attention to all aspects of dog ownership, and where the Obama family goes, the American public will surely follow. The number of cats in the US have long dominated dog numbers (according to the American Veterinary Medical Association, there are more than 72 million pet dogs in the U.S. and nearly 82 million pet cats) but the Obama dog may inspire people with pet allergies to reconsider bringing a dog in-house.

4. Growing Interest in Pet Health Care

Pet parents are taking control of their pets’ health care as they do their two legged children. Online resources continue to improve in quantity and quality and educated pet owners are arming themselves to guide their pets’ care (Wikipedia is a good place to start but other sites are now appearing).

Technology from the human world continues to make its way into the veterinary tool kit including non-invasive surgeries, human medical devices and services being applied to pets, super-premium foods aimed at specific ailments, and alternative therapies, such as acupuncture, massage, and behavioral therapies. High end diagnostics, such as MRIs, are becoming more widely available for pets and now stem cell therapy for arthritis has crept into the pet world.

Online veterinary pharmaceuticals continue to grow but veterinarians are fighting back by dropping their own drug prices. Pet lovers want, and are demanding, the same treatment options for their pets as they can get for themselves.

5. Pet Insurance Edges Towards the Mainstream

We estimate the size of the US pet insurance market to be $271 million in premium in 2008, up from approximately $220 million in 2007 (a 23% increase) and we expect 2009 premium to reach $328 million. We project that the market will grow to $500 million by 2012. There are 11 pet insurance companies in the US selling under 15 brands. Two new companies arrived on the scene in 2008, including the Purina Pet Insurance brand underwritten by AIG.

New entrants with money is good news for the industry as bigger marketing budgets means increasing awareness for pet insurance in general. It appears that some of the largest big box non-pet retailers have backed off from plans to jump on the pet insurance bandwagon but watch for Petco to relaunch its pet insurance partership in early 2009.

6. Hybrids Take Center Stage

If you see a rather “woolly” Labrador playing at your local dog park, it is more likely to be a planned hybrid called a Labradoodle than from an accidental litter. Hybrid dogs are muscling in on the purebred scene, much to the chagrin of some and the delight of others, and they are garnering a lot of attention from pet parents looking for something that might be the best of two breeds. Recent years saw the popularity of hybrids grow rapidly (Puggles, Maltipoos and Golden Doodles are some examples) and, as predicted last year, 2008 saw the growth of the puppy farm hybrid to take advantage of the inflated prices people are paying for these dogs. 2009 is only going to get worse in this respect. 

The business environment has become much more challenging in 2008. Not only has the economy put pressure on discretionary income (what discretionary income, we ask?) but larger players are pushing into the market, looking for revenue growth. Savvy small businesses will take advantage of change to successfully place themselves uniquely in the market. Trends here include:

7. Increased Competition from Larger Players

Larger companies are beginning to recognize the economic potential of the pet industry. Target and Wal-Mart are both expanding their pet selection and using pets in their advertising. Big box pet specialty retailers, Petco and PetSmart, are going to start to feel the pressure of the low cost alternatives breathing down their necks if they haven’t already. PetSmart has slowed its new store openings and its push into pet hotels in 2009 and has seen a drop in 2008 growth of their higher margin goods and services over 2007 due to the poor economy. These companies will rely heavily on their loyalty programs to keep their core customers from straying to the competition.

8. Large Companies Hold off Buying Smaller – Just When Prices are Right

Some might say that right now is the perfect time for consolidation in the pet industry because of the incredibly low valuations but don’t expect much to happen in the first half of 2009. Not that the recession won’t have bottomed out by then but those that have cash will keep it close at hand for the time being; for those that don’t have cash, it won’t be pretty. For 2009, it’s heads down to keep the ship sailing on course; there will be very little in the way of distracting partnerships or alliances forged until the end of 2009.   

