SuperZoo 2022 – Its a great opportunity but You Need a Plan!

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SuperZoo has now returned to full strength. With 39% more exhibitors than 2021, over 17,000 expected attendees and 800+ new products in the New Product Showcase, plus many more on the show floor, SuperZoo 2022 is literally packed with opportunities. To help attendees in working this huge show the floor sections were made more targeted and often renamed to reflect the changes. One thing is unchanged. There is a huge array of exhibitors in every product category.

Consider these 2022 SuperZoo facts:

  • 1020+ exhibitors
  • 7 “Targeted” Floor Sections: Natural & Health; Specialty & Lifestyle; Groomers; Aquatics, Birds, Reptiles & Small Animals; Emerging Brands; Farm & Feed; International
  • 266,000+ sq ft of exhibitor booths; Plus, a 37,000 sq ft New Products Showcase
  • SuperZoo Education: Seminars on Retail and Grooming – 86 hours; 80 separate sessions
  • 5 miles of aisles – just to walk the exhibit floor

Whew! This show is huge. The show floor is open for 22 hours so…Let’s “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…

You can spend…1 MINUTE AND 18 SECONDS…with each exhibitor…You definitely need a plan!

With a higher concentration of Pet retailer attendees and a commitment to groomers, there are subtle differences between SuperZoo and GPE.  However, like GPE, SuperZoo has attendees from every major retail channel and again attracts a multitude of exhibitors and attendees from around the globe.

Despite the variety of offerings to fill an attendee’s time, SuperZoo is still primarily about Pet Products. New Products are critical to maintaining and growing any business so you must take the time to visit the new product area. Knowledge is power so you should also sign up for any relevant classes. Sometimes it’s not what you know, but who you know that matters most. This makes networking with other industry professionals a priority.

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! Plus, there are 540 Exhibitors at SZ 22 that weren’t at GPE 22.

SuperZoo is a great place to review products but Business Services, everything from Private label to POS, have also become increasingly important. In fact, 1 out of every 6 exhibitors offers some type of Business Service. Attendees can now “Leave no stone unturned” in their quest for business success. SuperZoo 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. Your only real limitation is time. How do you make the most effective use of your time on the show floor? Here’s a suggestion.

Use the Super Search Exhibitor Visit Planner to make SuperZoo easier and more productive. I initially designed it in 2014 and have updated the data and produced a new version for every GPE and SuperZoo since then…including SZ 2022.

The “update” is not just 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 1000 websites and conducted separate internet searches to “validate” their product offerings. It is not 100% accurate, but it is close.

What does the Super Search 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 you to personally narrow down the initial results and see the “final” alphabetically or by booth number.

The SuperZoo 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.

SuperZoo 2022 Super Search Exhibitor Visit Planner – Quick Start Guide

First: When you download the Excel file, Remember to Enable Editing & Macros!

The SZ 2022 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 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 7 separate floor sections, 11 different Exhibitor or Animal Types and 33 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 sell 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 “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 a single list in alphabetical order.
  5. If you would like to view the list in Booth # order, just click the Booth # Sort.
  6. You can switch the list back to an alpha view 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 “Startup”; 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”. The Super Search also allows you to “cut down” the list during your review. (Pg 2; Point #11 – “U Pick ‘em” in Detailed Instructions) But 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’ll soon be “up to speed” on the full capabilities of Super Search.

Good Luck and Good “Hunting” at SZ 2022.

Use the links below to download The Super Search (Be Sure to Enable editing/macros/content), the Quick Start Guide and the Detailed Instructions. Then GET STARTED!  

Download Quick Start Guide

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

Download Detailed Instructions

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

Download SZ 22 Super Search Final

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

The Super Search Tool has been updated with a couple of last minute changes. Two exhibitors dropped out and another moved. This is the Final version of the SuperZoo Super Search. Hope you have an enjoyable and productive show.

SUPERZOO 2022 – THE PET INDUSTRY IS BACK AT FULL STRENGTH!

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SuperZoo 2022 is only 4 weeks away. You will see in this advance look, that the Pet Industry and in person trade shows have made a strong return to a more normal situation. The pandemic caused Pet Parents to spend even more time with their children, so the Pet Products segments prospered during this challenging time. However, pet trade shows were shut down, then slowly returned starting in 2021.

Consumers’ apprehensions regarding personal contact fueled exceptional growth in Pet Products sales on the internet. However, most of these $ are coming from proven products. Buyers of all kinds, from consumers to chain store executives prefer to make in person buying decisions on new pet items. Therefore, the strong return of in person Pet Trade shows is critically important to the continued growth of the Pet Industry.

With SuperZoo 2021, the Pet Industry began to get “back on track” to normal. At SuperZoo 2022, we are essentially “there”. Currently SuperZoo 2022 has 1017 exhibitors. That is still 8% less than pre-pandemic 2019 but 39% more than SZ 2021. 1000+ exhibitors is the usual target count for the big pet trade shows. Another good indication of “normal” is the increased enthusiasm from the exhibitors. As of this date only 5 booths (500 sq ft) haven’t been “officially” sold but 3 of these are “reserved”, awaiting final payment. SuperZoo 2022 will be a “full house”.

So how big is the SuperZoo 2022 “house”? There are 266,000 sq ft of booths, a 37,000 sq ft New Products Showcase, with over 800 items, and 17,000 sq ft devoted to Show Floor Education and demonstrations. There are also 80 separate educational sessions on grooming or business subjects totaling 86 hours. This is a great opportunity for the expected 10,000 buyers but also a challenge. They need to put together a plan to take full advantage of SuperZoo’s return to power. Total attendance including Buyers, Exhibitors, Media/Guests is expected to be 17,000. The show will be crowded.

New is always a focus at Pet Trade shows. That also applies to exhibitors. At SuperZoo 2022:

  • 515 Exhibitors weren’t at SZ21
  • 539 weren’t at GPE22
  • And 366 didn’t do either show

Those are some strong arguments for attending SuperZoo 2022. It is definitely a “must do” for all Pet Industry participants. Now, let’s look at some specifics of what you will see there. Note: With a 39% overall increase in exhibitors, you’re going to see a lot of large positive numbers when compared to SZ 2021. I suggest that you focus on share of booths. To gain share, a category in any chart must increase their booth count by more than 38.6%. Change in this measurement will indicate how a particular group or product category is performing.

First, we’ll look at the overall show floor in terms of specialized sections.

  • To help guide attendees’ time on the huge show floor, special sections have grown in size and importance. They exceeded 50% of SuperZoo booths for the 1st time in 2021. They are now up to 58%.
  • You also notice that there were a lot of name changes. Rodeo Drive became Specialty & Lifestyle. Critter Alley is Now Aquatics, Birds, Reptiles & Small Animals and the Innovation Incubator is now Emerging brands.
  • Other changes: Natural & Health were combined and the welcome return of an International Pavilion.
  • Natural & Health are the unquestioned biggest trends in Pet Products. They almost always go together so it makes sense to put them in one section. Natural has been the biggest section for years. Even with a huge overall increase in exhibitors, they essentially maintained their share.
  • Specialty & Lifestyle (Fashion) lost 1.0% in share. This section has been trending down in recent years.
  • The smaller sections all had significant share gains, with Groomers leading the way in their return to prominence.
  • The end of COVID related travel problems made an International Pavilion possible.
  • The increase in share by Emerging Brands is very important because it signals a strong return of new companies to the industry. In fact, there are 265 1st Time SuperZoo exhibitors at the show – 1 in every 4 booths!

