Strategic Data Analysis – What is it? Why do it?

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Data Analysis is certainly not new concept. It is a common practice and is just mathematically structured “common sense”. Strategic Data Analysis is different in that the person performing or directing it has an in depth knowledge and understanding of the industry gained from years of “street experience”. When you begin “Drilling into” data you are setting off on a pathway to a specific goal. Along the way, there will be forks in the data road. Strategic knowledge keeps you on the right path. It guides the analytical method and results in more targeted and effective recommended actions.

The “math” that I do with the data from the US BLS Consumer Expenditure Survey is Strategic Data Analysis at a very high level – a bird’s eye view of the marketplace. It still uncovers answers to spending questions. For example, in our analysis of the spectacular lift in Pet Food Spending  we found that it was primarily driven by the Baby Boomers. Now, how you keep them spending and spread the word to other groups becomes a marketing problem, which requires more research.

When you do strategic data analysis of your own business, the results become more personal and much more actionable. You now know how and on what your customers are spending their money. The behavior and trends that you find are not necessarily “national” trends. They are your trends. You “own” them and you get to decide what actions to take.

Strategic Data Analysis will vary depending upon your place in the consumer products distribution pattern. Manufacturers, Distributors and retailers all have a slightly different set of analytical needs. However, they all do share one important commonality. Ultimately, the Consumer is driving their business.

Some typical elements in Strategic Data Analyses are:

  • Category Management/sku Rationalization
  • Consumer Decision Tree/Product Attributes
  • SPPD – Sales Per Point of Distribution
  • Sales/Profit per – sq ft, linear ft, size….
  • ACV – All Commodity Volume
  • Power Ranking
  • Gap Analysis – Prioritized
  • Average SKU – Straight or Blended
  • Promotional Planning & Assessment
  • GMROII & Turns

I’m sure that some of these are very familiar and relevant to you and your business and some are not. And remember, this list is just a sampling. To be effective, Strategic Data Analysis must always take into consideration the type of business. However, businesses, like people are unique. To maximize the effectiveness, it should also be customized specifically to your business -”Strategic”.

“Strategic Planning” is a term that I’m sure that all of you are familiar with. Once again, the strategic plan must fit the business. It includes specific Strategies in key areas like Products, Pricing, Positioning, Promotion, People and…Profit.

Strategic Data Analysis is a key element both in developing the plan, especially when you get down to the tactical level and in regularly monitoring progress. Strategic Data Analysis tells you what is happening at the ground level…where the battle is being fought. Plus, as everyone with a GPS knows, to get where you want to go, you first have to know where you’re at.

The monitoring of your progress is a critical element in Strategic Data Analysis. The Best Strategic Plans still require “tweaking”. It is literally impossible to foresee every element of the future. To be successful you need a great strategic plan and an organizational commitment to execute the plan. However, you must always be prepared to make changes. What these changes are and when they should be enacted is determined by conducting a strategic data analysis on a regular basis.

You may hire someone from outside to come in and do this for you. However, the best way is to set up an internal program that your organization runs. Not only is this a lot cheaper but you and your employees take ownership of the knowledge. This familiarity will work its way into everyday business decisions and generate more profit in unforeseen ways.

I hope that I have answered, “What” is Strategic Data Analysis? I think that there have also been some insights into the “Why”. The answer to “Why” is really quite simple. You should do it because it will help maximize the success of your business. However, it is a decision that each business must make for themselves. Let’s consider the Upside and Downside of the decision.

On the Upside –

  • You will find aspects of your business that are performing exceptionally well and why. This will help you maintain this pace and perhaps find ways to spread this success to other areas.
  • Some things may be running as planned, but show no elements that can be improved or transferred. In these cases you just monitor the situation and keep it up.
  • You could find situations that are not performing. These are often masked by successes in other areas. Drill into the situation. Find out “why” and take corrective actions. These cases are truly “found” money and can make a big, unexpected impact on the bottom line.
  • The results will allow you to update your Strategic Plan, including specific immediate actions to take. Strategic Data analysis keeps you on the path to success.

On the downside –

  • Your Strategic Data Analysis may determine that everything is running perfectly. Nothing can be improved.

Whether to conduct or “pass” on Strategic Data Analysis presents a rather unique situation. How often in business or in life are you presented with a decision in which…

the worst case scenario is that it will produce mathematical evidence… …that you are a genius?

Get on board with a Strategic Data Analysis System. You have nothing to lose and everything to gain.

If you have questions or would like to discuss how Strategic Data Analysis can help your Pet Business, contact me through this site or at  [email protected]. I also have some time available at the upcoming Global Pet Expo. If you would like to set up a brief meeting in Orlando, let me know. On site, you can contact me on my cell 303-909-9480. Texts are fine.

And Always Remember to…Do the Math!

Attending Global Pet Expo 2017?…It’s the Show that Means Business and…You Need a Plan!

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Global Pet Expo has come a long way from that first show in 1958 with 17 exhibitors and 30 booths. In 2017 attendees will see and experience:

  • 1172 separate exhibitor booths
  • Over 350,000 square feet of booths (Plus 30,000 sq ft for the New Product Showcase) Global Pet Expo 2017 actually occupies almost 18 acres of prime Florida “real estate”.
  • 1000 new items in the New Product Showcase plus 3000 more launched on the exhibit floor
  • Sharing the aisles with 16,000+ attendees, more than 6000 “buyers”.
  • The opportunity to choose from 31 different educational seminars (plus 1 repeat) – 33 hours of classes
  • 5 miles of aisles – just to walk the exhibit floor

The show floor is open for 26 hours so let’s put this in perspective and… “Do the Math!”

If you don’t attend any seminars, visit the New Product Showcase, stop to chat with anyone in the aisles or for food, a drink or to go to the bathroom and maintain a walking speed of 2.5 mph…

[box]you can spend 1 minute and 14 seconds with each exhibitor.      You definitely need a plan!

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The theme of Global is the Show that Means Business. That is totally appropriate. Attendees and Exhibitors better “tend to business” if they want to get the most out of the wealth of opportunities presented at the show.

First and foremost, Global is about Pet Products – Food, treats and a vast array of Supply categories. A regular flow of New Products is always critical to keep businesses and the whole industry strong and growing. Obviously, you must take the time to visit the New Product Showcase. You should also sign up for any relevant classes, network with other industry professionals and…walk the whole show.  There are 3 times as many new products being “launched” on the show floor as there are on display in the New Product Showcase. Plus, 1 of every 3 exhibitors was not at Global 2016. Global is about gathering information and making decisions to improve your business – whether they are made on the spot or put on your “must do” list.

Every business can improve in terms of products. If you are a retailer, what sections of your store are not doing as well as you hoped and need a “facelift” or conversely, what areas are growing and need products to fill additional space? Category managers for distributors and retail chains may only be interested in targeted visits to exhibitors relevant to their “categories”. Representatives may be looking for new manufacturers…in specific product categories. Manufacturers could be looking to find distributors to handle their products or just looking to “check out” the competition. In regard to products, there is always something to see…for everyone!

And Global is the place to see it. It is the show that Means Business and in Business, Time is Money. At Global, Time is perhaps the most valuable commodity. How do you make the most of your time on the show floor? Here’s an idea.

In 2014 I first designed a tool in Excel, the Super Search Exhibitor Visit Planner to make “working Global & SuperZoo easier and more productive for ALL attendees – retailers, distributors, reps, groomers, vets…even exhibitors. I have updated the data and produced a tool for every GPE and SuperZoo since then…including GPE 2017.

The “update” is not just to exhibitor lists, but also to the product category offerings for every exhibitor. I reviewed every exhibitor profile on the show site but I also visited over 1100 websites and conducted separate internet searches to “validate” the offerings. It is not 100% accurate, but it is close.

What does the SuperSearch do?…It searches for and produces a list of Exhibitors by product categories.

  • From the simplest – “give me a list that I can look at on my phone or tablet in either Booth # order or alphabetically”
  • To the most complex…”can do a simultaneous search for multiple specific product categories, allowing me to personally narrow down the initial results and see the “final” alphabetically or by booth number”

The GPE Super Search Exhibitor Visit Planner does both…and more…and does it quickly! Take a look at the New Quick Start Guide. You will see that it looks complex but is really quite simple.

GPE 2017 Super Search Exhibitor Visit Planner – Quick Start Guide

The GPE Super Search Exhibitor visit planner is designed to make your time on the show floor more efficient and more productive. With the Super Search you can conduct up to 5 separate and distinct product category searches simultaneously with consolidated results produced in booth # order to facilitate your “journey”. There are also detailed instructions for reference and to help you understand the nuances of the tool. However, it is really very simple so let’s get started. Here is the Dashboard where you set up your searches. ↓

On the dashboard, the first things to note are the numerous category columns. There are 5 different floor sections, 11 different Exhibitor or Animal Types and 32 Dog and/or Cat Product categories. You can search exhibitors for any combination of these.