9. Increased Online Sophistication from new Pet-related Businesses in Ecommerce, Design, and Usability

Traditionally, small business sites have been set up by pet lovers with little thought on design, target audience, and content (yes, we still hear woofing and meowing on some sites when we log on!) In 2008, a whole slew of new “WebMD for pets” websites appeared, such as WebVet, PetMD, and PetDoc, and we’ll see them battle it out for the lead position in 2009.

Newer players are more sophisticated in design and ecommerce, reaching their target audience via web-site usability, SEO, paid search, and word of mouth. These websites are still in the minority of a largely fragmented pet marketplace but gives a savvy small business an opportunity to stand out from the crowd.

10. Pet-related Blogs Continue to Grow their Influence

The power of pet-related blogs really showed up during the pet food recall in the middle of 2007. Blogs such as Pet Connection, Pet Sit USA and Dolittler continue to provide high quality commentary on all aspects of pet news and issues. The number of quality pet bloggers is growing but at a slow rate, showing perhaps that many passionate pet parents haven’t found their blogging voices yet.

And one final bonus trend that indicates the direction of pet health …

11. The Divergence of the Veterinary Clinic

On the one hand, the advent of advanced human medical tests and treatments in the pet world has led to the growth in private specialty clinics. These clinics offer anything from comprehensive cancer treatment programs to advanced surgical techniques to correct knee ligament tears. The costs for these clinics are very expensive to cover the high tech equipment and staff needed but customers appear willing to pay their prices so far (likely supported more and more by pet insurance in the future.)

At the other end of the spectrum, there is good money to be made by a single veterinarian in a practice focusing on pet wellness, without the need for fancy equipment and more than a handful of support staff. You will see this divergence between wellness and accident/illness care in veterinary clinics grow noticeably over the next five years.

* * * * *

About the author: Laura Bennett is the CEO of Embrace Pet Insurance. Over her career working in the insurance industry in Dublin, Ireland, and Toronto, Canada, she eventually landed in the United States where along with Alex Krooglik, the two of them founded Embrace Pet Insurance to combine their love of pets, the desire for entrepreneurship, and Laura’s expertise in the insurance industry. Laura also writes a blog on pet-related issues, the Embrace Pet Insurance blog.

The post Pet Industry Trends for 2009 appeared first on Small Business Trends.

By Laura Bennett

The 2008 economics for pet-related small businesses will be affected by a continuing increase in pet-related spending, higher awareness of pet health, greater uptake of pet insurance, and continued humanization of pets, integrating them into all aspects of our lives. Trends include:

1. Pet parents continue to upgrade their purchases

Spending on pet supplies and over-the-counter medicines continues to increase with $9.9 billion projected to be spent in 2007, an increase of 6.5% over 2006, according to the American Pet Products Manufacturers’ Association (APPMA). Spending in 2008 will likely exceed $10.5 billion. People will continue to spend above and beyond on their pets as the population ages and pets take the place of children at home. Pet parents are upgrading necessities, such as food, leashes, and bedding, and some luxuries are not so unusual any more – how often do you see a dog dressed up to go out these days? High-end specialty pet stores continue to thrive despite competition from the big box stores as passionate pet owners look for selection, style, and a unique shopping experience.

2. Pet services for your pets grow in abundance

More than $2.9 billion dollars will be spent on pet services in 2007 according to the APPMA, which will likely continue to grow at around 7% for 2008. Again, pet parents are including their pets in their own lifestyles so visits to the spa, exercise regimes, and hotel-quality accommodations for day care are becoming more common place in urban areas. As we expected, we are seeing more services partnering together centered around pets, such as the Ritz-Carlton and the Barkley Pet Hotel and Day Spa providing pampering for your pet while you kick back in luxury. We also expect to see groomers, doggie daycares, pet hotels, pet insurance companies, lawyers providing pet trusts, and funeral homes providing services for pets also joining forces more and more in 2008.

3. Best friends in life and death

The year 2007 marked the death of Leona Helmsley and the $12 million trust fund she left for her dog, Trouble. New York is not the only state to allow money to be left to care for pets. In 2007, Ohio joined 37 other states plus the District of Columbia in passing a law allowing pet parents to set up pet trusts to take care of pets when they die. As the pet owning population ages, pet trusts will become more prominent. Greater awareness of how to provide for a pet after you are gone will lead to more and more elderly people keeping companion animals who might not have otherwise done so.