Now let’s look at the Exhibitors by type, including animal.

  • While all classifications but Distributors had more exhibitors, only 3 gained share – Business Services, Cat & Dog.
  • In terms of Animals, there are still plenty of exhibitors offering products to cover every need for Pet Parents of all animal types. However, the big gains by Dog & Cat emphasizes that the priority is the “Royalty” of the industry.
  • Business Services is the big story on this chart. This segment includes Companies that offer services to improve existing businesses and those that help in private label production – ingredients, packaging or finished products. In 2015 there were 65 SuperZoo exhibitors in this category. In 2022 there are 176, a 171% increase – almost triple. The driver has been the ever-increasing desire and availability of Private Label products. Private Label brands allow retailers to differentiate themselves, offer consumers more value and usually generate more profit.

Let’s take a closer look at the “royalty”. Here are the top 10 Dog and/or Cat Categories at SuperZoo 2022.

  • This chart is pretty boring and shows that the overall strong showing by Cat & Dog products was largely driven by these most popular categories. There were only 2 minimal share losses – Beds/Mats & Apparel.
  • The categories are the same as 2021. Treats and Meds/Supplements maintained their strong hold on the top spots.
  • Collars/Leads and Toys gained share and maintained rank, showing the focus on pets is both indoor and outdoor.
  • Food is becoming even stronger as Food & Food Accessories had the biggest gains in share.
  • Beds & Mats lost a little in share, -0.04% because their increase in booth count was only up 38.1%, slightly below the 38.6% needed to maintain share. They were also the only category to move down in rank, falling from a tie for 6th in 2021 to 7th place in 2022. That’s not bad for the worst performer.
  • Shampoos maintained rank & Tools had a big share gain. Grooming salons are coming back strong, but also more Pet Parents are doing part of the work. The key is that the Grooming category is becoming more of a priority.
  • Apparel lost -0.04% in share but that may be a win. Fashion has been less of a focus in recent years as Pet Parents turned their attention nutrition, health and wellness. This could mean that the decline has essentially ceased.

SuperZoo has 39% more exhibitors. However, the average booth size fell to 269 sq ft from 294 in 2021. In pre-pandemic 2019, it was 252. This drop in booth size reflects the strong influx of new and smaller companies. They are often the source of new products, so this is great news. Products and services are available to fill virtually every need or want of the attendees. Plus, increasing the size of special floor sections and making them more targeted along with a massive amount of educational sessions are 2 prime examples of the WPA’s ongoing efforts to continually improve the show.

853 exhibitors (84%) focus on Dog and/or Cat. Let’s take a closer look.

There are 283 more Exhibitors at SuperZoo 2022 than 2021. Those offering Dog and/or Cat products grew by 243. The Dog/Cat share increased slightly from 83.1% to 83.8%. Dogs and Cats remain the unquestioned “royalty” of the industry. Once again, we will focus on change in share

  • 27 of 33 categories increased their number of exhibitors
  • Only 9 categories increased their share of total exhibitors

When you look at the Dog/Cat Categories making share gains, you see familiar “faces”. 8 of the 9 that increased share were “Top 10” categories. The other category to gain share is a minor one, tracking & monitoring devices. However, their gain was impressive, +100% in booths and a 0.3% gain in share. This lift is very likely tied to the health/wellness trend. The share loss was widespread as 24 of 33 Dog & Cat categories lost ground. The biggest positive trends are Nutrition, Health & Wellness and Grooming. The “rich” in these categories got richer. #5 Food had the biggest share gain, +2.5%, but #1 Treats led the way in booth count with 106 more exhibitors and #2 Meds/Supplements grew by 84.

6 categories had a minimal drop in exhibitors. Catnip led the way (-3) and had the biggest drop in share, -1.3%. Of the 24 categories that loss share, 3 others had a drop of -1.2% or more – Rawhide, Furniture and Flea & Tick. However, make no mistake. Even with these share losses, all Dog & Cat product needs are more than covered, with a lot of choices in each.

SuperZoo again showcases what is “happening” in the Pet Industry and offers a great opportunity for Industry participants, both exhibitors and attendees, to drive the growth of their businesses. It still takes effort and commitment from everyone, but SuperZoo 2022 is the surest bet in Las Vegas!

Finally, the chart below details the specifics for all 33 of the Dog/Cat product categories that I defined for the Super Search Exhibitor Visit Planner.  (Note: The SZ 2022 Super Search will be available at PetBusinessprofessor.com on 8/1.)

Retail Channel Monthly $ Update – May Final & June Advance

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By 2021, the market had generally recovered from the impact of the pandemic. Now we are being hit by extreme inflation, with rates higher than we have seen in 40 years. Obviously, this can affect retail sales, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in the CPI from US BLS.

The Census Bureau Reports are the Monthly and the Advance Retail Sales Reports. 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 – about 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.

We begin with the Final Report for May and then move to the Advance Report for June. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

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 2021
    • Current Month Real change – % vs same month in 2021 factoring in inflation
  • Current YTD change – % & $ vs 2021
    • Current YTD Real change – % vs 2021 factoring in inflation
  • Current YTD change vs 2019 – % & $
    • Current Real change YTD vs 2019 – % factoring in inflation
  • Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the May Final. After a slight downturn in April sales generally grew slightly in May. The $ were up for May and YTD vs 2021 for all but Auto. However, when you factor in inflation, for the 2nd straight month only Restaurants had increases in these measurements. Here is the May data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The May Final is $0.5B more than the Advance Report. All but Relevant Retail were up. Relevant Retail: -1.5B; Auto: +$0.6B; Restaurants: +$0.1B; Gas Stations: +$1.4B. Total Sales are up slightly from April, as consumers continue to spend more vs 2021 in all but Auto. However, the “real” numbers give you a different view. All but Restaurants are again really down in all measurements. Restaurants are strong due to a late recovery but also note that half of the inflation in this group came before 2022. The inflation impact on Relevant Retail is especially significant as their Real YTD sales vs 2021 are again negative. Relevant Retail does have the best performance since 2019 as 65.7% of their 30.9% growth is “Real”.

Now, let’s see how some Key Pet Relevant channels did in May.

Overall – 10 of 11 were up vs April. Vs May 2021, 9 reported more $ but only 4 were really up. In YTD vs 2021, 9 reported increases but again only 4 were real. Vs 2019, only the Office/Gift/Souvenir channel was “really” down.

