U.S. Census Bureau Small Business Pulse Survey – Measuring the Impact of COVID-19

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Small Businesses are at the core of our nation’s economy and the challenges they face are important to everyone. To better understand the impact of COVID -19 on these businesses, the U.S. Census Bureau is reaching out to small businesses in order to aid decision-makers in serving their urgent needs. For the Survey, the Census Bureau defines a small business as a single location business with employment between 1 and 499 and receipts of at least $1,000.

Consisting of 16 questions, this 5-minute survey reaches close to 1 million businesses split across a 9-week rotation to reduce burden and lessen survey fatigue. The survey reaches out to small businesses in every area of the U.S. Economy. The first survey was conducted between 4/26/20 and 5/2/20 and results were released on 5/14. This report includes the data from that initial survey as well as the data from the weeks ending 5/9 and 5/16. It will be presented in charts that will allow you to track the evolution of the responses as we progress through this crisis.

The results are categorized by major NAICS code classification. This report will show the National Average plus results from 5 big groups which are relevant to the pet industry:

  • National Avg: Covers All Major Areas with a few Exceptions like Agricultural Production and Religious Organizations
  • Product Related Groups:
    • 31-33: Manufacturers – All manufacturers
    • 42: Wholesalers/Distributors – Wholesalers/Distributors of any type products
    • 44-45: Retail Trade – This includes everything from gas stations to Pet Stores (#453910). No restaurants
  • Services Related Groups:
    • 54: Professional, Scientific and Technical Services – Legal, Advertising Agencies, etc… and Vet Clinics (#541940)
    • 81: Other Services – Funeral Homes, Barber Shops, Auto Repair, etc … and Pet Care Services (#812910)

Each group will have a separate section in the report which will have 3 charts showing the group’s responses to some particularly relevant questions about the impact of COVID-19.

Here are the charts and the questions that will be answered on each:

Chart #1: Impact of Covid-19 on Your Business

  1. Overall, how has this business been affected by the COVID-19 pandemic?

Chart #2: Key Business Elements – Weekly Changes

  1. In the last week, did this business have a change in operating revenues?
  2. In the last week, did this business have disruptions in its supply chain?
  3. In the last week, did this business temporarily close any of its locations for at least one day?
  4. In the last week, did this business have a change in the number of paid employees?

Chart #3: Government Assistance & Your Outlook For The Future

  1. Since 3/13, has this business requested/received financial assistance from Paycheck Protection Program (PPP)?
  2. Since 3/13, has this business received any financial assistance from any Federal Program?
  3. In your opinion, how much time will pass before this business returns to its usual level of operations?

Advance Observations (Spoiler Alert)

  1. The negative impact is widespread and deep across the U.S. Economy.
  2. Business measurements, like revenue, closures and employment are generally moving in the right direction, but… slowly.
  3. As we come fully to grip with the crisis, it becomes more apparent that recovery will take quite some time.

Now Let’s Look at the Details

We will start with the overall National Small Business Response Averages.

Then, we will move to the Product Related Groups and Wrap it up with Services.

At the conclusion there will be a link to download a PDF copy of the report!

NATIONAL AVERAGE

  • Total Negative is down slightly. The biggest drop is in large negative as both the moderate negative and little/no effect groups move up.

  • All measurements are moving steadily in the right directions. Although it is at an extremely low level, the group with an increase in revenue basically doubled in 2 weeks. Supply chain problems remain an issue and over 1/3 of the businesses still are reporting closures but this is down 20% from May 2nd. Employment is definitely slowly improving.

  • ¾ of all small businesses requested help from the PPP. It is finally coming through as 89% of those that submitted a request have received funds as of 5/16. With help from numerous Government agencies, like the Small Business Association, 72% of the Small Businesses have received financial assistance.
  • In terms of outlook the biggest decrease came in those expecting to return to normal in 2 to 3 months while the biggest increase came in the over 6 months group.
  • Things are turning in the right direction in basically every measurement, but the movement is slow. As businesses became involved in the reality of the situation, it is becoming increasingly obvious that a return to normal will take some time.