4. Growing interest in pet health care

Pet parents are taking control of their pets’ health care as they do their own children. Online resources continue to improve in quantity and quality (Wikipedia is a good place to start) and educated pet owners are arming themselves to guide their pets’ care. Technology from the human world continues to make its way into the veterinary tool kit including non-invasive surgeries, human medical devices and services being applied to pets, super-premium foods aimed at specific ailments, and alternative therapies, such as acupuncture, massage, and behavioral therapies. High end diagnostics, such as MRIs, are becoming more widely available for pets. Online veterinary pharmaceuticals continue to grow but veterinarians are fighting back by dropping their own drug prices. Pet lovers want, and are demanding, the same treatment options for their pets as they can get for themselves.

5. Pet insurance starts to go mainstream

We estimate the 2007 market size for pet insurance in the U.S. to be approximately $195 million in premium, up from $161 million in 2006, a 21% increase, and we expect 2008 growth to increase. We know of at least 2 more companies launching in 2008, adding to the current 9 pet insurance providers in the U.S. One of these companies is a mainstream pet food brand that has had an interest in pet insurance for many years. New entrants with money is good news for the industry as bigger marketing budgets means increasing awareness for pet insurance in general. Look for some of the largest big box retailers to jump on the pet insurance bandwagon later in 2008, which will start to push the mass awareness required to take pet insurance mainstream.

6. Hybrids take center stage

If you see a rather woolly Labrador playing at your local dog park, it is more likely to be a planned hybrid called a Labradoodle than from an accidental litter. Hybrid dogs are muscling in on the purebred scene, much to the chagrin of some and the delight of others, and they are garnering a lot of attention from pet parents looking for something that might be the best of two breeds. The year 2007 saw the popularity of hybrids enter the mainstream (Puggles, Maltipoos and Golden Doodles are some examples) but 2008 will see the rapid growth of the puppy farm hybrid to take advantage of the inflated prices people are paying for these dogs.

The business environment will start to become more challenging as a multitude of new players enter the market. Savvy small businesses will take advantage of change to successfully place themselves uniquely in the market. Trends here include:

7. Increased competition from larger players

Larger companies are beginning to recognize the economic potential of the pet industry. Target and Walmart are both expanding their pet selection and using pets in their advertising. Big box pet specialty retailers, Petco and PetSmart, continue to grow. PetSmart is making a major push into pet hotels (with over 50 of a projected 435 open thus far). These companies continue to move into the full service arena to encourage one-stop shopping and customer loyalty.

8. Large companies buying smaller players or interacting with small businesses behind the scenes, via monetary investment and/or marketing alliances

Not only are the more obvious pet-related giants, such as Purina, Hills, and Iams engaged in this activity (for example, Iams owns an 8.9% interest in Veterinary Pet Insurance and Purina launched a pet insurance product in Canada in 2007), but also other more surprising companies such as paper product giant Kimberly Clark, which is very interested in expanding its revenue stream into the supermarket pet aisle.

9. Increased online sophistication from new pet-related businesses in ecommerce, design, and usability

Traditionally, small business websites have been set up by pet lovers with little thought on design, target audience, and content. Newer players, such as Pawspot noted last year, and DogCars new in 2007 (and we continue to love Urbanhound), are beginning to be more sophisticated in design and ecommerce, reaching their target audience via website usability, SEO, paid search, and word of mouth. These websites are still in the vast minority of a fragmented pet marketplace but gives a savvy small business an opportunity to stand out from the crowd.

10. Pet-related blogs continue to grow their influence.

If you ever doubted the power of blogs in the pet world, you only need look at the impact of blogs during the pet food recall in the middle of 2007. Blogs such as Itchmo, Pet Connection, and Pet Sit USA were deluged by literally millions of people looking for information on the recall. The bloggers responded with up to the minute information and constant pressure on the authorities as the situation unfolded. While the web hits have died down, these bloggers have been stepped up a notch in the eyes of pet parents looking for quality information.