  • Building Material Stores – Their Spring lift has started but it is not as strong as last year. Home Ctr/Hdwe is up vs 21 but Farm stores are down YTD. The Bldg/Matl group has an inflation rate of 11% which produced all negative real numbers. The pandemic caused consumers to focus on their homes which produced sales growth over 30% since 2019 in both channels. Importantly, 61.4% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.0%, Real: 7.0%; Farm: 10.7, Real: 6.7%
  • Food & Drug – Both channels are truly essential. Except for the food binge buying in the pandemic, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The rate for Grocery products is 5 times higher than for Drugs/Med products. Sales for Drug Stores are positive in all measurements and 89% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month and YTD. Also, only 24.1% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.2%, Real: +1.6%; Drug Stores: +3.9%, Real: +3.5%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their normal Spring lift started in March then stabilized in April/May at a level below 2021. Their current inflation rate is 5.7% which is down from 7.5% in April but YTD it is 7.3%. It was also high in 20>21, +4.8%. However, 71% of their 48.1% lift since 2019 is real. Their Avg Growth Rate was: +14.0%; Real: +10.4%.
  • Gen Mdse Stores – Sales in all channels were up vs April. Discount Dept stores are down for the month vs 2021. All other groups are up slightly for May and YTD vs 2021. All real measurements vs 2021 are negative for all channels. Disc. Dept Stores were struggling before COVID and only 1% of their 7.7% growth since 2019 is real. For the other channels, it averages 46%. Avg Growth Rate: SupCtr/Club: 4.4%, Real: 2.1%; $/Value Strs: +7.1%, Real: +4.0%; Disc. Dept.: +2.5%, Real: 0.04%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are up vs April and vs 2021. The growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021. However, their real sales vs 2019 are still down -3.7%. Their true recovery is still a ways off. Avg Growth Rate: +1.3%, Real: -1.2%
  • Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. Sales are down vs April but up vs 2021. Also, their YTD growth rate is less than half of the average since 2019, but 90% of their 78.1% growth since 2019 is real. Their Avg Growth Rates is: +21.2%, Real: +19.5%. As expected, they are by far the growth leaders since 2019.
  • A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. In 2022, they are by far the Sales increase leaders over 2021. As expected, their sales dipped in January from December, but all measurements have been positive every month since then. Plus, 87% of their 58.8% growth since 2019 is real. Their Avg Growth Rate is: +16.7%, Real: +14.8%. They are 2nd in growth since 2019 to the internet. I’m sure Pet Stores are helping.

There is no doubt that high inflation is an important factor in Retail. In actual $, 9 channels reported increases in YTD sales over 2021 and 9 are up for the month. When you factor in inflation, the number with any “real” growth falls to 4 for YTD & monthly. This is a very clear indication of the growing impact of inflation at the retail channel level. Recent data showed that Inflation continues to grow. Let’s look at the impact on the Advance Retail Sales numbers for June.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. Now, radical inflation is a big factor with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. This was very evident in June. There was a small overall sales decrease from May but $ were up vs June 2021 for all but Auto. However, the actual amount of product sold vs 2021 fell in all but Restaurants.

Overall – Inflation Reality is setting in. The monthly increase vs the previous year continues to be lower than the inflation rate. The still recovering Restaurants and Gas Stations are up double digits vs 2021 but Auto $ are down again. June set a new $ record for the month, but the real monthly and YTD sales vs 2021 for all but restaurants are down.

Total Retail – Every month in 2022 has set a monthly sales record. June $ are $695B, the 3rd largest of all time. In a normal year, sales should stay at or near this level until dipping slightly in September. However, 2022 is not normal. Sales are -0.4% vs May but are still up 8.9% vs June 2021 and 10.3% vs YTD 2021. However, when you factor in 13+% inflation, both measurements are down for the 4th consecutive month and only 42.3% of the 31.9% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.3%. The impact of Inflation continues to grow.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but have turned up since then setting new all-time monthly records in March>May. $ fell -2.5% in June but they are the only big group that is positive in all other measurements. Inflation is high at 7.5% for June and 6.9% YTD but it is the lowest of any big group. 60.9% of their 30.7% growth since 2019 is real. The May/June % is up 50% from April, showing the appeal of “eating out” after months of cooking at home. Their Avg Growth Rate: +9.3%, Real: +5.9%. They only account for 12.7% of Total Retail sales, but their positive performance significantly helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales fell in January, turned up in Feb/Mar, fell April>May and were +0.4% in June. They are unique in that their Mar>June monthly sales are below 2021. These are the only reported sales negatives by any group vs 2021. This is bad but their real sales numbers are much worse. Extremely high inflation has pushed their real sales down -9+% in all measurements vs 2021, the worst overall numbers of any group. Plus, their 26.7% growth since 2019 is really down -2.3%. Their Avg Growth Rate: +8.2%, Real: -0.8%. It is likely that the drops in the reported $ales in March>June vs 2021 are tied to high inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell in January and February then turned up in March>June. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation is in all of the headlines and is by far the highest of any expenditure category. It is over 47% YTD for 2022 vs 2021 and has even caused consumers to buy 5.7% less than they did in 2019. Avg Growth Rate: +14.5%, Real: -1.9%. It’s a textbook example of the initial impact of inflation. Consumers are spending more but buying less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in January and February, then went on an up/down roller coaster from Mar>June. All months in 2022 set new records but their YTD increase is now 22.7% below their 10.1% avg growth since 2019. Now, we’ll look at the impact of inflation. 64.2% of their 31.3% growth since 2019 is real. However real sales vs 2021 are down -3.8% for the month and -1.0% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +10.1%, Real: +6.4%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down 1.0% so the amount of products that consumers bought in 2022 is less than in 2021. They just paid more. That’s not good.

The impact of inflation is becoming even more apparent. All groups but Restaurants now have no monthly or YTD real growth vs 2021. Both Auto & Gas Stations are even “really down” vs YTD 2019. Added together, this has produced 4 straight months of real monthly and YTD drops for Total Retail. We are in Phase II of inflation. Consumer spending grows but the amount bought declines. With 4 straight down months vs 2021, the Auto Group is likely in Phase III, when consumers actually cut back on spending. If inflation continues, this worsening situation will become more widespread.