MANUFACTURERS

  • Total negative is slightly below the national average, but their evolving pattern is similar – a drop in large negative with increases in moderate negative and little/no effect. However, their Moderate negative share now ranks #1.

  • Their Revenue is moving in the right direction but the gain in the number with an increase was miniscule. While their Supply chain issues are significant, they have the lowest percentage of closures for any group. The employee count is also coming together but like Revenue, the gain in the number adding personnel was small.

  • 4 out 5 Manufacturers have requested PPP assistance and as of 5/16, 87% of those who applied had received funds. 77.8% of Small Manufacturers have received some Federal Financial assistance. This is the highest % of the 5 groups.
  • Although there was a slight increase in those stating that their was little or no impact on their business, the biggest movement in the projections is to over 6 months, which grew from 32.4% to 38%. The 2 to 6 month group fell from 51.9% to 45.1%.
  • The manufacturing segment is ultimately dependent upon retail so slowed business there will ultimately work its way up the distribution chain. This group is generally moving in the right directions but changes, especially increases tend to happen at a slower pace.

WHOLESALERS/DISTRIBUTORS

  • The overall negative impact has remained stable and very high, ranked 2nd of all 5 groups. However, it is moderating slightly. Little impact is up slightly. Overall, positivity is down slightly but is still the 2nd highest, behind Retailers.

  • Revenue is moving in the right direction. However, the percentage with decreased $ is the highest of all groups. Supply Chain problems are over 50% and 2nd highest, while Closures have the 2nd lowest rate. Employment remains very stable and moving towards a return to normal.

  • 70% have applied for PPP assistance and 87% have received funds. However, this group has the highest percentage of businesses receiving no Federal financial assistance of any kind – 34%.
  • Their outlook is also moving towards a longer recovery time. 38.6% of Distributors now believe that it will take over 6 months to return to normal, the highest percentage of any group. The size of the groups who saw little or no impact on their business and those who think they will never return to normal has stayed about equal, unlike any other industry segment.
  • The recovery of Distributors is dependent upon the recovery of their retail customers. The faster the Retail Business returns, the faster the distributors gain $. The key is that they need to be ready and able to handle it.

THE RETAIL TRADE

  • The overall negativity is the lowest of any group and is increasingly seen as moderate. However, the biggest reason the number is low is that 8.7% of Retailers are seeing a positive impact. Online retailers are one example.

  • While the situation is still dire, Retailers are having the best results in terms revenue flow, with 22.2% having increased $. They are doing this despite having a very high rate of Supply Chain problems and Closures, although Closures are down 27% in 2 weeks. Employment is also improving, and they lead the way with 9.7% adding workers.

  • Over ¾ of Retailers have applied for PPP assistance. By 5/16, 87% of those that applied had received funds. In fact, 74.5% of all Small Business retailers have received some type of financial assistance from the federal government.
  • On May 2, 53% of retailers said things would be back to normal in 2 to 6 months. In 2 weeks that number has fallen to 46% and the number that think that recovery will take more than 6 months has risen to almost 35%.
  • Next to the Health Care Segment, the Retail Segment is where we see the biggest visual impact of the COVID-19 pandemic. With stay at home and closures, we are seeing a huge movement to online shopping. However, that is not enough. This segment, without restaurants accounted for $5.4 trillion dollars in consumer sales in 2019. That’s a lot of ground to make up. Plus, the fate of the manufacturing and distributing segments is directly tied to Retail.

PROFESSIONAL, SCIENTIFIC and TECHNICAL SERVICES (INCLUDES VETERINARY CLINICS)

  • Their initial perceived negative impact of COVID-19 was high at 87.5%, but it was still the lowest of the 5 groups. Also, many more, over 50%, believed the impact to be moderate rather than large. They also have the highest percentage saying there will be little or no impact from COVID-19 on their business.