And one final bonus trend that indicates the sentiment of the pet-related customer …

11. More people traveling with their pets

From day trips with the dogs in the back of the car, to trips abroad with your pets, more and more people are including their cats and dogs in their travels. As a result, more hotels, such as the Comfort Inn all the way up to the Westin are accommodating pets beyond just allowing them on the premises. This gives small businesses the opportunity to provide services to local hotels for pets or for accessories to make traveling even easier.

* * * * *About the author: Laura Bennett is the CEO of Embrace Pet Insurance. Over her career working in the insurance industry in Dublin, Ireland, and Toronto, Canada, she eventually landed in the United States where along with Alex Krooglik, the two of them founded Embrace Pet Insurance to combine their love of pets, the desire for entrepreneurship, and Laura’s expertise in the insurance industry. Laura also writes a blog on pet-related issues, the Embrace Pet Insurance blog.

The post Pet Industry Trends for 2008 appeared first on Small Business Trends.

By Laura Bennett The 2007 economics for small businesses will be affected by a continuing increase in pet-related spending, focusing on improving pet health, trading up to quality for pet accessories and food, and an about turn on donations to pet-related charities. Trends include:

1. Growth in unique pet goods. The American Pet Products Manufacturers’ Association (APPMA) estimates that pet goods and medicines spending will grow 6.9% to reach $9.3 billion in 2006 (out of a total of $38.4 billion in overall pet industry expenditures). Much of the growth continues to come from the newer pet items such as pet deli snacks, toys, luxury items, and convenience accessories such as programmable feeding and watering stations, warming mats, and self-cleaning litter boxes. High-end specialty pet stores continue to thrive despite competition from the big box stores as passionate pet owners look for selection, style, and a unique shopping experience.

2. Growth in pet services such as grooming, boarding, pet photography, dog walking, and pet sitting. More than $2.7 billion dollars will be spent on pet services in 2006 according to the APPMA, which will likely continue to grow at around 8% for 2007. More pet owners will pay for these services as it is becoming socially unacceptable in some cities, such as New York and Los Angeles, to leave your dog alone during the day or your cat alone for the weekend. We also predict that we will see more pet services partnering together (or perhaps merging together) to support a pet through its life, such as breeders (birth), and groomers, doggie daycare, pet hotels, and pet insurance (lifetime services), and pet trusts and cremations/burials/memorials (for a pet’s death).

3. Growing interest in pet health care. This includes non-invasive surgeries, human medical devices and services being applied to pets, super-premium foods aimed at specific ailments, and alternative therapies, such as acupuncture, massage, and behavioral therapies. High end diagnostics, such as MRIs, will become more widely available for pets, with the price dropping accordingly. Online veterinary pharmaceuticals will become more main stream. Pet lovers want, and are demanding, the same treatment options for their pets as they can get for themselves.

4. Continued steady increase in pet insurance. The estimated 2006 market size is approximately $200 million, and is estimated to continue to grow by 25% to reach $250 million in 2007, according to the 2005 Packaged Facts “Pet Insurance in North America: The Market and Trends in the U.S. and Canada” report. While our prediction of one of the established companies being acquired in 2006 did not come true, it is only a matter of time before a large insurance company buys its way into the pet insurance arena. More and more employers continue to join the ranks of those who offer pet insurance as a voluntary benefit and at least one pet insurance company plans to start mass media advertising in 2007, increasing consumer awareness of pet insurance.

5. More pet-friendly environments. These environments pop up in places such as hotels (Starwood and Loews), restaurants (the Flying Fig in Cleveland, Ohio), and shopping centers (Stony Point Fashion Park in Richmond, Virginia) causing pet lovers to steer their business to where their pets are welcomed. Florida passed a doggie dining law in 2006 and other cities such as Houston are considering a similar move.