Let’s take a specific example running 3 simultaneous searches for several Dog/Cat categories:

  • Toys
  • Treats
  • Catnip & Litter (Must have both)

Now referring to the Dashboard, let’s take it by the numbers:

#1. This column is where you activate each search. Type in a “Y” (Cells C3>C7 will auto-capitalize) This search “line” becomes active.(cell turns green) In our example we are running 3 searches so we have 3 green “Y”s

#2. Now we enter a 1 in the correct column for each search line. Search Line 1: Toys; Search Line 2: Treats.

#3. In Search Line 3 we want exhibitors that sell both Catnip and Litter so we put a 1 in both of these columns.

#4. Now we just “click” the Execute Search Button. The searches are done simultaneously and the results combined into 1 list in alphabetical order.

#5. If you would like the list in Booth # order, just click the Booth # Sort.

#6. You can switch back to an alpha list by clicking the Alpha Sort Button.

#7. To Clear all your search categories and start a new search, Click the Clear Criteria Button. Then click Execute (#4) again and you will be back to the full list

Note: Any Search Line with a Y and no 1’s in any column will always deliver the entire list regardless of what is selected in other lines. Change the Y back to an N in unused search lines. Now a sample of the results:

Company A – Has Toys Only; Company B has Dog Treats Only and is also a 1st Time Exhibitor at GPE; Company C is on the list for Treats and also has Catnip, but no Litter. This is not unusual as Catnip is often a Treat; Company D has Treats & Toys. Company E has both Catnip and Litter and in fact, actually has it all!

Note: The Super Search highlights your search categories so you know “why you are there”. However, it also shows all categories that are available. Some might “pique” your interest while you are visiting the booth.

You can review the exhibitors alphabetically then put the list in Booth # order to make it easier to “work”. Super Search also allows you to “cut down” the list with a “U pick ‘em” feature. (pg 2; Point #11 in Detailed Instructions) However, first I suggest that you “play” with the Super Search to get a “feel” for the tool, and then review the Detailed Instructions. With your “play” experience, the detailed instructions will become a “quick read” and a valuable reference. You will soon be “up to speed” on the full capabilities of Super Search.

Ready to Start Planning?

Use the links below to download the Super Search Tool (Be Sure to Enable Editing/Macros/Content if asked by your computer), the Quick Start Guide and the Detailed Instructions. Then GET STARTED!

[button link=”https://pmud8a.a2cdn1.secureserver.net/wp-content/uploads/2017/02/GPE-2017-QuickStartGuideSUPERSEARCHExhibitorVisitPlannerFINAL.pdf” type=”icon” newwindow=”yes”] Download Quick Start Guide (PDF)[/button]

(To save the PDF to your computer Right Click the download link and select “Save Link As…”)

[button link=”https://pmud8a.a2cdn1.secureserver.net/wp-content/uploads/2017/02/2017-GPE-SUPERSEARCH-ExhibitorVisitPlannerDETAILED-Instructions-2-28.pdf” type=”icon” newwindow=”yes”] Download Detailed Instructions (PDF)[/button]

(To save the PDF to your computer Right Click the download link and select “Save Link As…”)

[button link=”https://pmud8a.a2cdn1.secureserver.net/wp-content/uploads/2017/02/GPE2017-SuperSearch-FINAL.xlsm” type=”icon” newwindow=”no”] Download GPE 2017 Super Search FINAL (Excel)[/button]

(For the Excel file to work on your computer, be sure to enable macros/editing/content if asked.)

 

GLOBAL PET EXPO 2017: “The Show that means Business” is coming soon!

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Every Pet Parent knows the joy and fulfillment that comes as a result of their companion animals. Plus, the folks at HABRI have taken this a step further. They continue to compile mounds of evidence that definitively proves that companion animals do improve our physical and mental health. We are all extremely lucky to be involved in an industry that works to improve the quality of life of both companion animals and people.

However, as this year’s GPE so rightly points out, the Pet Industry is also about business. The GPE evolved from the APPMA. That first show took place in 1958, with 17 exhibitors occupying 30 booths. This year’s GPE will showcase the wares of over 1158 exhibitors occupying more than 1164 separate booths. If that increase seems impressive, consider this. The US BLS dug into their archives and I was able to calculate that Total Pet Spending (All 4 Segments) in 1960 was $1.08B. In 2015 it reached $67.75B. Let’s put this huge increase in perspective. Adjusted for inflation, Pet Spending has increased at an annual rate that is 78% faster than Total U.S. Income and twice as fast as Total Consumer Spending..

This growth has attracted some attention and a “little” competition. Pet Products are now sold in over 200,000 U.S. retail outlets, plus the internet. Moreover, the combined exhibitor list from GPE 2016-17 and SuperZoo 2016 totals over 1900 different companies. About 25% of all show exhibitors don’t return the following year and every year they are replaced with new “entrants”. Without a strategic plan and a strong business focus , pet companies can and do fail. This rule extends beyond “startups”. Existing companies – manufacturers, distributors and retailers are not immune. So… TAKE CARE OF BUSINESS! And the place to do that is… GPE 2017. Let’s take a look at what awaits you in Orlando.

First, some 2017 GPE “booth” facts: (As of 2/20/17, 99+% of the booths were taken. A handful await final commitment.)

  • Over 1164 booths – up 3.9% from 2015
  • 350,000 sq ft of exhibit floor booth space (Not counting the new product area) – up 5% from 2015
  • 10 x 10 is still the most popular size – with 422, in fact 70% of the booths are 20 x 10 or less.
  • But Booths are 2% larger than 2016 – the “average” booth is over 300 sq ft (30×10)
  • Size matters – Booths 300 to 800 sq ft (25%) occupy 41% of the space. Those over 1000 sq ft (4%) cover 26%.

Will you see any new exhibitors or is it the usual group? The “usual” group is definitely there (773 from 2016) but…

  • 391 (34%) of the GPE 2017 Exhibitors did not exhibit at GPE 2016 (1 in every 3 Exhibitors this year was not at GPE 2016!)
    • In fact, 325 (28%) of this year’s GPE exhibitors didn’t exhibit at either GPE 2016 or SZ 2016

There are Specially Designated “Floor Sections” at GPE. Here is a brief review.

  • International – Now separate pavilions for 4 countries – China, Taiwan, Great Britain and Canada, Total: 78 This is up 50% but is only about 1/3 of the 200+ exhibitors from outside the U.S. GPE is truly GLOBAL!
  • Natural – 151 Booths: Up 29 (24%) “Natural” is still a “magic” word to the “ultimate” buyers – the consumers.
  • Boutique – 52 Booths: Up 1 (2%) The section is “stable”, but down 20% from 2014. It is also much smaller than SuperZoo’s Rodeo Drive. A big factor may be the higher percentage of Retail Pet Stores among SZ attendees.
  • Aquatic – 51 Booths: No Change. GPE has a long standing commitment to be the “go to” show for Aquatics.
  • 1st Time Exhibitors – 136 Booths: The Section is full but only includes about half of the 265+ 1st Time exhibitors at the show. If you want to get firmly established in the U.S. Pet Industry, you “must” do GPE. Every year, a major focus of Global Pet Expo is on “new”…both in products and in exhibitors.

A word of caution: These are specially targeted sections. However, as we have seen, there are large numbers of exhibitors in the “regular” floor space who would qualify for inclusion in these sections. You need to “work” the whole show to insure that you get a full view of the product categories of interest to you.

To facilitate show planning for attendees, in 2015 I developed a search tool for GPE and SuperZoo . Using Super Search, attendees are able to plan out their floor time by targeting the exhibitors with products that they are interested in seeing. Up to 5 product category searches can be run concurrently and the results are available in alpha or booth# order. The GPE 2017 Super Search will be published on 2/28. Now, let’s take a look at the results from this year’s research on exhibitors’ product offerings.

First We’ll Compare Exhibitor Types – By function: By Animal type

  • Dogs Rule – 84% (5 out of every 6 booths) are selling dog products.
  • Cats are making a move – In 2017, Cat Products surpassed 50% of exhibitors. Up from 40% in 2014.
  • Fish/Aquatic is still positive. The other animals, especially reptiles and small animals are losing space.
  • Business Services – This can range from POS systems to private label manufacturing. The growth is huge and reflects the growing business needs of attendees.
  • Distributors – The count is less than half of SZ, but growth reflects GPE’s increasing appeal to independents.

Dogs and Cats are the undisputed royalty of Pet. Because of their huge impact on the industry. I have divided the products designed for them into 32 subcategories. Let’s see how this year’s GPE Top Ten (by booth count) are doing.