Here’s a more detailed look at June by Key Channels

  • Relevant Retail: Avg Growth Rate: +9.5%, Real: +6.4%. 4 channels were up vs May but 8 vs June 2021, producing a June $ales record. 10 were up YTD vs 2021 but you will see the negative impact of inflation in the real numbers.
  • All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow in 2022. Their YTD numbers have been positive vs 2019 since April but in June they are still down in real terms in all measurements vs both 2019 & 2021. Avg Growth: +0.1%, Real: -2.5%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. June sales are down from May but up vs June 2021 and YTD. Their real numbers are down and only 38.9% of their 17.5% lift from 2019 is real. Avg Growth: +5.5%, Real: +2.2%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Inflation has hit them hard. $ are down from May. Monthly & YTD increases vs 2021 are strong but inflation is stronger. Real sales are down and only 21.8% of the growth since 2019 is real. Avg Growth: +6.3%, Real = +1.4%.
  • Health/Drug Stores – At least the drug stores in this group are essential, but consumers visit far less frequently than Grocery stores. Most of their COVID ride has been rather calm. However, sales turned down in June vs May and 2021. Their inflation rate is low so 89% of their 13.7% growth from 2019 is real. Their Avg Growth is: +4.4%, Real: +3.9%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth which has continued until June 2022. $ are down 8.1% from May and only +0.2% from 2021. YTD $ are still up 10.1% and 88% of their growth from 2019 is real. Avg Growth: 5.0%, Real: 4.4%.
  • Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation is high. They are up from May, but growth is slowing and all their real numbers vs 2021 are negative. Only 30.4% of their growth since 2019 is real. Avg Growth: +6.9%, Real: +2.0%.
  • Electronic & Appliances – Look at the graph. This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up from May but are down across the board vs 2021. The increase from May and deflation kept sales positive vs 2019 but only +1.1%. Avg Growth: +0.35%, Real: +0.44%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift is somewhat inconsistent as $ fell 4.2% from May. June & YTD sales are up vs 2021, but when you factor in strong, double-digit inflation, the amount sold vs 2021 is significantly lower for both. However, 61.3% of their strong 37.5% sales growth since 2019 is real. Their Avg Growth is: +11.2%, Real: +7.1%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. Sales were up 5.7% from May which kept the month & YTD $ up vs 2021. However, all real measurements are down vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 79% of their 37.7% growth since 2019 is real. Avg Growth is: +11.3%, Real: +9.1%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. $ are -4.4% from May but from April>June they have held the top spot in both monthly & YTD lifts vs 2021. Their YTD growth since 2019 is 2nd only to NonStore. Plus, 82.8% of the 44.8% growth since 2019 is real. Their Avg Growth is: +13.1%, Real: +11.1%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier for the year. Their Growth has slowed significantly in 2022 but all measurements are positive. 88.7% of their 72.6% increase since 2019 is real. Their Avg Growth is: +20.0%, Real: +18.0%.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Moreover, each month it is getting worse. On the surface, the impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth has slowed markedly. Overall, the market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph above illustrate this perfectly and show how widespread that it has become. 8 of 11 channels are up vs June 2021 and 10 are up YTD. However, when you factor in inflation, only 2 are up for June and 4 for YTD. Inflation is real and there are real and even worse consequences if it continues. To see an example of this, take a look at what is happening in the Auto Group.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

I’m sure that this list raises some questions. Here are some answers to some of the more obvious ones.

  1. Why is the group for Non-store different from the Internet?
    1. Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
  2. Why is there no Food at home included in Non-store or Internet?
    1. Online Grocery purchasing is becoming popular but almost all is from companies whose major business is brick ‘n mortar. These online sales are recorded under their primary channel.
  3. 6 Channels have the same CPI aggregate but represent a variety of business types.
    1. They also have a wide range of product types. Rather than try to build aggregates of a multitude of small expenditure categories, it seemed better to eliminate the biggest, influential groups that they don’t sell. This method is not perfect, but it is certainly closer than any existing aggregate.
  4. Why are Grocery and Supermarkets only tied to the Grocery CPI?
    1. According to the Economic Census, 76% of their sales comes from Grocery products. Grocery Products are the driver. The balance of their sales comes from a collection of a multitude of categories.
  5. What about Drug/Health Stores only being tied to Medical Commodities.
    1. An answer similar to the one for Grocery/Supermarkets. However, in this case Medical Commodities account for over 80% of these stores’ total sales.
  6. Why do SuperCtrs/Clubs and $ Stores have the same CPI?
    1. While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the mix of actual products is substantially different.

Petflation 2022 – June Update: Prices increase to +8.8% above 2021

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Inflation continues to make headlines. There have been year over year increases in the monthly Consumer Price Index (CPI) larger than we have seen in decades. In June the CPI was up 9.1% vs 2021, beating the previous high of 8.6% in May. Food at Home (groceries) prices continue to surge, up 12.2% over 2021. That’s 4 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. As we have seen in recent years, even minor price fluctuations can affect consumer pet spending, especially in the more discretionary pet segments. With that in mind, we will continue to publish monthly reports to track petflation as it evolves in the marketplace.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. The gap narrowed in March & April as Petflation accelerated to 97.6% of the national rate. In May, Petflation stabilized and the gap widened a bit to 94%. However, inflation in the Products segments surged in June and the gap decreased to 96.7%, again virtually equal to the national rate. Let’s look a little deeper. This and future reports will include:

  • A rolling 24 month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
  • Monthly comparisons of 22 vs 21 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month
    2. Inflation changes for recent years (20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2022 vs 2019
    4. Average annual Year Over Year inflation rate from 2019 to 2022
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from June 2020 to June 2022. We will use December 2019 as a base number in this and future reports so we can track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus those from 12 and 24 months earlier are included as are the yr-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons. (Note: the April Peak for Veterinary is also highlighted.)

The pandemic hit home in early 2020. The national CPI was only +0.3% and Pet prices deflated until August. There are 2 different patterns between the Services and the Products segments. Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI. Food and Supplies prices generally deflated until late 2021. After that time, inflation took off, but the patterns became mixed. Services paused in March and fell in June. Veterinary dropped in May. Supplies prices plateaued then surged in June while inflation in Food is accelerating. Here are some things to note:

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow through June 2022. 44% of the overall 15.3% increase since 2019 occurred in the last 6 months.
  • Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December but 81% of the 9.8% increase has happened since January.
  • Pet Supplies – Remember that Supplies prices were high in December 2019 due to the added tariffs. They had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022 when they turned sharply up reaching a new all-time pricing high in January, beating the 2009 record. Prices plateaued from February to May, but turned up in June, reaching a new record high.
  • Pet Services – Normally inflation is 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. Inflation got stronger in 2022, slowed a little in March, turned up in April but then prices fell in June.
  • Veterinary – Inflation has been generally consistent in Veterinary. Prices began rising in March 2020 and increased through 2021. Then a pricing surge began in December which pushed them past the overall CPI. Prices peaked at +15.5% in April. In May prices fell and stabilized in June which pushed them below the National CPI.
  • Total Pet – The blending of the different segment patterns made the Pet Industry appear calm. That ended in December 2021 as prices surged in all segments. In June inflation is slowing in Services but growing in Products.

Next, we’ll turn our attention to the Year over Year inflation rate change for the month of June and compare it to last month, last year and to previous years. We’ve added some human categories to put the pet numbers into perspective.

Overall, Prices vs 2021 were up 9.1% vs 2021 with the Grocery increase now hitting 12.2%. There are some small positives. Only 3 of 9 categories had increases over 1% from last month, the same as April & May but down from 5 in March…. And Non-Veterinary Services prices actually fell 0.7% from May. There is a little hope.