6. Philanthropy returns to the pet world. The events of September 11, the 2004 Tsunami, Hurricane Katrina, and the war in Iraq all attracted outpourings of charitable donations to the affected areas, diverting funds from smaller pet-related charities. While it will take time for donation levels to turn around, pet parents are doing good while catering to Fluffy’s every need as more and more pet-related companies are donating a portion of their sales to pet-related charities.

The business environment will start to become more challenging as a multitude of new players enter the market. Savvy small businesses will take advantage of change to successfully place themselves uniquely in the market. Trends here include:

7. Increased competition from larger players. Larger companies are beginning to recognize the economic potential of the pet industry. Target and Walmart are both expanding their pet selection and using pets in their advertising. Petco and PetsMart continue to grow rapidly, increasing their total number of stores by over 160 stores in 2005, which is projected to continue in the coming years according to their annual reports. These companies are moving into the full service arena if they aren’t there already, to encourage customer loyalty.

8. Large companies buying smaller players or interacting with small businesses behind the scenes, via monetary investment and/or marketing alliances. Not only are the more obvious pet-related giants, such as Purina, Hills, and Iams (for example, Iams owns an 8.9% interest in Veterinary Pet Insurance) engaged in this activity, but also other more surprising companies such as paper product giant Kimberly Clark, which is very interested in expanding its revenue stream into the supermarket pet aisle.

9. Increased online sophistication from new pet-related businesses in ecommerce, design, and usability. Traditionally, small business sites have been set up by pet lovers with little thought on design, target audience, and content. Newer players, such as Urbanhound and WagginTails noted last year, and Pawspot, a pet sitting community new this year, are beginning to be more sophisticated in design and ecommerce, reaching their target audience via web-site usability, SEO, paid search, and word of mouth.

10. More meaningful pet-related blogs. Blogs, written by both corporate players and evangelists, will become more prevalent, more widely read, and will have a significant influence on driving traffic and sales to smaller niche players. New blogs in 2006 include Scratchings and Sniffings, sponsored by Purina, and the Embrace Pet Community blog, part of the broader Embrace Pet Community sponsored by Embrace Pet Insurance.

And one final bonus trend that indicates the sentiment of the pet-related customer…

11. Pet adoptions continue to grow. Pet adoptions grow as the adoption network becomes more sophisticated, structured, and effective. In 2006, Petfinder, the largest online adoption facilitator, was acquired by the TV channel, Animal Planet in order to diversify the company’s pet-related revenue stream. Meanwhile, the number of American Kennel Club (AKC) pedigree dog registrations will continue to drop (over 21% from 2000 to 2005 according to the AKC) as pet lovers look to rescue those in need rather than buying purebred dogs and cats.

* * * * *

About the author: Laura Bennett is the CEO of Embrace Pet Insurance. Over her career working in the insurance industry in Dublin, Ireland, and Toronto, Canada, she eventually landed in the United States where along with Alex Krooglik, the two of them founded Embrace Pet Insurance to combine their love of pets, the desire for entrepreneurship, and Laura’s expertise in the insurance industry. Laura also writes a blog on pet-related issues, the Embrace Pet Insurance blog.

The post Pet Industry Trends in 2007 appeared first on Small Business Trends.

The 2006 economics for small businesses will be affected by an unabated increase in pet-related spending, focusing on improving pet health and trading up to quality for pet accessories and food. Goods and services trends include:

1. Growth in unique pet goods.

The American Pet Products Manufacturers’ Association (APPMA) estimates that pet goods and medicines spending will grow 8.6% to reach $8.8 billion in 2005 (out of a total of $35.9 billion in overall pet industry expenditures). Much of the growth will come from newer pet items such as pet deli snacks, toys, luxury items, and convenience accessories such as programmable feeding and watering stations, warming mats, and self-cleaning litter boxes. High-end specialty pet stores will thrive despite competition from the big box stores as passionate pet owners look for selection, style, and a unique shopping experience.