  • Treats are still #1 and expanding their lead. Nearly 1 of every 3 GPE booths is selling dog and/or cat treats.
  • OTC Meds/Supplements continue strong growth. 212 Booths: Up 99 (88%) from 2014. Many are in treat form.
  • Food and even Feeding Accessories both showed strong growth, gaining in both Booth Count and share.
  • Toys – It’s not all about health and nutrition. There is still room for fun. Toys moved into a tie for the #2 spot.
  • Apparel fell 2 spots in rank and is losing exhibitors. The count is down 10% from the peak in 2015
  • Collars & Leads – Stable in count but losing share. The numbers are actually buoyed up by wellness products.
  • Beds/Mats gained slightly in count but fell in rank and slightly in share.
  • Carriers – Took advantage of the drop in Clothes to move up in rank. Soft-sided carriers were a big factor.
  • Grooming Tools – The Service Segment is strong. Tools entered the top 10 last year and continue to grow.

U.S. Consumers are more nutritionally focused and are transferring this attention to their companion animals. Super Premium Foods and Treats, Health & Wellness related products from Supplements to specialty feeders and even health related collars are filling the internet, more and more retail shelves, consumers homes…and of course, GPE Booths. Except for the strong, “fun” move by Toys, in 2017 the trend is function over fashion.

The last chart details the specifics for all 32 of the Dog/Cat product categories that I defined. Of note: All the data inputs for this report and the SuperSearch tool come from  a review of the GPE online exhibitor product listings AND visits to over 1100 websites. They’re not 100% accurate, but pretty close. Changes of special note from 2016 are highlighted.

Which categories are of interest to your business?

In addition to being bigger, the show staff works hard to make each GPE better, including enhanced educational offerings and of course…the New Product Showcase. In combination with the excellent work being done on SuperZoo, we have 2 “must attend” U.S. Pet Industry Shows. Thank you, APPA, PIDA and WPA!

Taking Care of Business – Time is Money. If they do nothing else, attendees can spend 1 minute and 14 seconds with each exhibitor. To have a successful show, everyone needs a plan. Exhibitors must provide accurate, advance information on their product offerings and showcase the “right” items in an impactful manner. Attendees need to Strategically Analyze their data, determine what they need to improve their business and develop a plan to find the products to fulfill their business needs. Then…execute the plan. Taking Care of Business requires planning and hard work. The GPE Super Search tool will be released in my upcoming post on 2/28/17. I believe that it can help. Good luck and I hope to see you in Orlando!

2015 Pet Products Spending $44.4B – Part 3: Pet Food Compared to Pet Supplies

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Pets, Food and Supplies account for 65.5% of Total Pet Spending and are often grouped as Pet Products. They do have many similarities in their spending demographics and they are certainly different from the Services group. However, there are also some distinct differences. We will take a closer look and compare the spending demographics of Food vs Supplies. Most of this final part of the report will be in the form of graphs which should make it easier to “see” the differences…and similarities. Plus, we will add some brief observations along the way. (Note: At the end of this post we will provide a link to download a full report on the Demographics of Pet Products Spending – a PDF file which combines all 3 parts into 1)

First, let’s put the 2 Industry Segments into perspective. Remember, overall Product Spending was $44.4B; Up $3.3B (+8.1%)

Pet Food (& Treats) – 2015 $29.5B; Up $5.4B (+22.5%);

  • Share of Pet Products $ – 66.4%; Share of Total Pet $ – 43.5%
  • This largest segment of the industry is truly “needed” spending for every Pet Parent. Of course, many treats are “discretionary” and you can exercise discretion in the price you pay. However, if you have a pet you must buy food.

Pet Supplies (& Pets) – 2015 $14.9B; Down $2.1B (-12.4%);

  • Share of Products $ – 33.6%; Share of Total Pet $ – 22.0%
  • This is the 3rd largest industry segment. While many Supplies are “needed”, many more are “discretionary. Also their “usage” rate is generally lower than Food items. A spending drop may just be the result of reduced purchase frequency.

Let’s first compare where most Food & Supplies Spending comes from…in the 2 charts that follow.

  • In all but 2 of the categories, the same demographic group generates 60+% of the $ for both Supplies & Food.
  • In the Age Group, Boomers, with their upgrade in Food are having a big impact. However, supplies perform better with all the younger groups and spending performance drops off markedly for age 55 and older.
  • In the Occupation category, All Wage & Salary Earners doesn’t quite reach our 60% minimum for Food. This occurs because Retired people and No Earner CU’s have a large share of pets. Their spending on Food is necessary. Supplies is more discretionary. Income does matter but “how you make it”, not as much.
  • Yes, Income does matter, especially to Supplies. Higher income is obviously important to both Food and Supplies. However, please note how the share of Supplies Spending increases both in the Income category and in those categories directly related to income, like # Earners, Education and Occupation. Income matters a lot to Supplies.

In the next 2 charts we’ll compare Food & Supplies in terms of the best and worst performing segments in 11 Demographic Categories. The similarities become immediately apparent. Although the performance may differ, the Best or Worst performing segment is the same for both Food & Supplies over 70% of the time.

  • Income jumps right to the forefront again. It is important to both but more important to Supplies. Note the Over performance by Supplies in Income & Occupation “Best” and under performance in the “worst”. Note in Age “Best”: 45>54 is the highest income group.
  • It is no surprise that Homeowners with a mortgage and rural/suburban areas are the best performers. Owning your own space and having a little more room to share with companion animals has always been a key to spending.
  • Center City, Renters, Over 75, Singles and Single Parents are also traditionally low performing groups. However, we should note the improving performance, especially by Supplies in the Rental and Center City environments.
  • You can see the impact of the Baby Boomer Food upgrade in the performances of 55>64 and Married Couples only.

  • Most of these best and worst performers reflect the points already made. However, the performance of the Adv. Degree segment speaks for more than just income. It is also knowledge to see the true value in the Food Upgrade.
  • The 2+ People winner for Supplies is interesting. After you reach 2 people in Supplies spending, all sizes of CU’s perform well and within 2 percentage points of one another. In Supplies Spending, it literally just takes 2.

Next, we’ll finally “show you the money.”

The Winners and Losers in Spending $ in 2015 – The Biggest $ changes

In the final section of this comparison, we will identify the segments that had the biggest gains and losses or smallest gains in spending $ for Pet Food and Pet Supplies. This is where specific differences come to the forefront. Only 30% of the winners or losers occupy the same “position” for both Food and Supplies. In fact, some are the winner in one and the loser in the other. For that reason, we will present Food and Supplies in separate charts. I have indicated the “dual” winners or losers by “boxing them in”. Take a look at both charts. Then we’ll wrap it up with some closing observations.

Overall, Food had a great year with a $5.3B increase and 6 categories with no negative segments. Supplies was the opposite story with a $2.1B decrease that seemed to affect everyone. I was surprised that I found 8 segments with  positive numbers. Here are the impacting trends that we have seen reflected in this and earlier Demographic Analyses:

  • The Baby Boomer Food upgrade – a huge impact. However, there were also increases in regular food spending.
  • The <25 Millennials are becoming Pet Parents and even opting for upgraded food.
  • The big drop in Food spending in the 25>34 group – probably a Food upgrade roll back due to financial pressures.
  • The Overall drop in both Food and Supplies for the 25>44 age group. They are the traditional American H/H’s and affect a wide number of Demographic Categories. Like most drops, it was undoubtedly due to financial concern.
  • Speaking of age, we also discovered that the younger groups are more “into” supplies than their older counterparts.
  • We know that Income is an important factor in spending, especially for supplies, but “commitment” and education have also come to the forefront with the Food Spending Performance by Retired People and College Grads.
  • All Racial/Ethnic groups bought more Food and Hispanics had an increase in both Food and Supplies spending.
  • Renters and Center City both had increases in Food & Supplies. Pet Parenting is gaining in two normally slow areas.

We are truly “done”… for now. We have seen what happened in 2015. And as always, it raises big questions for the next year, like… Will the Boomers “stick with” their upgraded Food and will this trend become widespread across other demographics? Will the Supplies Segment rebound after a tough year? We’ll start to get answers in May with the release of the US BLS mid-year update.

Below is the link to download the complete 3 part report on the Demographics of Pet Products Spending.

(To save the PDF to your computer Right Click the download link and select “Save Link As…”)

 [button link=”https://pmud8a.a2cdn1.secureserver.net/wp-content/uploads/2017/02/2015-PetProductsSpendingDemographics-FullReport.pdf” type=”icon” newwindow=”yes”] Download Full Report (PDF)[/button]

2015 Pet Products Spending $44.4B – Part 2: The “Winners” & “Losers”

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Spending on Pets, Food and Supplies in 2015 totaled $44.4B, an increase of $3.3B (8.2%) over 2014. In part 1 of this report we established who was doing most of the spending (60>80+%) in the major demographic categories. In this section, we will drill deeper into the data to determine:

  • Which segments are performing best…and worst in each demographic category
  • Which segments had the biggest gain or loss* in Spending $. (*or smallest gain)
  • Some non-winners whose performance merits “Honorable Mention”
  • The “Ultimate” Pet Products Spending Household in 2015

Performance

We’ll get started with the best “Performing” segments. To determine a segment’s performance we simply compare their share of the overall Pet Products Spending to their share of the total CU’s. (Financially independent Consumer Units) Example: If a segment spends 15% of all Pet Product $ and has 10% of all the CU’s, then their performance rating is 15/10 = 150% – very good. If their share of spending was only 5%, then their performance rating is 5/10 = 50% – not so good. This method puts every segment on a level playing field…then, may the best one win. All numbers in this report were calculated from data provided by the US BLS in their Consumer Expenditure Survey.