  • U.S. CPI – Prices are up 1.4% from last month. In May the increase was 1.1%. June Inflation was +9.1%. The targeted rate is <2%. We remain 4+ times higher than the “target”. Inflation is getting worse, and it accelerated again in June.
  • Pet Food – Prices are up 1.3% vs May and 10.3% vs June 2021. The YOY increase is being measured against a deflationary year, but that increase is almost 4 times the pre-pandemic 2.8% increase from 2018 to 2019.
  • Food at Home – Prices are up 1.0% from May. The increase from 2021 is 12.2%, which is the largest increase in any month since 12.3% in April 1979 and the largest June monthly increase since 15.1% in 1974. Inflation for this category since 2019 is the highest of any category on the chart and is 25% more than the national CPI.
  • Pets & Supplies – Prices grew 0.9% from May and set a new record high. They now have the 2nd highest monthly increase over 2021 of any industry segment, but still have the lowest increase since 2019.
  • Veterinary Services – June prices grew 0.2% from May. They are up 7.5% from 2021 but now trail Food & Supplies in the Pet Industry. They also remain 2nd in the increase since 2019 with 16.9% compared to Food at home at 19.7%.
  • Medical Services – Prices sharply increased at the start of the pandemic in 2020 but then inflation slowed and returned to a more normal rate in 2021. In 2022 prices are turning sharply up, +71% vs the pre-pandemic 2018>19 rate.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021/22. Prices are -0.7% from May and +6.3% vs 2021. Prices are now below April and appear to be stabilizing, at least for a short period.
  • Haircuts & Other Personal Services – Prices are +0.3% from May and +6.3% from 2021. They are +15.8% since 2019.
  • Total Pet – Inflation is strong and is 3+ times the rate of last year. Service segments prices are becoming stable while the Product segments prices are growing. This is driving Petflation up. In the past, inflation has caused a reduction in the frequency of purchase in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying big bucks and it is needed every day. We’ll see if consumers are willing to pay the new high prices for food and buy the more discretionary products/services at the same frequency as they did in the past.

Now here’s a look at Year-to-Date numbers. How does 2022 compare to previous years…so far?

The increase from 2021 to 2022 is the biggest for 7 of 9 categories. The average annual increase since 2019 is over 3% for all but Pet Food & Pet Supplies. This is due to deflation in 2021.

  • U.S. CPI – The current increase is double the average increase from 2019>2022, but over 4 times the average annual increase from 2018>2021. Inflation is a big problem that started recently.
  • Pet Food – Inflation is growing stronger, especially after deflation in 2021.
  • Food at Home – The 2022 YTD inflation beat the U.S. CPI by 22.9%. You can see the impact of supply chain issues.
  • Pets & Pet Supplies – Prices have been at record levels since January. Although the 2021>22 increase is being measured against a deflationary 2021, it is significant and tied for 1st with Veterinary in the Pet Industry segments.
  • Veterinary Services – Has the most inflation since 2019 and is the only segment on the chart with a 3+% inflation rate each year throughout the pandemic and recovery. No matter what, just charge more.
  • Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2022 there is another pricing surge as the inflation rate is 36% higher than pre-pandemic 2018>19.
  • Pet Services – February & May set records for the biggest year over year monthly increases in history. Prices seem to be becoming more stable, but the current June YTD increase of 6.1% is the largest in history. Demand has grown for Pet Services while the availability has decreased, a formula for inflation.
  • Haircuts & Personal Services – The services segments, essential & non-essential were hit hardest by the pandemic. After a small decrease in March, prices turned up again. The YTD rate is now equal to 2020>21 but still 93% more than 2018>19. Consumers are paying 15% more than in 2019. This usually reduces the purchase frequency.
  • Total Pet – We have seen basically two different inflation patterns. After 2019, Prices in the Services segments continued to increase, and the rate accelerated as we moved into 2021. The product segments – Food and Supplies, were on a different path. They generally deflated in 2020 and didn’t return to 2019 levels until mid-year 2021. Food prices began a slow increase, but Supplies remained stable until we neared yearend. In 2022, everything changed as Food and Supplies prices turned sharply up. Food prices continued to climb. Supplies pricing stabilized then grew in June. The Services segments have had decreases but are becoming more stable. The net was a June YTD CPI increase vs 2021 for Total Petflation of 7.1%, 85.5% of the extraordinarily high 8.3% overall rate. It was only 72.5% in March.

Inflation is strong in the Pet Market. Will it impact spending? Let’s put it into perspective. The 7.1% June YTD increase in Total Pet is far below the 8.9% record set in 2009 but 4+ times larger than the 1.5% avg since then. Although pet spending continues to move to higher income groups, the impact of inflation varies by segment. Supplies is the most affected as many categories are price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. We’ll just have to wait and see the overall impact on Pet Spending of the continued strong Petflation.

U.S. PET FOOD SPENDING $31.56B (↓$6.40B): MID-YEAR 2021 UPDATE

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The pandemic had a huge impact on consumers. They stayed home and focused on needs, rather than wants. This behavior was very evident in the Pet Industry as the “needed” segments – Food and Veterinary Services, had big $ increases while the spending in the more discretionary segments – Supplies and Non-Vet Services fell. There were other factors that amplified these differences. Services outlets were often deemed non-essential, so they were subject to widespread restrictions and closures. Food had a completely different path. During the early stages of the pandemic, consumers often binge bought essential products to have a backup supply in case there were outages. This behavior applied to Pet Food, which is the only absolutely essential Pet Industry Segment. The result was a $6.8B increase in spending over the 1st half of 2019. It should be noted that Pet Food spending was down in the 1st half of 2019 because the segment was still feeling the impact of the “untrue” FDA warning on grain free dog food. However, the lift was still the biggest year over year increase in history.

Pet Parents maintained this extra supply of pet food throughout the balance of 2020. As we moved into 2021, there were still some outlets that were suffering but most channels had recovered, and the overall Retail Market was prospering. This caused a change in Pet Food spending. Pet Parents obviously didn’t binge again and, in a few situations, even had their pets start to “eat down” the extra supply of food to return to their previous level of home “inventory”. They also increasingly moved to internet purchasing with regular deliveries. As a result, Pet Food Spending fell -$6.4B (-16.9%) in the 12 month period ending 6/30/21 over the previous year and -$5.3B vs the 1st 6 months of 2020.

As you know, the pandemic also caused problems in information gathering for the data collected by the US BLS for the annual Consumer Expenditure Survey (CEX), especially in the Diary method which is used for Pet Food. Those were resolved in 2020 and everything returned to a “new normal”.

Now, let’s get started with our Pet Food spending update for Mid-Year 2021. Pet Food (& Treat) Annual Spending was $31.56B, down -$6.40B (-16.9%). The following charts and observations were prepared from calculations based upon data from the current CEX report and earlier ones. The first chart will help put the $31.56B into historical perspective and truly show you the roller coaster ride that continues in Pet Food Spending.

Here are the current numbers:

        Mid 2021: $31.56B; ↓$6.40B (-16.9%) from Mid-2019. The net -$6.40B in Mid 2021 came from:

  ◦  Jul>Dec 2020: Down $1.12B from 2019.          ◦  Jan>Jun 2021: Down $5.29B from 2020.

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. In the 1st half of 2019, Pet Food spending remained stable at the new lower level. In the second half of 2019 we started to see a recovery from the overreaction to the FDA warning and spending increased by $2.3B. Then came 2020. The recovery was continuing but a new outside influence was added which had a massive impact on U.S. consumers – the COVID-19 pandemic. In March nonessential businesses were closed. This also produced a wave of panic buying in some truly essential product categories. In the Pet Industry there is only 1 truly essential category – Pet Food. Coupled with the FDA “recovery” and the ongoing movement to Super Premium, this produced an incredible $6.76B lift in Pet Food Spending in the 1st half of 2020. Spending fell in the 2nd half of 2020 and plummeted in the 1st half of 2021. Pet Parents didn’t binge again and some even began using up the stockpile that they panic bought in the early days of COVID.