2. Growth in pet services such as grooming, boarding, pet photography, dog walking, and pet sitting.

More than $2.4 billion dollars will be spent on pet services in 2005 according to the APPMA, which will continue to grow at around 5% for 2006. More pet owners will pay for these services as it is becoming socially unacceptable in some areas to leave your dog alone during the day or your cat alone for the weekend.

3. Growing interest in pet health care.

This includes non-invasive surgeries, human medical devices and services being applied to pets, super-premium foods aimed at specific ailments, and alternative therapies, such as acupuncture, massage, and behavioral therapies. High end diagnostics, such as MRIs, will become more widely available for pets, with the price dropping accordingly. Online veterinary pharmaceuticals will become more main stream. Pet lovers want, and are demanding, the same treatment options for their pets as they can get for themselves.

4. Continued steady increase in pet insurance, with at least 2 new players arriving on the scene in 2006.

The estimated 2005 market size is approximately $160 million, and is estimated to continue to grow by 25% to reach $200 million in 2006, according to the 2005 Packaged Facts “Pet Insurance in North America: The Market and Trends in the U.S. and Canada” report. We also predict that at least one of the established companies will be acquired in 2006, possibly by a large insurance company trying to get into the pet insurance arena. More and more employers will offer pet insurance as a voluntary benefit and some of the larger pet insurance companies will start mass media advertising, increasing overall consumer awareness.

5. More pet-friendly environments.

These environments pop up in places such as hotels (Starwood and Loews), restaurants (the Flying Fig in Cleveland, Ohio), and shopping centers (Stony Point Fashion Park in Richmond, Virginia) causing pet lovers to steer their business to where their pets are welcomed.

The business environment will start to become more challenging as a multitude of new players enter the market. Savvy small businesses will take advantage of change to successfully place themselves uniquely in the market. Trends here include:

6. Increased competition from larger players.

Larger companies are beginning to recognize the economic potential of the pet industry. Target and Walmart are both expanding their pet selection and using pets in their advertising. Petco and PetsMart continue to grow rapidly, projecting to open over 160 stores between them in 2006, according to spokespeople quoted in the NY Times article “Wild Demand, and Competition, for New Pet Products” (Jonathan Grater, November 16, 2005.)

7. Large companies interact with small businesses behind the scenes, via monetary investment and/or marketing alliances.

Pet food companies may be the leaders here, but watch out for other active giants including banks, ATM companies, and large insurance companies.

8. Industry consolidation with larger players buying promising, smaller players.

Not only the more obvious pet-related giants, such as Purina, Hills, and but also other more surprising companies such as paper product giant Kimberly Clark which is very interested in expanding its revenue stream into the supermarket pet aisle.

9. Increased online sophistication from new pet-related businesses in ecommerce, design, and usability.

Traditionally, small business sites have been set up by pet lovers with little thought on design, target audience, and content. Newer players, such as Urbanhound and WagginTails, are beginning to be more sophisticated in design and ecommerce, reaching their target audience via web-site usability, SEO, paid search, and word of mouth.

10. More meaningful pet-related blogs.

Blogs, written by both corporate players and evangelists, will become more prevalent, more widely read, and will have a significant influence on driving traffic and sales to smaller niche players.

And one final bonus trend that indicates the sentiment of the pet-related customer…

11. Pet adoptions continue to grow.

Pet adoptions grow as the adoption network becomes more sophisticated, structured, and effective. Meanwhile, the number of American Kennel Club (AKC) pedigree dog registrations will continue to drop (over 18% from 2000 to 2004 according to the AKC) as pet lovers look to rescue those in need rather than buying purebred dogs and cats.

About the author: Laura Bennett is the CEO of Embrace Pet Insurance. Over her career working in the insurance industry in Dublin, Ireland, and Toronto, Canada, she eventually landed in the United States where along with Alex Krooglik, the two of them founded Embrace Pet Insurance to combine their love of pets, the desire for entrepreneurship, and Laura’s expertise in the insurance industry. Laura also writes a blog on pet-related issues, the Embrace Pet Insurance blog.

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