Here are the best and worst performers for 11 demographic categories, ranked by performance – from high to low.

Most of the “winners and losers” are the same as last year and largely due to the extraordinary lift in Food spending, all the winners match the Total Pet Spending honorees. Let’s look at some differences of note from the 2014 list.

  • The average winning performance is 6% higher than last year and the average” loser” is 4% lower so the differences are becoming more extreme.
  • The influence of the Baby Boomers’ upgrade in Food is apparent across several demographic categories
    • Age – Last year the 45>54 group won and was 8th This year age has more impact – ranked 3rd.
    • # in CU – Last year the winning number was 5+. This year it is 2
    • CU Composition – Last year it was all married couples with children. This year, only those with a child over 18.
  • CU Composition – Although singles always have low performance, usually the lowest in this category goes to single parents because of their extreme financial pressures. But not in 2015.
  • Age – In 2014 the lowest performers were the <25 group. In 2015 they achieved a greater share of Pet Products spending. The falling share of the over 75 group is not unexpected as their Pet Parenting days inevitably end.

Now let’s truly “Show you the money”. In the next chart, we’ll look at the biggest $ changes in spending from 2014. In most cases there are both positive and negative situations. However, in 2 categories every segment spent more in 2015.

In this chart, we truly see the Boomer’s influence on Pet Products spending and how 2015 was radically different from 2014. Not only are there new winners and losers in virtually every category, but in many cases they just switched positions. 2015’s winner was 2014’s loser and vice versa. We’ll take a look at one demographic category at a time.

  • Age – This category had the biggest influence of any category. In 2014 it was ranked 7th.
    • Winner – 55>74 yrs – Products Spending: $19.85B; Up $5.6B (+39.3%)    
      • 2014: 25>34 yrs
    • Loser – 25>44 yrs – Products Spending: $12.16B; Down $2.16B (-16.8%)
      • 2014: 45>54 yrs
    • Comment: This category most shows the influence of the Boomers since they are all in the winning segment. The 25>44 yr age group is very value conscious since they are at the peak of their family responsibilities. It appears that the 25>34 group were the first to upgrade their Pet Food in 2014, then backed off in 2015…perhaps price?
  • Education – Pet Parents are widespread across all education levels. You can see that from the 2014 winner.
    • Winner – College Graduates – Products Spending: $22.52B; Up $4.25B (+23.2%)
      • 2014: Less than College grad
    • Loser – High School Graduates or less – Products Spending: $8.45B; Down 2.16B (-20.4%) 
      • 2014: Advanced Degrees
    • Comment – In 2014 all Education segments had gains. In 2015 Education level seemed to truly matter. Perhaps the value upgrading to the nutritionally superior but higher priced foods was more apparent. With generally lower income, the big drop in the less educated group could have been a result of increased financial pressures.
  • # in CU – In 2014 all CU sizes had an increase in Pet Products Spending. This was not true in 2015.
    • Winner – 2 People – Products Spending: $18.57B; Up $3.87B (+26.4%)
      • 2014: 3+ People
    • Loser – 4+ People – Products Spending: $9.82B; Down $1.66B (-14.5%)
      • 2014: 2 People
    • Comment: In 2014, more people meant more spending. In 2015 it was the opposite story. Only 2 or 3 person CU’s had an increase. Spending fell slightly for 1 person CU’s, dropped further for 4 people, then fell precipitously at 5. Financial pressures are once again the likely cause for the spending decrease in the larger CUs. Of note, a 2 person CU is very common in the older age groups and in the under 25.
  • # Earners – Usually more earners means a higher income and more Spending.
    • Winner – 2 Earners – Products Spending: $18.03B; Up $3.7B (+25.8%)
      • 2014: 2+ in CU w/1 Earner
    • Loser – 2+ in CU with 1 Earner – Products Spending: $8.88B; Down $2.3B (-20.6%)
      • 2014: 2 Earners
    • Comment – In this category we are seeing the impact of 2 trends. The 2014 lift in Food and subsequent drop in 2015 due to financial pressure by the 25>34 yr olds and the Boomer Food upgrade in 2015. Note: In the 25>34 age group one person often suspends employment for a time to devote themselves to child care.
  • CU Composition – You will see a strong interrelationship between this group and the # Earners and Age groups.
    • Winner – Married Couple Only – $14.07; Up $3.42B (+32.2%)
      • 2014: Married Couple w/Children
    • Loser – Married, with all children <18 – $7.46B; Down $1.9B (-20.3%) 
      • 2014: Married Couple Only
    • Comment – The Married Couple only group tends to be under 25 or over 55. Both of these groups had a big lift from upgrading Food in 2015. Married w/children reflects the 2015 pull back in Food $ from the 25>34 group.
  • Area Type – All Urban includes Center City and Suburban areas.
    • Winner – All Urban – Products Spending: $38.06B; Up $3.32B (+9.5%)
      • 2014: Rural (Pop. <2500)
    • Loser – Rural – Products Spending: $6.63B; Up $0.01B (0.1%)
      • 2014: Suburbs
    • Comment – All areas had an increase. The $ increase in All Urban was equally divided between city & suburbs.
  • Race/Ethnic – The vast majority of Spending comes from the White, Not Hispanic group.
    • Winner – White, Not Hispanic – Products Spending: $37.78B; Up $3.13B (+8.8%)
      • 2014: White. Not Hispanic
    • Loser – African American – Products Spending: $1.54B; Down $0.04B (-2.5%)
      • 2014: African Americans
    • Comment – There is some good news. African Americans had the only decrease and it was relatively small.
  • Income – Increasing Income generally increases spending…but not always.
    • Winner – Over $100K – Products Spending: $16.48B; Up $2.89B (+21.3%)
      • 2014: Over $70K
    • Loser – $70 to $99K – Products Spending: $6.94B; Down $0.68B (-8.9%) 
      • 2014: Under $30K
    • Comment – Most, but not all of the increase came from over $100K. The income of the $70>$99K group is all above the national average. However, it was the only segment with a decrease in spending.
  • Region – Regions vary in size and demographics like race/ethnicity and income. Plus, the South is growing rapidly.
    • Winner – West – Products Spending: $11.91B; Up $2.65B (+28.6%)
      • 2014: Midwest
    • Loser – Midwest – Products Spending: $9.7B; Down $0.96B (-9.0%)
      • 2014: West
    • Comment – All regions had a lift in Food, especially the West and South. The West also spent more on Supplies which made them #1. The Midwest was driven down by a big decrease in Supplies after a big increase in 2014.
  • Housing – Homeowners dominate, but every group increased spending for the second consecutive year.
    • Winner – Homeowner, w/No Mtge – Spending: $12.25B; Up $2.24B (+21.8%)
      • 2014: Homeowner w/Mtge
    • Loser – Renter – Products Spending: $8.69B; Up $0.49B (+6.0%)
      • 2014: Renter
    • Comment – Homeowners with No Mortgage are usually older and many are retired. The lift in spending by Renters was smaller than in 2014 but they also were the only segment with an increase in Supplies.
  • Occupation – Pet Parents are widespread across occupations. Spending depends more on income than occupation.
    • Winner – Mgrs & Professionals – Products Spending: $13.03B; Up $2.12B (+19.4%)
      • 2014: Self-employed
    • Loser – Operators & Laborers – Products Spending: $2.35B; Down $0.06B (-2.4%)
      • 2014: Tech/Sales/Clerical
    • Comment – Mgrs & Professionals are usually near the top in Spending. In 2015, they were the only segment with an increase in both Food & Supplies. Retired & Self Employed also spent significantly more. All Wage & Salary Earners spent more on Food. The overall decrease by Operators/Laborers was due to a big drop in Supplies.

