Lately, everyone is feeling the tight pinch of their money during the worldwide recession that we are all currently in. The good news, however, is that the pet industry seems to be doing quite well for itself, especially in terms of luxury goods and gourmet pet foods.
The pet industry, according to the American Pet Products Association, grew by an astonishing $2 billion in 2008 and is predicted to do $45 billion in sales in 2009. In 1994, that sales number was a measly $17 billion.
“We’re as recession-resistant as any industry I can think of,” stated Bob Vetere, the association’s president.
Euromonitor International, a market researching company that tracks the sales of pet food and accessories (not including the actual purchase price of pets, grooming, training and other such expenses), estimates this year’s pet spending to be a whopping $23.9 billion. Astonishingly, the group also forecasts that the pet industry’s sales are still on pace to increase to more than 13 percent by the year 2013.
Retail experts believe that many pet owners are as devoted to their pets as parents are to their children; which means that they are willing to forgo their own little luxuries before even considering denying their pets any luxuries.
Although 2008 saw one of the worst fourth quarters in generations, the luxury pet products industry saw itself expand.
Such pet product companies sell everything from organic doggie treats to couture inspired clothing and pet toys. These pet business owners are ecstatic that their business’s sales are up, despite the economic indicators showing that the majority of today’s shoppers are actually tightening their budgets during one of the worst downturns in monetary history.
“I think they’re buying nice dog collars instead of remodeling their kitchen,” said Fiona Tavernier, owner of Lollypadoodle in San Francisco which sells wool stuffed dog toys. Lollypadoodle’s business is still going strong despite the current monetary deficiency.
“You know, for some families, the pet comes first,” said Carol Perkins, the president and co-founder of Harry Barker, a Charleston, S.C. based pet toy company whose sales were up 40 percent by the end of 2008. “The dog goes to the vet first, and the dog gets organic food. Maybe some people will cut back on a dog bed, but they’ll still buy dog treats, toys and collars and leashes.”
Morningstar analyst, R.J. Hottovy explained that the pet industry is “more resilient than most categories tied to discretionary spending. It’s one of the last categories [people] cut out of their budget.”
Consumer Reports ran a poll in their ShopSmart magazine that concluded that female shoppers were more likely to buy the cheaper, no-name brands of goods but refused to switch to less expensive pet foods or personal care items.
Since the outbreak of pets that were poisoned from food that was imported in from China, many dog and cat owners have switched their pets to a more organic gourmet food, thereby securing the organic pet food’s future profits.
Another aspect is that the potential of digestive problems in cats and dogs from switching their foods from a higher grade quality to a lower grade quality is too serious for most pet owners to risk.
“Once people have their pets on a certain pet food, there’s health risks to switching over to another,” Mr. Hottovy said. “As soon as they’ve moved up to the premium brands, they’re kind of locked in, so it’s hard to trade down.”
However, there are a few luxury pet retailers that are finding that some of their most expensive items, such as custom made $4000 poster dog beds or crystal cat food dishes, are not selling as fast as they used to.
“Gone are the days when people would buy $100 collars and fake fur,” said Claire Chew, of Venice, California, who founded Luxepets, a line of pet keepsakes.
Some pet store owners are actually increasing their sales by increasing the amount of less expensive products that they stock in their stores. Such as Paige Ormand, the owner of the Doggy Style Pet Shop in Chicago’s Wicker Park, who ordered $5 toys instead of the $20 variation. However, Ormand is not removing the expensive gifts from her store shelves, either.
“This industry is way more insulated than other businesses,” she said. “But I wouldn’t say it’s recession-proof.”
In the last three recessions, pet supply stores actually saw a 3%, 3%, and 8% growth in sales. Even though their human companions have a lighter wallet, most pets will not have a lighter appetite, and it’s because of that, that pet stores will be able to fare quite well for themselves in times of economic despair.
Photo Credit: Joi