  • In terms of Revenue change they have the most consistency of any group – the highest percentage of no change, 32.9% – the lowest percentage with an increase and the second lowest percentage with a decrease. They also have faced the least amount of Supply problems as well as the lowest percentage of closures of any group dealing directly with consumers. Employment shows the highest percentage of no change while the increases/decreases are headed in the right directions.

  • 71% applied for PPP and by 5/16, 91% had received their funds. In regard to overall Government aid, 69% have received Federal financial assistance. Only Distributors, at 64% had a lower number.
  • Despite their stability in business elements and the fact that 1 in 9 say that COVID-19 has had little or no impact on their business, the outlook on recovery time for most has worsened. The group estimating a 2 to 6 month return to normalcy has fallen from 53% to 48%, under half. Over 1/3 now think it will take 6+ months to recover.

OTHER SERVICES (INCLUDES PET CARE SERVICES)

  • At 92%, COVID-19 had the biggest negative impact on this group. It was also very severe. Although it has moderated slightly, the ratio of businesses with Large Negative over those with Moderate Negative remains at nearly 2 to 1.

  • 80% of businesses reported a change in revenue in the week ending 5/16. The negative number was 65%. This was the highest among those interacting with consumers, but down significantly from the 78% peak. Those reporting increased $ is up to 14.9%, 2nd place behind Retailers. Supply Chain problems remain high and they have the highest percentage of closures. In terms of Employment, they are moving in the right direction – slowly. They are below the national average in additions, lowest of the group of 5 in “no change” and highest in the group for decreases.

  • 80% have applied for PPP and as of 5/16, 86% of received funds. 74% of the group have received some Federal aid $.
  • 32% of this group originally expected a return to normal in 3 month or less. The size of that optimistic group has dialed back to 26%. The mid-range 4 to 6 month group has remained steady at 27%. However, the group that projects 6+ months to recovery now represents 1 in every 3 businesses. We should also note that 1 in 11 businesses say they will never return to normal, the highest number in our group of five.

That wraps it up for the 5/16 update. If you would like a PDF copy of the report, click the button below.

Click to download PDF of report

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail Channel Monthly $ Update – March Final & April Advance

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Time for our monthly update on U.S. retail sales by channel. The current COVID-19 crisis has caused turmoil in the Retail Marketplace. Consumer spending behavior has changed and continues to evolve. In this report we will track the changes and migration between channels. We will do that with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – approximately 2 weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

This means to get the full picture in our monthly channel update we need to look at the latest release of both reports. We will begin with the Final Retail Report from March and then move to the Advance Retail Report for April. This will also allow us to better track the consumers’ evolving spending behavior in terms of channel migration.

Both reports include the following:

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This will be more detailed in the “Final” reports and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2019
  • Current YTD change – % & $ vs 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

We’ll start with the March Final report. This was the first month of the crisis. The impact is very visible. First, we will look at some major retail groups. (Note: The Data in all graphs is Actual, Not Seasonally Adjusted)

It looks just like the Advance report projected a month ago. All 3 of the groups that are down in YTD $ were up at least 8% through February. March is the start of the traditional Spring lift, but not in 2020. If you can’t go out, you don’t think about a new car. It also doesn’t matter how cheap gas is if you aren’t driving.

The “Relevant” retail is the only positive and we know that it is being driven up by binge/panic buying of necessities. Food is the biggest driver. If you can’t go out to eat, you cook at home.

Now, let’s see how some Key Pet Relevant channels were doing in March.