We’ve now seen the best overall performers and the “winners” and “losers” in terms of increase/decrease in Pet Product Spending $ for 11 Demographic Categories. Not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding performance. They don’t win an award but they deserve…

Honorable Mention

  • Age – <25 yrs – Products Spending: $1.31B; Up $0.4B (+42.3%)
    • Comment – This small group is just getting started with life and Pet Parenting. Their percentage of increase was more than the 55>74 age group and second only to the 55>64, all “Boomer” segment. They had a significant increase in the average CU spending for both Food and Supplies so they are adding pets and even buying upgraded Food. The only reason that their increase in $ wasn’t more is that there was a 9% drop in # of CU’s.
  • Occupation – Retired – Products Spending: $7.7B; Up $1.45B (+23.2%)
    • Comment – Income is a big factor in spending but not the only factor. This lower income group is showing a lifetime commitment to their companion animals.
  • Type of Area – Center City – Products Spending: $9.91B; Up $1.67B (+20.3%)
    • Comment- Usually the weakest performer of any they segment in this category, they had by far the biggest percentage increase and actually “nosed out” the Suburbs by $0.03B to also have the biggest increase in $.
  • CU Composition – Single Parents- Products Spending: $1.6B; Up $0.25B (+18.5%)
    • Comment – This segment has strong financial pressures and invariably is last in performance – share of spending vs share of CU’s, but that was not the case in 2015. An increase in Food $ allowed them to slip past Single CU’s.
  • Income – $50>$69K – Product Spending: $7.03B; Up $0.8B (+12.9%)
    • Comment – The income for this segment is below the national average but it still performed very well. In fact the under $70K group also showed an increase. Yet another argument that pet spending is not just about income.

Summary

My earlier analysis of the Demographic factors in Pet Products spending indicated that there were 3 major factors behind the $3.3B increase in spending.

  1. Plus: The Baby Boomers upgraded their Food and increased their Food spending by $5.8B.
  2. Minus: Supplies Spending fell almost across the board – down $2.1B
  3. Minus: The 25>34 yrs age group upgraded their Food in 2014 but rolled back in 2015 – Down $1.02B

This in depth Demographic view strongly supports these assertions especially in the categories of Age, # in CU, CU Composition, Housing, Income and Occupation. In fact, the list should be expanded to include the 35>44 age segment as a Minus: (-$1.04B) and the under 25 age group as a Plus: Up (42.3%). The underlying reasons are a mixture of “financial pressure” for the decrease and “commitment to their companion animals” for the increase. The 25>44 age group are building careers, buying houses and taking care of most of the under 18 children in America. Their income is growing but not as fast as their responsibilities. On the other hand, the Boomers’ children have generally left the nest and now they can focus even more of their attention on their Pet family…and whatever they need, they get. The value of the new high quality foods caught their attention. They read and appreciated the facts and said “count me in”. However, they did cut back on spending in other segments because Food was their top priority. There was another significant positive move…but from the other end of the Age Spectrum. The Under 25 group stepped up with a radical increase in spending – adding pets and opting for high quality food. This bodes well for the future of the Pet Industry.

AND NOW…FINALLY, WHAT YOU HAVE ALL BEEN WAITING FOR…THE ULTIMATE PET PRODUCTS CONSUMER UNIT

The “Ultimate” Pet Products Spending Consumer Unit consists of 3 people – a married couple with an 18+ year old child, still living at home. Mom and Dad are in the 55 to 64 age range. They are White, but not of Hispanic origin. At least one of the Parents has an advanced College Degree. Everyone works in the H/H. Mom and Dad have their own business but their child also works, at least part time. They’re doing very well with a total Household income in excess of $150K. They own their home or to be more accurate, share ownership with the bank. They live in a rural area (under 2500 pop.) in the West, but it is adjacent to a good sized metropolitan area. This gives them plenty of space for their companion animals, but they are still close enough to commute to the City for business, shopping and entertainment – the benefits of the Urban environment…We all wish that there were more of them.

(↓Here are some CU Spending Fun Facts↓)

That “wraps it up” for this part of the report. In the final segment we “drill even deeper”- comparing Food to Supplies.

2015 Pet Products Spending was $44.4B- Where does it come from?

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The 2015 Consumer Expenditure Survey conducted by the US BLS with “field” work by the Census Bureau determined that Total Pet Spending in the U.S. reached $67.75B, a $3.43B (5.3%) increase over 2014. Pet Products (Pets, Food & Supplies) generated $44.39B, 65.5% of the total and 97% of the increase.  Specifically, annual Pet Products spending increased by $3.32B (+8.1%).  This came from a huge $5.43B (22.5%) increase in Food spending which overcame a $2.1B drop in Supplies. In earlier analyses we determined that the increase was primarily driven by the Baby Boomers, who elected to upgrade their Pet Food in 2015. However, that’s not the whole $44.4B Pet Products story.

Where did the bulk of the spending come from? In this report we will look at Pet Products Spending in terms of 10 demographic categories. The goal is to determine what groups are responsible for most of the overall spending. Our target number was to find demographic segments in each category that account for 60 to 80% of the total. In some cases this was easy – Homeowners. In other situations, we had to bundle individual segments together to reach our 60% “minimum”. Ex: Occupation – All Wage & Salary earners

Knowing the specific group within each demographic category that was responsible for generating the bulk of Pet Products Spending is a first step in a targeted marketing program. In part 2 of this 3 part report we will drill deeper to show the best and worst performing demographic segments for 2015! But first… Let’s “show you the money!”

In the 2 charts that follow, the demographic groups appear in ranked order by Total Pet Product market share from highest to lowest. I also included their share of total CU’s (Financially Independent Consumer Units). This allows us to see how each performed versus the size of the demographic group.

1. Race/Ethnic – White, Non-Hispanics (87.4%) The vast majority of Pet Products Spending is done by this group. In fact, Hispanics, African Americans and Asians account for 30% of CU’s but less than 13% of Pet Products Spending. The Hispanic portion of the U.S. population is growing strongly. This situation that was addressed in a recent report specifically covering racial/ethnic spending.. (Performance Rating: 125%)

2. # in CU – 2+People (82.2%) – It just takes two. More singles are adding Pets to their household. However, if you put 2 people together pets very likely will follow. (Performance Rating: 116%)

3. Housing – Homeowners (80.4%) Controlling your “own space” has long been the key to larger pet families and especially more pet products spending. (Performance Rating: 129%)

4. Income – Over $50K (68.6%) Although Pet Parenting is common in all income groups, money does matter. The top half of CU’s by income spent 69% of Pet Products $. (Performance Rating: 138%)

5. Age – 45>74 (65.8%) Income starts high with this group then fades. The key factor is that their children are older and in most cases have left home. When this happens, their attention and spending naturally turn to their Pet Children. (Also, All the Boomers are in this group) (Performance Rating: 129%)

6. CU Composition – Married Couples (64.3%) With or without children, two people, committed to each other, is an ideal situation for Pet Parenting. (Performance Rating: 133%)

7. # Earners – “Everyone Works” (64.3%) This is a composite of CU’s, regardless of size, where all adults are employed. While this group makes and spends more money, retired folks and CU’s with 2+ people and only one earner are still a significant share of Pet Products spending. (Performance Rating: 113%)

8. Area – Suburban (63.4%) Homeownership is high plus this group also has the “space” for pets. This equation invariably equals increased Pet Products Spending. (Performance Rating: 115%)

9. Education – Associates Degree or Higher (61.3%) All education levels certainly have pets but spending is another matter. Pet Products spending increases with education level. Consumers with a formal degree beyond a high school diploma accounted for 61% of spending. (Performance Rating: 121%) By the way, those with a degree or at least some college courses were responsible for 81% of Pet Products Spending.

10. Occupation – All Wage & Salary Earners (59.9%) – Pet ownership is widespread across this group. All individual segments had a performance rating of over 80% for Pet Products. (Performance Rating: 99%)

Overview: The Demographics of Pet Products spending are slightly different from those of Total Pet Spending, which includes the Services and Veterinary segments. The Pet Service segment is largely discretionary spending and inflation has become so strong in the Veterinary Segment that it has caused many price conscious consumers to delay, eliminate or look for alternatives for many Veterinary Clinic Services. In 2015, consumers also reduced their spending on Pet Supplies, but at the same time, some also radically increased Food spending by upgrading to a higher quality. If you are a Pet Parent, you can shop for value and exercise discretion in your purchases, but ultimately you have no choice. You must spend money on Pet Products.

Comments: In terms of this report, the spending disparity in regard to Race/Ethnicity is very evident. Putting 2 people together is definitely a “good bet for pet”. The correlation between homeownership (especially with a yard) and pet spending has been true from the earliest days of the industry. Yes, income does matter, especially with the current movement to upgrade Pet Food. but how you make the money isn’t as important. Educated consumers are also more likely to spend more. They usually make more money but they may also respond better to situations like the value of higher quality nutrition – even though it comes at a significantly higher price. Finally, as parents grow older and their children start to leave home, they turn their attention and spending to their Pet Children.

Pets are an integral part of the American way of life…but there is still room for the relationship to grow.

In Part 2 we will look at the Demographic Segment “Winners and Losers”

2015 U.S. Pet Spending by Racial/Ethnic Groups

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Over 88% of the $67.75B that we spent on our companion animals in 2015 was done by 69.9% of the 128.4 million financially independent Consumer Units. These “majority” CU’s are White, Not Hispanic. That means that the 38.4 million CU’s – 30.1%, which are Racial or Ethnic minorities, generated less than 12% of Total Pet Spending.