Let’s look at Pet Food spending by the 2 most popular demographic measures – income & age group. They both show the current and previous 12 months $ as well as 2019 and 2020 yearend. This will allow you to track the spending changes between halves and to see where we started, in pre-pandemic yearend 2019. 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 of the 20>21 mid-yr numbers using the under $100K group as an example:

  • <$100K Mid-yr Total Spending Change: $17.79B – $17.35B = Up $0.44B (green outline = increase; red outline = decrease)
  • 2nd half of 2020: Subtract Mid-20 ($17.35) from Total 2020 ($16.53B) = Spending was down $.82B in 2nd half of 2020.
  • 1st half of 2021: Subtract Total 2020 ($16.53B) from Mid-21 ($17.79B) = Spending was up $1.26B in 1st half of 2021.

Note: The green/pink fill in the 20/21 numbers indicates if they are up/down vs Yearend 2019.

  • We see 2 distinct spending patterns in the individual groups. The <$50K and the especially the $100>149K groups both binge bought Food in the pandemic so there was a steep spending drop in 2021. The middle income $50>99K and over $150K groups cut spending in the pandemic then began recovery in 2021.
  • Perhaps the most obvious fact is the spending disparity due to income. Prior to the Super Premium era, $70K was the “halfway point” in Pet Food spending. In 2013 the under $70K group accounted for 67.8% of CUs and 51.3% of Pet Food spending. Due to the rise of Super Premium, they lost the lead in 2015 as $70K> spent 50.8% of Pet Food $. In 2020, the binge buying of Pet Food by $100>150K pushed the $100K> group to the top at 55.1%. Then the big drop in 2021 flipped $70K> back into the lead at 60.8%. The halfway point in Pet Food spending is still high but is again below $100K.
  • < $70K > Surprisingly, the Pet Food spending patterns for both groups are the same, but the changes are more pronounced in the higher income group because they had the $ to finance more binge buying. Both show a 2020 COVID lift and a 2021 drop. Also, both groups returned to a spending level above 2019 yearend $.
  • < $100K > The spending patterns of these 2 groups are different in every way. Spending for the <$100K group fell during 2020 then bounced back in 2021 but is slightly below 2019. The $100K> massively binge bought in 2020 so there was a huge decrease in the 1st half of 2021 but they still finished slightly ahead of 2019 $. Both are being driven by a pattern of one subgroup. For the <$100K group it is $50>99K income. For $100K> it is $100>149K.
  • < $50K Both the <$30K and $30>49K have a pattern like the $100>149K but the binge buying was limited due to lower income. However, both did finish the 1st half of 2021 slightly ahead of 2019. While income is the most important factor in Pet Food Spending, it is not the only factor.
  • $50 > $100K – This income group was the most negatively affected by the pandemic. Spending dropped in 2020 for both the $50>69K and $70>99K groups. They bounced back a little in 2021 but didn’t reach the 2019 level. They are under financial pressure in normal times. COVID undoubtedly made things even tougher. The drops and even the failure to return to 2019 $ were probably largely due to value shopping, especially on the internet. However, some CUs may have downgraded their Food. The biggest swings occurred in the middle income $70>99K group.
  • $100K>149K – High income is increasingly becoming “where it’s at” in Pet Spending. In the 1st half of 2020 spending went through the roof. This group drove virtually all of the binge buying of Super Premium Foods. That also made them responsible for most of the current big drop. They did end up slightly above 2019 $.
  • $150K > Their Pet Food spending also fell in 2020. It was most likely due to value shopping and moving to the internet as a primary source. Their spending came back strong in 2021, 10% above 2019. It’s likely that they broadened the range of food & treats purchased and may have upgraded to even more expensive food.

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

  • Each group had a unique pattern but there is one basic difference. 55>74 binge bought Food. Everyone else didn’t.
  • < 25 – Their spending fell in 2020 but then bounced back in 2021 but not to the 2019 level. The pandemic had a unique impact on them. The number of CUs fell by 2.1M in 2020 as many moved back home with their parents taking their pets with them. In 2021, 1.2M set up a separate H/H again but that’s still significantly less than pre-pandemic. Their movement also helped enhance the spending lift & drop by the 55>64 yr-olds.
  • 25>34 – No binge buying. They value shopped but likely upgraded their food and even added pets to their family which produced the only steady growth since mid-year 2020.
  • 35 > 44 – Their spending drop in 2020 was probably due to increased value shopping, especially on the internet. When things truly opened up in 2021, they opened their wallets and spending exceeded 2019 $ by 12%.
  • 45 > 54 and – They have the highest income, so their spending pattern is somewhat unusual. Their Pet Food spending continued to drop throughout 2020. It turned up in 2021 but was still 15% below 2019. They are an unlikely group to downgrade. They probably focused on savings and convenience and turned to the internet.
  • 55>64 – This group is mostly Boomers, the most emotional Pet Parents. Binge buying food was an emotional response to the pandemic. They have the highest income of any Boomer group so they had the will and means to drive the binge. The movement of their children to & from home also contributed. Ultimately, they are now down 19% from 2019.
  • 65 > 74 – This group is mostly Boomers but with lower income. Their pattern has similar ups and downs to the 55>64 yr-olds but with far smaller swings. There is one difference. Their 2021 numbers exceed 2019.
  • 75> – COVID had virtually no impact on spending. They are committed pet parents as they had a 30% $ lift over 2019.

That gives us the “big picture” for our 2021 Mid-year update of Pet Food spending. Now we’ll take a closer look at the start of 2021. However, rather than compare it to 1st half of 2020 to see the big negative swings, we’ll compare it to the 1st half of 2019 and document the biggest changes since then. This will show how close that we are to a “normal” year.

The first thing that you notice is that the biggest increases are generally much larger than the biggest increases. We should also note that all Housing segments spent more in 2021 than in 2019.

  • There are a number of usual winners, like $150K>, Managers, White, Not Hispanic, BA/BS, 2 People and Gen X. There are also some surprises like No Earner 2+ CUs, Center City and the Northeast.
  • When we look at the losers we see a few familiar names, African Americans, HS Grads & Singles. However, five of the big losers binge bought Food in 2020 so naturally they had a huge drop in 2021. They are Self-employed, 55>64, Areas <2500, Married, Oldest Child 18> and Boomers. They haven’t recovered as yet. Perhaps they will in the 2nd half.
  • It’s a good sign that despite the 2 radical swings we are still $1.5B ahead of the time before the pandemic turmoil began in 2020 and continued into early 2021.