Observations – We’ll look at them in groups

  • Building Material Stores – This group typically has their biggest annual lift in Spring. It appears that this is unchanged. In fact, there is a significant increase over last year. Farm Stores are doing especially well with double digit increases over March 2019 and YTD. Although Sporting Goods stores are not included in this group, they have a similar Spring lift pattern. March Sales were up from February, but still down 8% vs 2019.
  • Food & Drug – This is where we see the greatest positive impact from “Stay at Home”. Supermarket sales are skyrocketing – +30% vs 2019. Drug stores are also experiencing a big lift as consumers stock up on necessities.
  • General Merchandise Stores – It’s about Food. Sales in $ Stores, Clubs and SuperCenters are all up 12+% vs 2019. Most traditional Department stores are closed and the shopping in many Discount Department stores is often limited to essentials. This has helped depress sales by -10% vs March 2019.
  • Office, Gift and Souvenir Stores – Most of these stores are deemed non-essential. You see the result.
  • Internet/Mail Order – “Stay at home” has further accelerated this channel’s growth. This will likely continue as the crisis has introduced many new consumers to online shopping.
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores. Pet Stores generally account for 22 to 24% of this group’s total sales. The group was up 21% YTD in February. Although that pace has slowed slightly to +17%. Consumers are still shopping for essentials, like Pet Products in these outlets.

March was certainly a terrible month for retail spending, the biggest Total Retail $ drop in history. Binge/panic buying buoyed up the Relevant Retail sector but that is temporary and non-essential business closures became widespread by the end of the month.  We’ll see what a full month of shuttered doors brings. Here are the Advance numbers for April.

March was terrible, with the biggest spending drop in history. However, it was nothing compared to April. It is obvious that a full month of stay at home and business closing orders had a huge impact across the Retail Marketplace.

Total Retail – Total Retail spending fell $108B, -21.2%. This unprecedented drop is literally 3 times greater than the record decrease set in March. Remember, 2020 started off strong. Spending through February was up $60B, +6.6% versus 2019. Then came the COVID-19 crisis and now it is down -$82B – a $142B turnaround in just 2 months.

Restaurants – Spending was up $9B through February, +8.1%. In March Social Distancing began and many restaurants closed. Spending fell $18B, turning a $9B increase into a $9B decrease. April brought a full month of the restrictions and spending plummeted, down $31B, -49% vs 2019. Many restaurants are offering delivery and curbside pickup, but this can’t replace eating in restaurants. This group is now down $40B YTD.

Automobile & Gas Stations – If you can’t go out, except for necessities, then your car becomes less of a focus in your life. Buying a car is definitely less of a priority. Auto Dealers, both new and used, are trying to combat this with some fantastic deals and a lot of advertising. It doesn’t seem to be working. In terms of Gas Stations, prices are down sharply but as we have said, it doesn’t really matter much how cheap gas is if you’re not driving.

Relevant Retail – Less Auto, Gas and Restaurants – Many non-essential businesses were forced to shutter their doors in March. However, there was also a rash of binge/panic buying as consumers literally battled over toilet paper and sanitary wipes. The closure of restaurants, schools, and businesses, along with many people now working from home caused a big lift in home cooking. This drove up spending at Supermarkets, SuperCenters and Warehouse Clubs. These 2 factors overcame the impact of closures and Relevant Retail Spending in March was up 6.3% and YTD 5.9%, +$49B. Then came April, with a full month of closures. Plus, while grocery spending continued to be strong, the bingeing and hoarding slowed markedly. Spending dropped $43B, -13.4% from March and cut the YTD growth in half. However, the YTD, +2.1% for Relevant Retail is the only positive number in any measurement for any of the big groups on the entire graph.

Now let’s look at what is happening in the individual retail channels across America. In April, spending turned down in Relevant Retail. Let’s see if we can find any positives. These groups are less defined than in the Final Monthly reports and we will look all across the whole market, not just pet relevant outlets.

A full month of stay at home resulted in few “winners” and the impact on the “losers” is even more pronounced.

 Observations

You quickly see that the negative impact from a full month of stay at home, closures and reduced discretionary spending was widespread. Only 3 groups had positive numbers for April:

  • Nonstore Retailers – Stay at home has moved even more consumers to online shopping.
  • Grocery Stores – Stay at home means “eat at home”. Food sales continue to surge.
  • Bldg Materials/Garden/Farm – A near normal Spring lift as “at home” consumers also focus “on their home”.

The panic/binge buying of March ended in April as spending fell in all but 2 groups – Nonstore and Bldg Materials.