In our earlier demographic analyses, we noted specific instances of minority “under performance”. In this report, we will drill deeper to get more specifics on the Pet Spending by Minority Groups – Hispanics (All Races), African Americans and Asians. The U.S. is growing more ethnically diverse every day so this is a situation and an opportunity which needs to be investigated.

Note: All the numbers are calculated from or taken directly from the Annual US BLS Consumer Expenditure Survey.

Let’s get started by looking at the Racial/Ethnic make-up of the U.S.

  • The White, Not Hispanic group also includes Native Americans and Pacific Islanders.
  • 2015 is the first year that the White, Not Hispanic group fell below 70% of the total CU’s
  • Asian share of CU’s was down slightly.
  • The biggest growth in number of CU’s came from Whites, although it was only 4K more than Total Minorities.
  • African Americans are increasing at a rate more than double the White Population.
  • The Hispanic growth is spectacular. Hispanic CU’s are increasing 3½ times faster than Whites.

Now let’s take a look at some of the characteristics that we have found to be important in pet spending behavior.

  • CU Size – Hispanics have by far the largest CU’s, 30+% higher than average. However, in 2015, smaller CU’s, 2-3 people, generated the most spending and had the biggest increase largely due to the Food Upgrade by the Boomers.
  • # Children under 18 – In 2014, CU’s with more than 1 child bought the most pet products. In 2015, it was the older age groups with a child over 18. Note: With twice as many children per CU than Whites, the Hispanics are sure to gain in share of CU’s, even without immigration.
  • # Earners– It is more likely that all the adults work in a Hispanic family. With twice as many kids, this could be tough.
  • Homeownership – Homeowners account for 80+% of all Pet Spending. The percentage of Hispanics and African Americans that own homes is 40% less than Whites. Both groups are also twice as likely to live in a Center City than in the suburbs. Asians are also likely to be Center City dwellers. The rate of pet ownership is lower in Center Cities.
  • Education was also an important factor in 2015 spending, especially regarding the Food Upgrade and the Veterinary segment. The Asians are the leaders, while Hispanics have the lowest percentage of after High School education.

Next, we’ll compare each to the National Avg in Income, Spending, Pet Spending and Pet Share of Total $pending.

CU National Averages: Income – $69,627; Total Spending – $55,978;

Pet Spending – $528.17; Pet Share – 0.944%

  • Asian Americans make and spend the most money…but not on their pets. This may be due to cultural differences.
  • African Americans and Hispanics have lower incomes and their overall spending is relatively in line. However, they spend significantly less on their pets. This is especially true of African Americans and indicates a significantly lower rate of pet ownership. A consumer survey from HUD on emergency disaster planning found this number to be 24%.
  • The spending of White Americans is very much tied to income, except where their pets are concerned, then…$$$.

It’s time to look at actual Dollars Spent. We’ll review the spending on Total Pet and each industry segment in terms of share of sales as well as a 3 year history of each of the Racial/Ethnic Minority segments.

In the graph showing market share of Total Pet, as well as those that follow, the overwhelming dominance of White Americans in terms of spending on their pets is all too apparent.

  • Performance = Share of Spending/Share CU’s: Hispanic – 47%; Asians – 45%; African Americans – 29%
    • This reinforces the probable low level of Pet ownership among African Americans.
    • With the exception of a big drop in Total Pet Spending by African Americans, all other groups showed an increase.
    • While the $ amount is small, the 18.7% increase by Asians could be significant. We’ll see where it comes from.
  • Spending History – From 2013 to 2015, U.S. Total Pet Spending increased $10.0B (+ 17.3%). During the same period, Minority Spending fell $0.75B (-8.6%).
    • Overall, Total Minority groups showed a decline each year.
    • African Americans had a big increase in 2014, but then “gave it back” in 2015. They are basically even with 2013.
    • Hispanics had a huge decline in 2014, but made a partial comeback in 2015. However, it was not enough. They are $0.89B (17.7%) down from 2013 spending.
    • Asian spending dipped in 2014 but bounced back in 2015. They are 10% “ahead” of their 2013 total.
    • Without the two massive drops, Hispanic in 2014 and African Americans in 2015, the numbers would be positive.

Bottom Line: Pet Spending is not making progress with Minority Groups. Now, the individual segments…First Food.

  • Performance = Share of Spending/Share CU’s: Hispanics – 49.0%; Asians – 46.1%; African Americans – 27.0%.
  • All groups had an increase in Pet Food Spending in 2015. The increases by Asians and African Americans were especially significant. The Asians increase may be a food upgrade, but both are maintaining and possibly adding pets.
  • Spending History – From 2013 to 2015, U.S. Pet Food Spending increased $6.54B (+ 28.5%). During the same period, Minority Spending increased $0.13B (+3.9%)
    • Asians are the only group with an increase in both years.
    • This “need” segment doesn’t reflect the overall U.S. growth but it is at least relatively stable. Now, Supplies.

  • Performance = Share of Spending/Share CU’s: Hispanics – 69.4%; Asians – 38.0%; African Americans – 28.0%.
    • Hispanics were one of the few Demographic segments in any category to have an increase in Supplies spending.
    • The decreases from Asians and African Americans were small in $, but a 20% decrease is still significant.
  • Spending History – From 2013 to 2015, U.S. Pet Supplies Spending fell $0.07B (- 0.5%) – Essentially Flat. During the same period, Minority Spending increased $0.16B (+8.2%)
    • Hispanics’ consistent growth in Supplies in conjunction with stable Food Spending is a good Pet Parenting sign.
    • The Supplies Segment is largely “discretionary” so spending is often impacted in groups with financial pressures.
    • Asians have the least income pressure so it makes a small spending cut due to a Food Upgrade more plausible.

Now, we will turn to the Service Segments. We’ll begin Non-Vet Pet Services.

  • Performance = Share of Spending/Share CU’s: Hispanics – 49.3%; Asians – 45.3%; African Americans – 26.7%.
    • This segment is generally discretionary spending so income and convenience generally matter.
    • For the Hispanics, with big families and everyone working, the convenience of services becomes a real “need”.
  • Spending History – From 2013 to 2015, U.S. Pet Services Spending increased $0.98B (+ 18.6%). During the same period, Minority Spending increased $0.03B (+4.2%)
    • Growth is minimal and considering the increase in CU’s, all groups are losing market share. Now, Veterinary.

  • Performance = Share of Spending/Share CU’s: Asians – 50.9%; African Americans – 32.2%; Hispanics – 23.4%.
    • Income and education are big factors in Veterinary Spending. Whites and Asians had the only increases.
  • Spending History – From 2013 to 2015, U.S. Veterinary Spending rose $2.56B (+17.6%). During the same period, Minority Spending decreased $1.05B (-39.6%).
    • This Demographic category illustrates the impact of the ongoing high inflation in this segment, especially among the Hispanic group. Financial pressures forced them to make a choice. They chose to spend their Pet $ on Food, Supplies and even Services at the expense of Veterinary.

Comments

One thing that we should always keep in mind is that all these numbers are averages. These Racial/Ethnic Groups are made up of individuals and are represented in virtually all Demographic Category Segments. Examples: 9% of all people with a Master’s Degree or higher are African Americans. 5% of the CU’s with an income above $200K are Hispanic.

However, overall, these rapidly growing racial/ethnic groups are not keeping pace with U.S. Pet Spending. In fact, they are losing ground…at an alarming rate. Consider this: Minority spending on Pet Products, just Food & Supplies, went from $5.3B in 2013 to $5.6B in 2015 – a $0.3B (5.0%) increase. At the same time, the number of minority CU’s increased 4.9%. So, all of this increase essentially came just from having more CU’s. At the same time, the White segment had a $6.2B (19.0%) spending increase with only a 1.1% increase in CU’s. The Result: The Total Minority Group’s market share of Pet Products spending fell 10% in just two years, even with a 5% increase in spending.

Asian Americans come from a variety of cultures, each with their own history regarding Pet Ownership. They certainly have the income and recent increases in Pet Food spending indicate the number of Asian Pet Parents may be growing.

Hispanics and African Americans are the two fastest growing groups and they share certain key characteristics. Their income is 20-30% below the National Average. Homeownership is 25-33% less. They are more likely to live in Center City areas. All these factors tend to reduce Pet Spending and ownership. The African American group has the lowest numbers in these measurements and a low percentage of Pet Households. The Hispanic group has another characteristic which is relevant to spending – kids. Having twice as many children under 18 per CU can only add to their financial pressures.

Most of the factors reducing Pet Spending are societal rather than just industry issues. However, the Pet Parenting desire still appears to be strong in these groups. We see it in Hispanic Spending on Food and especially Supplies. Also, despite having the lowest average income, African Americans still spend more on Veterinary than any other minority. The Pet Industry should recognize the situation as both a challenge and an opportunity. We need to do what we can to encourage and facilitate Pet Parenting in these groups.  It will pay “dividends” to everyone.