The spending drop was huge in the 1st half, but not unexpected. The huge lift in Pet Food $ in the 1st half of 2020 was an emotional reaction to the pandemic. The retail inventory of many “necessary” items like toilet paper and hand sanitizers was wiped out. Consumers wanted to ensure that they had them at home in case of supply chain issues. In the Pet Industry, there is no more necessary product than Pet Food. The lives of our Pet Children depend on it. With the widespread commitment to Super Premium Food, buying a safety stock produced a huge lift in $. It was clearly an emotional reaction. When it comes to emotion related to pets, there is one group that leads the way, Baby Boomers. In the 90s, they were the 1st group to be defined as Pet Parents and they have increasingly personified their Pet Children ever since. The huge lift was amplified by additional demographic factors. A high income of $100>149K drove the lift. The 55>64 yr-old Boomers have the highest income of their group. This gave them the means to buy the extra Food. Areas <2500 population generally have more pets but fewer retail outlets. This would increase their fear of product shortages. However, the pandemic increasingly came under control in 2021, bringing a desire to return to a new normal. No binge buying. Some began a return to more normal levels of backup, and many arranged regular deliveries. All of these contrbuted to the big drop in Pet Food spending in the 1st half of 2021. I expect a strong lift in the 2nd half. We’ll get the data in September.

Tracking Pet Food Pricing – The PPI (Mfg) vs CPI (Retail)

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Changes in the price manufacturers charge for a product obviously impact the retail price for consumers. However, it is not always a direct correlation and often there is a significant delay in the response. The retailers who sell high demand products like Pet Food are under intense competitive pressure.

In this brief report we will look at how changes in the Producer Price Index (PPI) for Pet Food match up to the changes in the retail CPI from December 2019 to 2022. Pre-pandemic December 2019 is used as the base number in all graphs to facilitate comparisons.

The first graph plots the PPI pricing path of Dog & Cat Food and Other Pet Food vs the Pet Food Retail CPI.

  • Pricing remained essentially stable for all groups through most of 2020. The first change was that the PPI for Non-Dog/Cat Pet Food began moving up in November. This lift has continued but this small category has little impact on overall Pet Food Retail Prices.
  • The Dog & Cat Food PPI moved up sharply in July 2021 then essentially stabilized until the end of the year. This turned Retail Prices up slightly, only +1.6% vs 2019 by December 2021.
  • In 2022, the Dog & Cat PPI turned up in Jan/Feb, stabilized in Mar/Apr, then rose sharply in May. Pet Food Retail prices began growing in February. This increase accelerated in March and continues through May. The Retail inflation rate for Pet Food is now 66% of the PPI increase for Dog & Cat Food. In February it was 31.6% and only 25.4% back in December 2021. This gap is definitely narrowing as the Retail price increases are more closely matching the increase in manufacturing costs. By the way, the increase for Other Pet Foods is a meteoric +31.6% vs 2019. This is huge and by far the biggest increase in any Pet Food category, but it is only 29% of the 109% increase in the Gasoline PPI over the same period.

Obviously, it takes a while for a rise in the PPI to impact retail prices. Also, as we saw in most of 2020 and in the 2nd half of 2021, stability in the PPI usually generates stability in Retail prices.

Dogs & Cats “rule” the pet food segment just like they “rule” the overall Pet Industry. However, the lift in prices for manufacturing Food for Other Pets has now gotten so large that it is having an impact in pushing Pet Food Retail Prices up.

We will now drill a little deeper into the “ruling” Dog & Cat Food categories. We will look at the individual PPI history for Dog Food and Cat Food and the 2 largest sub-categories in each – Dry/Semi-moist and Canned. Our chart will track and compare the Pet Food CPI and the PPI history for all groups from December 2019 to March 2022. The detailed data release for these specific groups is 2 months behind the overall PPI release.

  • The PPI for all categories was essentially unchanged from December 2019 until October 2020. At that time manufacturers’ prices in the Canned Dog Food category moved up 1.1%.
  • In October 2020 Pet Food retail reached bottom in their deflationary movement. The price increase in Canned Dog Food slowed overall Pet Food deflation and essentially stabilized prices.
  • Both the individual PPIs and the overall Pet Food CPI plateaued from November 2020 through May 2021.
  • All prices moved up slightly in June 2021 but the PPIs took off in July. The Pet Food CPI also was above December 2019 for the 1st time since February 2020.
  • Canned Dog Food led the skyrocketing PPI prices in July 2021 but all categories had a significant increase. The increase continued in August, but the CPI unexpectedly dipped slightly below December 2019.
  • The PPIs for all groups essentially stabilized from September through December 2021 while the Pet Food CPI began to increase, especially from Nov>Dec.
  • In January 2022, the PPIs for all but Canned Dog Food turned up again. Their increase continued in February, with Canned Cat Food skyrocketing up to +12.7%, almost equal to the overall increase by Canned Dog Food. The Pet Food CPI moved up slightly in January and then inflation took off in February.
  • The PPIs stabilized again in March, but we should note that prices for Canned Dog Food have been stable since August, after the spectacular Jun>August lift. While manufacturing prices have stabilized, inflation in Pet Food Retail is accelerating. From our 1st chart we know that this trend continued through May.
  • Once again, we see that there is obviously a timing delay from the PPI to the CPI. It takes time for the impact to work its way from manufacturer to retailer to consumer.
  • We also see that the Canned Food categories have significantly more pricing volatility than Dry Food for both Dogs and Cats. While Canned Dog Food led the way in the PPI lift and ended up with the biggest increase, +13.3%, Canned Cat Food finished a close second at +12.7%.
  • However, when you look at how these individual PPIs compare to the overall PPI for Dog or Cat, it is readily apparent that Canned Cat Food has a much larger share of total Cat Food than Canned Dog Food has of Total Dog Food.

In terms of what will happen in the future, we turn again to our first chart. The PPI for Dog/Cat Food was stable through April but turned sharply up again in May. When Mfg prices go up, Distributors & Retailers must take a closer look at their product mix. For those items with increasing prices, they can raise their prices, accept lower margins or some combination of both. The Retail CPI is spiking. It’s likely that rising manufacturing prices will cause Retail Pet Food inflation to continue to grow. We need the PPIs to flatten for the CPI to stop increasing. Ultimately, we hope that any supply chain issues will be fixed, returning Pet Food Retail and Manufacturing to a more price competitive market.

Retail Channel Monthly $ Update – April Final & May Advance

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By 2021, the market had generally recovered from the impact of the pandemic. Now we are being hit by extreme inflation, with rates higher than we have seen in 40 years. Obviously, this can affect retail sales, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in the CPI from US BLS.

The Census Bureau Reports are the Monthly and the Advance Retail Sales Reports. 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 – about 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.

We begin with the Final Report for April and then move to the Advance Report for May. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

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 2021
    • Current Month Real change – % vs same month in 2021 factoring in inflation
  • Current YTD change – % & $ vs 2021
    • Current YTD Real change – % vs 2021 factoring in inflation
  • Current YTD change vs 2019 – % & $
    • Current Real change YTD vs 2019 – % factoring in inflation
  • Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the April Final. After an uptick in March, sales generally turned down slightly in April. The $ were up for April and YTD vs 2021 for all groups but Auto. However, when you factor in inflation, only Restaurants had increases in these measurements. Here is the April data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The April Final is $2.6B less than the Advance Report. The drop was driven by Relevant Retail: -3.6B; Auto: -$0.1B; Restaurants: +$0.7B; Gas Stations: +$0.4B. Total Sales are down slightly from March, but consumers continue to spend more vs 2021 in all but Auto. However, the “real” numbers give you a different view. All but Restaurants are really down in all measurements. Restaurants are strong due to a late recovery but also note that half of the inflation in this group came before 2022. The inflation impact on Relevant Retail is especially significant as their Real YTD sales vs 2021 are now negative. Relevant Retail does have the best performance since 2019 as 67.9% of their 31.8% growth is “Real”.