Regarding the Individual Large Channels

General Merchandise Stores – April also wiped out the overall YTD gains of GM stores. Regular Department stores are closed, and discount department stores continued their downward sales trend. Club/SuperCtr/$ stores had provided the only positive note. In April consumers dialed back their panic buying and Spending on discretionary items was also down significantly. This combination of factors drove sales down 6.7%, -$3.1B vs April 2019 in this largest GM group.

Food and Beverage, plus Health & Personal Care Stores – The initial March wave of binge/panic buying in March ended in April. The Grocery segment is still being driven by increased Food sales, up 14.5%, +$8B. However, sales in the Health, Personal Care group turned down, essentially wiping out the previous YTD gains. While Drug Stores are essential, many Personal Care stores are shuttered.

Clothing and Accessories; Electronic & Appliances; Home Furnishings – Some Electronic stores are deemed essential but most of the other stores in these groups are not. All saw a huge 60+% drop in sales but Clothing stores took the biggest hit, down 89.3%, -$19.1B from 2019. Even before the crisis, their online sales were growing, but not enough.

Building Material, Farm & Garden & Hardware – This channel has its biggest spending lift in the Spring. With many consumers sheltering in place, their focus has turned to their needs at home, including house and yard repair and improvement. Their spending pattern is the closest to “normal” of any brick ‘n mortar group. The Spring lift is apparently still “on” as their sales are up 7% over March, 2.6% over April 2019 and 5.6% YTD.

Sporting Goods, Hobby and Book Stores – Many Book and Hobby stores have been classified as non-essential, but most Sporting Goods stores are open. They also usually have a big spending lift in the Spring. However, with organized sports on hold, many parks closed, and non-essential travel discouraged, the need for products in the sporting goods arena is greatly diminished. This group was down 24% in March, but the decline increased in April – Down $3B, -48.7% vs 2019.

All Miscellaneous Stores – This group is mostly small to medium specialty stores – both chains and independents. While Pet Stores are essential, most other stores in this group are not. In March, YTD sales for this group were up solely because of a spectacular early year performance by the All Other Subgroup, which includes Pet Stores. In April this was not enough to overcome a full month of closures as Sales for All Miscellaneous Stores were down across the board.

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. In April, the ongoing movement to online accelerated. They were up 12.1% in March. Their April increase was 21.2%, +$13.1B. They took over the lead from Grocery Stores in all sales measurements regardless if it is in $ or % increase. Two things are significant. Unlike many other channels that had a big lift in March, their $ sales didn’t fall off in April. They were 6.7% higher. Also, their YTD sales are up 13.8%, exceeding their 12.9% annual increase in 2019. This early year lift bodes well for 2020 as much of their annual lift is usually driven by Christmas Holiday spending, which is still to come.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded along with their store sales in their regular channel. Whether they are up or down, their online sales are included in the totals.

Recap – April clearly shows the huge fundamental impact that the COVID-19 pandemic has had on the American way of life and consumer spending. The impact is also evolving as we saw the panic buying in March end in April. As the situation continues, spending will no doubt move back to a more routine pattern – a new normal. No one knows how long the current situation will last and what long term impact it will have on U.S. consumers’ spending behavior. We will continue to monitor the data and provide you with regular updates as the situation evolves.

A Final Note From the Census Bureau: Due to COVID-19 many businesses are operating on a limited capacity or have ceased operations completely. The Census Bureau has monitored response and data quality and determined estimates in the Advance Retail Report for April 2020 and Monthly Retail Report for March 2020 both meet publication standards.

U.S. PET FOOD SPENDING $28.90B (↓$2.46B): MID-YEAR 2019 UPDATE

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The US BLS just released their Mid-Year Update of the Consumer Expenditure Survey covering the period 7/1/2018 to 6/30/2019. The report shows Pet Food (& Treat) Annual Spending at $28.90B, down $2.46B (-7.8%). The following charts and observations were prepared from calculations based upon data from that report and earlier ones. The first chart will help put the $28.90B into historical perspective and truly show you the roller coaster ride that is Pet Food Spending.