2015 Total Pet Spending Was $67.75B – The Demographic “Winners & Losers”

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Consumer spending on Pets in 2015 totaled $67.75B, an increase of $3.43B (5.3%) over 2014. In our last report, we established who was doing most of the spending (60>80+%) in the major demographic categories. In this report, we will drill deeper into the data to determine:

  • Which segments performed best…and worst in each demographic category
  • Which segments had the biggest gain or loss* in Total Pet Spending $. (*or smallest gain)
  • Some non-winners whose performance merits “Honorable Mention”
  • The “Ultimate” Pet Spending Consumer Unit in 2015

Performance

We’ll get started with the best “Performing” segments. To determine a segment’s performance we simply compare their share of the overall Pet Spending to their share of the total CU’s. (Financially independent Consumer Units) Example: If a segment spends 15% of all Pet $ and has 10% of all the CU’s, then their performance rating is 15/10 = 150% – very good. If their share of spending was only 5%, then their performance rating is 5/10 = 50% – not so good. This method puts every segment on a level playing field…then, may the best one win. Once again, all numbers in this report were calculated from data provided by the US BLS in their Consumer Expenditure Survey.

Here are the best and worst performers for 11 demographic categories, ranked by performance – from high to low.

Most of the “winners and losers” are the same as last year.  Changes from 2014 are “boxed”. We should note:

  • The average winning performance is 8% higher than last year and the average” loser” is 2% lower so the differences are becoming more extreme.
  • The influence of the “older” Baby Boomers’ upgrade in Food is apparent across several demographic categories
    • Age – This year age has more impact. It is ranked 6th in terms of winning percentage. Last year it was 10th.
    • # in CU – Last year the winning number was 3 people. This year it is down to 2
    • CU Composition – Last year it was “all married couples with children”. This year, it’s those with a child over 18.
  • Occupation – The Self-employed, which always rank high, had a big spending increase in all categories. Managers & Professionals dropped out of the top spot in 2015 primarily because of a big decrease in Veterinary Spending.
  • Race/Ethnic – In 2014, Asians had the lowest spending performance. In 2015, African American bought 10% more food but their spending was down significantly in all other segments which resulted in an overall decrease of 27%.
  • Region – The South actually had the largest increase in $ but it couldn’t keep pace with an increase of 1.9M CUs.

Now let’s truly “Show you the money”. In the next chart, we’ll look at the biggest $ changes in spending from 2014. As a rule there are both positive and negative situations. However, in 1 category every segment spent more in 2015.

In this chart, we truly see the impact of the Boomer’s food upgrade on Pet spending and how 2015 was radically different from 2014. There are new winners and losers in virtually every category. In a few cases they just switched positions. 2015’s winner was 2014’s loser and vice versa. We’ll take a look at one demographic category at a time.

  • Education – Pet Parents are widespread across all education levels. You can see that from the 2014 winner.
    • Winner – College Grads – Pet Spending: $38.93B; Up $6.41B (+19.7%)
      • 2014: < Less than College grad
    • Loser – High School Grads or less – Pet Spending: $10.36B; Down 3.08B (-22.9%)
      • 2014: BA/BS Degrees
    • Comment – In 2015 Education level seemed to truly matter. Perhaps the value of upgrading to the nutritionally superior, but higher priced foods, as well as the need for regular Vet visits was more apparent. With generally lower income, the big drop in the less educated group could have been a result of increased financial pressures.
  • Age – This category had the 2nd biggest influence of any category. In 2014 it was ranked 9th.
    • Winner – 45> yrs – Pet Spending: $47.92B; Up $5.08B (+11.8%)
      • 2014: 65+ yrs
    • Loser – 25>44 yrs – Pet Spending: $18.15B; Down $1.99B (-9.9%)
      • 2014: 45>54 yrs
    • Comment: This category most shows the influence of the Boomers since they are all in the winning segment. The 25>44 yr age group is at the peak of their family responsibilities and feeling financial pressure. It also appears that the 25>34 group were the first to upgrade their Pet Food in 2014, then backed off in 2015…probably price.
  • # in CU – In 2014 all CU sizes had an increase in Pet Products Spending. That was not the case in 2015.
    • Winner – 2 People – Pet Spending: $29.06B; Up $5.0B (+20.8%)
      • 2014: 2+ People
    • Loser – 4+ People – Pet Spending: $12.96B; Down $2.87B (-18.1%)
      • 2014: 1 Person
    • Comment: In 2014, more people meant more spending. In 2015 it was the opposite story. Only CU’s with 3 or fewer people had an increase. Financial pressures are once again the likely cause for the spending decrease in the larger CUs. Of note, a 2 person CU is very common in the older age groups and in the under 25.
  • Race/Ethnic – The vast majority of Spending comes from the White, Not Hispanic group.
    • Winner – White, Not Hispanic – Pet Spending: $59.81B; Up $3.87B (+6.9%)
      • 2014: White. Not Hispanic
    • Loser – African American – Pet Spending: $2.45B; Down $0.93B (-27.5%)
      • 2014: Hispanic
    • Comment – Hispanic and Asian spending was up. African Americans had the only decrease.
  • Housing – Homeowners dominate. Last year all groups were up. In 2015 Renter’s spending fell due to Veterinary.
    • Winner – Homeowner, No Mtge – Spending: $18.4B; Up $3.69B (+25.1%)
      • 2014: Homeowner w/Mtge
    • Loser – Renter – Pet Spending: $11.82B; Down $0.74B (-5.9%)
      • 2014: Renter
    • Comment – Usual winner is Homeowner w/Mtge. Those with No Mortgage are usually older and often retired.
  • Income – Increasing Income usually increases spending…but not always. In 2015, Middle income spending dropped.
    • Winner – Over $100K – Pet Spending: $27.12B; Up $3.57B (+15.2%)
      • 2014: Over $70K
    • Loser – $50 to $99K – Pet Spending: $19.95B; Down $1.64B (-7.6%)
      • 2014: Under $30K
    • Comment – The over $100K segment had a huge increase. However, the <$50K group was also up $1.5B (+8.0%).
  • CU Composition – You will see a strong interrelationship between this group and the # Earners and Age groups.
    • Winner – Married Couple Only – $21.69; Up $3.47B (+19.0%)
      • 2014: All Married Couples
    • Loser – Married, with all children <18 – $10.4B; Down $2.8B (-21.2%)
      • 2014: Singles
    • Comment – The Married Couple only group tends to be under 25 or over 55. Both of these groups had a big lift from upgrading Food in 2015. The Married w/children <18 drop was primarily in Food & Supplies due to financial pressures. We also saw this in the 25>44 age group, which is the age range for the vast majority of this group.
  • # Earners – Usually more earners means a higher income and more Spending.
    • Winner – 2 Earners – Pet Spending: $25.88B; Up $2.76B (+11.9%)
      • 2014: 2+ in CU w/1 Earner
    • Loser – 2+ in CU with 1 Earner – Pet Spending: $14.18B; Down $1.12B (-7.3%)
      • 2014: 2 Earners
    • Comment – In this category we are seeing the impact of a couple of trends. The huge 2014 lift in Food and subsequent drop in 2015 by the 25>34 yr olds due to financial pressures and the Boomer Food upgrade in 2015. Note: In the 25>34 group one person often suspends employment for a time to devote themselves to child care.
  • Occupation – Pet Parents are widespread across occupations. Spending depends both on income and commitment.
    • Winner – Retired – Pet Spending: $13.14B; Up $2.57B (+24.3%)
      • 2014: Retired
    • Loser – Operators & Laborers – Pet Spending: $2.76B; Down $0.78B (-22.1%)
      • 2014: Tech/Sales/Clerical
    • Comment – The Retired group wins 2 years in a row with big lifts in Food and Veterinary. This is not just the Boomers. The Silent Generation is a big part of this. All occupations bought more food but only Managers & Professionals had an increase in Supplies. The overall decrease by Operators/Laborers was due to a big drop in Veterinary spending.
  • Region – Regions vary in size and demographics like race/ethnicity and income. Plus, the South is growing rapidly.
    • Winner – South – Pet Spending: $24.28B; Up $1.75B (+7.8%)              
      • 2014: Midwest
    • Loser – Midwest – Pet Spending: $14.84B; Down $0.69B (-4.4%)
      • 2014: South
    • Comment – All regions had a lift in Food, especially the West and South. Quite frankly, the South “won” because of an increase of 1.9M CU’s. The Midwest was driven down by a big drop in Supplies after a big lift in 2014.
  • Area Type – All areas showed an almost equal increase in $.
    • Winner – Rural (Pop <2500) – Pet Spending: $8.57B; Up $1.23B (+16.8%)
      • 2014: Center City
    • Loser – Suburban – Pet Spending: $43.74B; Up $1.08B (+2.5%)
      • 2014: Suburbs
    • Comment – All areas had an increase in Food and a drop in Supplies. The largest segment, Suburban, has been last for 2 years in a row.

