Editor’s Note: Welcome to the 2006 trends forecast for the pet-related industries, a special guest post by Laura Bennett, CEO of Embrace Pet Insurance. You might wonder why we would focus on pet industry trends, of all things. Simple: Pets are a huge business in the United States and some other Western countries where owners coddle their pets. (President and Mrs. Bush even feature their pets in the White House Christmas card and decorations. ) Although a number of large players have a foothold in the market — especially in the pet food category — it is also an industry in which startups and small businesses proliferate. Themes that stand out in this particular forecast include: luxury and discretionary expenditures, pet health care, and industry consolidation and alliances. Keep reading for the 2006 pet industry 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.
Shirley George Frazier
I don’t wonder why you’ve decided to focus on the pet industry. As you point out, the industry is massive and will continue to grow. Small businesses should consider adding this sector to their plans if possible.
Pet blogs is one aspect I hadn’t considered, and I personally think that would be a hit, tying many ends together (owners, suppliers, manufacturers, etc.).
Personally, I’d do anything for my two dogs. Both were adopted. Money’s no option if the product or service keeps them healthy and happy. My feelings are shared by many pet owners, and that’s the reason for industry profits.
I would hope the pet adoptions continue to grow. Less stray pets, better society for all of us!
These are all very interesting and true trends, but what about the trend in the dog collar industry? Isnt there a dmand for dogs to be well trained the these stimulation dog collars seem to be the trick…right?
I am interested in starting a doggie store. I do not have any start up capital. Is it possible for a woman to start a business? I am interested in the most pet friendly small towns in the eastern part of the united states, preferably near a major city near the mountains of ocean…
Can anyone give me the market size of the pet food industry segmented based on the end user applications ?
It is interesting to find out how much is spent a year on pets and the growth, but how many times does the average person visit a pet store, breeder, or groomer a year. I realize that the average person spends almost $40 a visit. If you know this information please email me at firstname.lastname@example.org.
It’s amazing how big pet industry really is… good article.
Good to see that dog adoptions continue to grow. I just adopted a lovely Schnauzer dog about two years old. I recommend doing that instead of going to a breeder. 🙂
It’s really interesting to look back at the 2006 trends and see where we are now. I love that increased interest in adoptions has been on an upward swing for a while and that the pet blogging field has continued to grow. It surprises me though that “meaningful pet blogging” has been an identified trend for almost 5 years now and yet it wasn’t until last year that an industry conference like BlogPaws existed.
I work in the pet death industry, and I have found that the biggest source of new costumers is online. Having a easy to use website that is well advertised has become one of our main focuses. A year or two ago I would have told you that I did not need a website, but everything is moving to internet advertising. My advice is think outside the box and target internet sales.
The pet industry is growing everyday. It seems that most people who have a pet pampers them better than their own selves. I think that if you have a pet and you are not going to breed it or even show it then it should be mandatory to have it fixed, especially if you have cats that go out doors. We need to cut down on the pet population since many are just left to fend for themselves. If you are getting a new pet, I think adoption is a wonderful to go. Give a lonely animal a loving home.