Here are the current numbers:

  • Mid 2019: $28.90B; ↓$2.46B (-7.8%) from Mid-18. The net -$2.46B in Mid 2019 came from:
    • Jul>Dec 2018: Down $2.51B from 2017.
    • Jan>Jun 2019: Up $0.05B from 2018.

Historical research has shown that Pet Food spending has been on a roller coaster since 2000, with 2 years up, followed by a flat or even declining year. This up and down “ride” has been driven by a succession of Food trends. The most recent were “Natural” in 2011 and “Super Premium” in 2014. Another factor was added in 2013 – deflation. As consumers opted for higher quality, more expensive pet food, competition became more intense, with the Internet now becoming a key player. 2013 was a definitely a game changer for this segment as it began an extended period of deflation which continued through 2018. Midway through 2018, Pet Food prices were still 2.3% lower than in 2013.

The spending drops in 2013 and 2016 were driven by pet parents value shopping for their recently upgraded pet food.

As it turns out, 2014 brought out yet another new factor in Pet Food spending. For over 30 years Baby Boomers have been the leaders in the Pet Food, both in spending and in adopting new products. They still spend the most, but it turns out that the 25>34 year old Millennials led the movement to Super Premium in late 2014. The older groups, especially Boomers followed in 2015 and spending rose $5.4B. At the same time, the Pet Food spending of the 25>34 yr olds dropped. At first, we thought they had rolled back their upgrade. However, it turns out they were leading the way in another element of the trend to Super Premium – value shopping. The Boomers once again followed their lead and spending fell -$2.99B in 2016. For consumers, the Super Premium upgrade movement consisted of 3 stages:

  1. Trial – The consumer considers the benefits vs the high price and decides to try it out. Usually from a retail outlet.
  2. Commitment – After a period of time, the consumer is satisfied and is committed to the food.
  3. Value Shop – After commitment, the “driver” is to find a cheaper price! – The Internet, Mass Market, Private label

This brought us to 2017. Time for a new “must have” trend. That didn’t happen but the competitive pricing situation brought about another change. Recent food trends have been driven by the higher income and higher education demographics. However, the “value” of Super Premium was established and now more “available”. Blue Collar workers led a new wave of spending, +$4.6B, as Super Premium more deeply penetrated the market. After the big lift in 2017, 2018 started off slowly, +$0.25B. Then came the FDA warning on grain free dog food. Many of the recent Super Premium converts immediately rolled back their upgrade and spending fell -$2.51B. This 2018 decrease broke a 20 year spending pattern. What came next? In the 1st half of 2019, Pet Food spending was stable, +$0.05B.

Let’s look deeper, starting with the 2 most popular demographic measures – age & income. The graphs will show both the current and previous 12 months $ as well as 2018 yearend. This will allow you to track the spending changes between halves.

The first graph is Income, which has been shown to be the single most important factor in increased Pet Spending. Here’s how you get the change for each half using the $150K+ group as an example:

$150K+ Mid-yr Total Spending Change: $6.05B – $5.02B = Up $1.03B (Note green outline = increase; red outline = decrease)

  • 2nd half of 2018: Subtract Mid-17 ($5.02B) from Total 2018 ($5.57B) = Spending was up $0.55B in 2nd half of 2018.
  • 1st half of 2019: Subtract Total 2018 ($5.57B) from Mid-19 ($6.05B) = Spending was up $0.48B in 1st half of 2019.