We’ve now seen the best overall performers and the “winners” and “losers” in terms of increase/decrease in Total Pet Spending $ for 11 Demographic Categories. Not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding performance. They don’t win an award but they deserve….

Honorable Mention

  • Age – <25 yrs – Pet Spending: $1.31B; Up $0.3B (+25.8%)
    • Comment – This small group is just getting started with life and Pet Parenting. Their percentage of increase was the largest of any age group. They had a huge increase in the average CU spending for Food as well as increases in both Supplies and Services, so they are adding pets and even buying upgraded Food. The only reason that their increase in $ wasn’t greater is that there was a 9% drop in the number of CU’s.
  • Race/Ethnic – Asian – Pet Spending: $1.34B; Up $0.2B (+18.7%)
    • Comment – This small group has the CU highest income but perennially has the lowest average spending on companion animals. With strong increases in Food & Veterinary Spending they moved out of last place in 2015.
  • Income – <$30K – Pet Spending: $11.3B; Up $1.67B (+17.3%)
    • Comment – Much of this segment consists of older and younger consumers. With all segments but Supplies showing an increase, this is evidence that spending on our Pet “Children” is not just about income.
  • # of Earners – No Earners – Pet Spending: $11.45B; Up $1.43B (+14.3%)
    • Comment- The vast majority of this group are retired. Their 14.3% increase was the largest of any segment in the category. Still more proof that the motivation for increased Pet Spending is not limited to increased income.
  • Region – Northeast – Pet Spending: $11.82B; Up $1.3B (+12.0%)
    • Comment – This densely populated area benefited from a strong performance by the Center City areas, which even had an increase in Supplies. Their 12% overall gain was by far the best of any Region.

Summary

2015 was a year of extremes which is best illustrated by the situation in 2 Industry Segments – Food and Supplies.

  1. Plus: Food Spending ↑$5.4B. The Baby Boomers upgraded their Food and their Food spending went up $5.8B.
  2. Minus: Supplies Spending fell almost across the board, primarily due to a drop in purchase frequency– ↓$2.1B

Spending in the other 2 segments basically cancelled each other out. Services continued their steady growth ↑$0.58B, driven primarily by convenience in the under 55 age group, but with income always a factor. Veterinary spending was down ↓$0.47B and continued to be negatively impacted by a high inflation rate. This was somewhat mitigated by the strong commitment from the oldest Americans to the care of their companion animals.

You have seen the individual demographic winners and losers. However, when you step back it often seems to be 2 ends against the middle. Let’s look at what that means in terms of 2 important demographic measures – Income and Age:

  • Income: The increase is coming from the Over $100K group and the Under $50K group. It is middle income America, $50>99K, with the biggest financial pressures of housing, children and career that is feeling the pinch.
  • Age: The increase is coming from the >45 and the <25 groups. The older crowd has both high and low incomes but smaller families. The <25 group generally has lower incomes but also fewer responsibilities. The middle 25>44 age group had a significant drop in spending, but they are building careers, buying houses and taking care of most of the under 18 children in America. Their income is growing but not as fast as their responsibilities.
  • One other trend should be noted – Education: This came to the forefront in 2015. It may be that the better educated were quicker to see the value of the upgrading their pet food – at a substantially higher price.

AND NOW…FINALLY, WHAT YOU HAVE ALL BEEN WAITING FOR…THE “ULTIMATE” PET CONSUMER UNIT

The “Ultimate” Pet Spending Consumer Unit consists of 3 people – a married couple with an 18+ year old child, still living at home. Mom and Dad are in the 55 to 64 age range. They are White, but not of Hispanic origin. At least one of the Parents has an advanced College Degree. Everyone works in the CU. Mom and Dad have their own business but their child also works, at least part time. They’re doing very well with a total Household income in excess of $150K. They own their home or to be more accurate, share ownership with the bank. They live in a rural area (under 2500 pop.) in the West, but it is adjacent to a good sized metropolitan area. This gives them plenty of space for their companion animals, but they are still close enough to commute to the City for business, shopping and entertainment – the benefits of the Urban environment…We all wish that there were more of them.

 (↓Here are some CU Spending Fun Facts↓)

That “wraps it up” for this report. We look forward to the US BLS Mid-Year 2016 Update in May.

2015 Pet Spending was $67.75B – Where did the $ come from…?

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As we have reported, the 2015 Consumer Expenditure Survey conducted by the US BLS with “field” work by the Census Bureau determined that Total Pet Spending in the U.S. reached $67.75B – an increase of $3.43B (+5.3%). After a detailed analysis, we concluded that the increase was primarily driven by the Baby Boomers, who elected to upgrade their Pet Food in 2015. However, that’s not the whole $67.8B story.

Where did the bulk of the spending come from? In this report we will look at Total Pet Spending in terms of 10 demographic categories. The goal is to determine what groups were responsible for most of the overall spending. Our target number was to find demographic segments in each category that account for 60 to 80% of the total. In some cases this was easy – Homeowners. In other situations, we had to bundle individual segments together to reach our 60% “minimum”. Ex: Ages 45>74

Knowing the specific group within each demographic category that was responsible for generating the bulk of Pet Spending is a first step in a targeted marketing program. In an upcoming “awards” post we will drill even deeper to show the best and worst performing demographic segments for 2015! But first…we’ll “show you the money!”

In the 2 charts that follow, the demographic groups appear in ranked order by Total Pet market share from highest to lowest. I also included their share of total CU’s (Financially Independent Consumer Units). This allows us to see how each performed versus the size of the demographic group.

  1. Race/Ethnic – White, Non-Hispanics (88.3%) The vast majority of Pet Spending is done by this group. In fact, Hispanics, African Americans and Asians account for 30% of CU’s but less than 12% of Pet Spending. The Hispanic portion of the U.S. population is growing strongly. This is a situation that should be researched further. (Performance Rating: 126%)
  2. Housing – Homeowners (82.6%) Controlling your “own space” has long been the key to larger pet families and more pet spending. (Performance Rating: 132%)
  3. # in CU – 2+People (80.1%) – It just takes two. More singles are adding Pets to their household. However, if you put 2 people together, pets very likely will follow. (Performance Rating: 113%)
  4. Income – Over $50K (69.5%) Although Pet Parenting is common in all income groups, money does matter. The top half of CU’s by income spent 70% of Total Pet $. (Performance Rating: 140%)
  5. Education – Associates Degree or Higher (66.5%) Once again, all education levels have pets but spending is another matter. Consumers with a formal degree beyond a high school diploma (51%) accounted for 2/3 of Total Pet $pending. (Performance Rating: 131%)
  6. Age – 45>74 (65.2%) Income starts high with this group then fades. The key factor is that their children are older and in most cases have left home. When this happens their attention and spending naturally turns to their Pet Children. (Performance Rating: 128%)
  7. Area – Suburban (64.6%) Homeownership is high and this group also has the “space” for pets. About half (55%) of U.S. CU’s accounted for almost 2/3 of Pet Spending. (Performance Rating: 117%)
  8. CU Composition – Married Couples (62.9%) With or without children, two people committed to each other is an ideal situation for Pet Parenting. (Performance Rating: 130%)
  9. # Earners – “Everyone Works” (62.2%) This is a composite of CU’s, regardless of size, where all adults are employed. While this group makes and spends more money, retired folks and CU’s with 2+ people and only one earner are still a significant share of spending. (Performance Rating: 109%)
  10. Occupation – “I’m a Boss” (61.0%) – This is another composite group, consisting of managers/professionals, self-employed and retired people. While they may not be “the” boss, they are all “bosses” to some extent. Pet ownership is so widespread across all occupations that bundling a “significant” spending majority with a common connection is difficult. (Performance Rating: 122%)

Comments: The apparent spending disparity in regard to Race/Ethnicity is an obvious concern which should be investigated. The correlation between homeownership (especially with a yard) and pet spending has been true from the earliest days of the industry. Putting 2 people together is another “good bet for pet”. Yes, income does matter, especially with the inflation in the Veterinary Segment and the current movement to upgrade Pet Food. However, how you make the money isn’t as important. Educated consumers are also more likely to spend more. They generally make more money and may respond better to the value of higher quality nutrition – at a higher price, as well as the need for regular Vet visits. Finally, as parents grow older and their children start to leave home, they turn their attention and spending to their Pet Children.

Most of these answers are the ones that we expected. However, as we have learned from past experience, it is always a good idea to look “beneath the surface” of the overall numbers. In a follow up post, we will drill deeper into the data. We will determine the best and worst performing segments in each demographic category and specifically, who generated the largest increases and decreases in Pet Spending in 2015. As usual, expect some surprises.

Pets are obviously an integral part of the American way of life…but there is still room for the relationship to grow.