  • The over $150K group was the only group unaffected by the FDA grain free warning as spending grew consistently in both halves. If they had concerns about grain free, they apparently upgraded to even more expensive options.
  • The over $100K groups and the under $30K group had the only annual increases. However, the under $30K group had their lift in the second half of 2018, which was very unusual. Their spending flattened in the first half of 2019.
  • Besides the High Income pattern, there appear to be 2 other spending patterns based upon income. The Middle Income group, from $50K to $150K was most affected by the FDA warning with a spending drop in the second half of 2018. As income increased, the impact lessened until it was minimal at $100>150K. Spending rebounded very slightly in the first half of 2019 for all of these groups and the amount of the increase grew along with income.
  • The Lower Income group, under $50K had almost the opposite pattern. They showed a spending increase in the last half of 2018, with the biggest increase coming from the <$30K group. In the first half of 2019, spending in the $30>$50K group fell -$0.78B, a huge drop. The <$30K spending was flat. However, this data suggests that the $50K income level is a key dividing point in Pet Food Spending behavior, at least in the era of Super Premium. It also demonstrates once again that analyzing pet food spending behavior is a complex process.

Now let’s look at Pet Food spending by Age Group.

  • The 45>54 yr olds had the biggest 2019 1st half lift and were the only group with increased spending in both halves. They have the highest income, so it is to be expected that their behavior matches that of the $150K+ income group.
  • Annual decreases occurred in 3 groups – 75+, 55>64, 25>34. However, the oldest and youngest (75+ & <25) had the only 2019 decreases and shared the same overall pattern. A 2018 2nd half lift followed by the drop in 2019 suggests that they were slower to act than other groups, first in upgrading food and then in reacting to the FDA warning.
  • Although the 2019 lift was sometimes minor, all age groups from 25>64 spent more on Pet Food in the first half of 2019. This is a good sign for the second half of 2019.

That brings us to the obvious question, “What is happening in Pet Food spending at the start of 2019 across the whole range of demographic categories?” We will endeavor to answer that in our final chart. We will list the biggest $ moves, up and down by individual segments in 11 demographic categories.

The increase in the 1st half of 2019 was bland – up $0.05B but this bland result came from some tumultuous spending behavior…Always look deeper.

  • There are big differences between the winner and loser in all categories but Area. You also see that the losers are often much bigger than the winners. The overall slight increase came from 44 of 80 segments (55%) spending more.
  • You see the negative spending by the older groups reflected in the spending drops by these demographics – over 65, Retired, Homeowners w/o Mtge, Silent/Greatest Generations and $30>49K income. (Avg Retired income is $42.8K)
  • In terms of positives, one thing immediately stands out. Thank God for Singles, especially if they are working. They had the biggest increase in 3 demographic categories. That’s unusual to say the least.
  • Two “usual” winners are back on top – Homeowners w/Mtge and White, not Hispanic.
  • Income matters, as is demonstrated by wins by $150K+ and the 45>54 yr olds, but education not as much. The winner was HS Grads, but all college educated groups, from Associates Degree to PHD also spent more on Pet Food.
  • In Generations, the Millennials/Gen Z won. However, all but the very oldest groups spent more. Even the Boomers bounced back with a small $0.12B increase after a -$3.18B drop in the second half of 2018.
  • Speaking of bouncing back, Blue Collar workers also started to recover after a bad second half of 2018.
  • There are 2 “losers” that raise some concern – Married Couple Only and 1 earner, 2+ people CUs. Married Couples Only are a perennial winner but their share of Pet Food spending fell from 40% to 27%. 1 earner, 2+ CUs had a big lift in both halves of 2018. Perhaps their big 2019 decrease is also a delayed reaction to the FDA warning.

So, what will happen in the second half of 2019? It is a good sign that 55% of demographic segments are spending more in the first half of 2019 than they did in 2018. Also, Gen Xers, Millennials and even Boomers spent more so the increase is widespread. Considering these trends in conjunction with the big spending drop in the second half of 2018 a continued lift in the second half of 2019 is likely. However, there is another factor – inflation. Pet Food prices trended down from Mid-yr 2013 to Mid-yr 2018. Then they turned up and continued to increase through 2019. In the first half pet food prices were up 2.1% vs 2018. In the second half they were 3.6% higher.  Will this impact spending? We don’t know. One thing is certain. We definitely need a new “must have” pet food trend.

The Pet Food segment continues to become more complex. In September, we’ll see what the 2nd half of 2019 brings.