Now, let’s see how some Key Pet Relevant channels did in April.

Overall – Only 6 of 11 were up vs March. Vs April 2021, 9 reported more $ but only 2 were really up. In YTD vs 2021, 9 reported increases but only 4 were real. Vs 2019, only the Office/Gift/Souvenir channel was “really” down.

  • Building Material Stores – Their Spring lift has started but it is not as strong as last year. Home Ctr/Hdwe is up vs 21 but Farm stores are down for the month & YTD. The Bldg/Matl group has an inflation rate over 11% which produced all negative real numbers. The pandemic caused consumers to focus on their homes which produced sales growth over 30% since 2019 in both channels. Importantly, 67.9% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.3%, Real: 7.5%; Farm: 10.5, Real: 6.6%
  • Food & Drug – Both channels are truly essential. Except for the food binge buying in the pandemic, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The rate for Grocery products is 5 times higher than for Drugs/Med products. Sales for Drug Stores are flat vs March 2021 but 90% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month and YTD. Also, only 28.5% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.3%, Real: +1.9%; Drug Stores: +4.1%, Real: +3.7%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their normal Spring lift started in March then stabilized in April at a level considerably below 2021. Their current inflation rate is 7.5% but it was also high in 20>21, +4.8%. However, 73% of their 48.8% lift since 2019 is real. Their Avg Growth Rate was: +14.2%; Real: +10.7%.
  • Gen Mdse Stores – Sales in SupCtr/Clubs fell vs March and all channels are up only slightly for the month and YTD vs 2021. All real measurements vs 2021 are negative for all channels. Disc. Dept Stores were struggling before COVID and only 17% of their 8% growth since 2019 is real. For the other channels, it averages 45%. Avg Growth Rate: SupCtr/Club: 5.6%, Real: 2.5%; $/Value Strs: +6.6%, Real: +3.5%; Disc. Dept.: +2.9%, Real: +0.5%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down vs March but up vs 2021. The growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021. However, their real sales vs 2019 are still down -4.3%. Their true recovery is still a long way off. Avg Growth Rate: +1.0%, Real: -1.5%
  • Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. April sales are up in all measurements, but the YTD growth rate is less than half of the average since 2019. However, 91% of their 81.8% growth since 2019 is real. Their Avg Growth Rates is: +22.1%, Real: +20.4%. As expected, they are by far the growth leaders since 2019.
  • A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. In 2022, they are the Sales increase leaders over 2021. As expected, their sales dipped in January from December but all measurements have been positive every month since then. Plus, 88% of their 62.9% growth since 2019 is real. Their Avg Growth Rate is: +17.7%, Real: +15.8%. They are 2nd in growth since 2019 to the internet, which is somewhat surprising.

There is no doubt that high inflation is an important factor in Retail. In actual $, 9 channels reported increases in YTD sales over 2021 and 9 are up for the month. When you factor in inflation, the number with any “real” growth falls to 4 YTD & 2 monthly. This is a very clear indication of the growing impact of inflation at the retail channel level. Recent data showed that Inflation continues to grow. Let’s look at the impact on the Advance Retail Sales numbers for May.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. Now radical inflation has entered the game with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. In May there was a  small overall increase from April, but the amount sold again fell in all but Restaurants. If it continues, it can reduce consumer spending. This has happened in Auto in April & May.

Overall – Inflation Reality is setting in. The monthly increase vs the previous year continues to be smaller than it has been. The still recovering Restaurants and Gas Stations are up double digits vs 2021 but Auto $ are down again. May set a new $ record for the month, but the real monthly and YTD sales vs 2021 for all but restaurants are down.

Total Retail – Every month in 2022 has set a monthly sales record. May $ are $698B, second only in $ to December 2021. In a normal year, sales should stay at or near this level until dipping slightly in September. However, 2022 is not normal. Sales are +2.4% vs April but are still up 8.2% vs May 2021 and 10.6% vs YTD 2021. However, when you factor in 13+% inflation, both measurements are down for the 3rd consecutive month and only 43.6% of the 31.2% growth since 2019 is real. The Avg Growth Rate is: +9.5%, Real: +4.3%. The impact of Inflation is growing.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but have turned up since then setting new all-time monthly records in March, April and now May ($90.2B). They are the only big group that is positive in all measurements. Their inflation is high at 7.3% for May and 6.8% YTD but it is the lowest of any big group. 61.6% of their 30.2% growth since 2019 is real. This is up from 51% in April which shows the appeal of “eating out” after months of cooking at home. Their Avg Growth Rate: +9.2%, Real: +5.8%. Although they only account for 12.9% of Total Retail sales, their positive performance significantly helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales fell in January, turned up in Feb/Mar then fell again in April/May. They are unique in that their March, April and May sales are below 2021. These are the only reported sales negatives by any group vs 2021. This is bad but their real sales numbers are much worse. Extraordinarily high inflation has pushed their real sales down -16+% in all measurements vs 2021, the worst performance of any group. Plus, their 26.7% growth since 2019 is really down -1.4%. Their Avg Growth Rate: +8.2%, Real: -0.5%. It is very likely that the drops in the reported $ales in March>May are tied to extreme inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell in January and February then turned up in March>May. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation is in all of the headlines and is by far the highest of any expenditure category. It is over 44% for 2022 vs 2021 and has even caused consumers to buy 6% less than they did in 2019. Avg Growth Rate: +13.2%, Real: -2.0%. It’s a textbook example of the initial impact of inflation. Consumers are spending more but buying less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in January and February, turned up in March, flattened in April, then grew in May. All months in 2022 set new records but their YTD increase is now 23.4% below their 9.4% avg growth since 2019. Now, we’ll look at the impact of inflation. 65.8% of their 31% growth since 2019 is real. However real sales vs 2021 are down -1.8% for the month and -0.4% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.4%, Real: +6.4%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down 0.4% so the amount of products that consumers bought in 2022 is actually less than in 2021. They just paid more. That’s not good.

The impact of inflation is truly beginning to Hit home. All groups but Restaurants now have no monthly or YTD real growth vs 2021. Both Auto & Gas Stations are even “really down” vs YTD 2019. Added together, this has produced 3 straight months of real monthly and YTD drops for Total Retail. We are now in Phase II of inflation. Consumer spending increases but the amount bought declines. With 3 straight down months, the Auto Group is likely in Phase III, when consumers actually cut back on spending. If inflation continues, this worsening situation will become more widespread.

Here’s a more detailed look at May by Key Channels

  • Relevant Retail: Avg Growth Rate: +9.4%, Real: +6.4%. 9 channels were up vs April and vs May 2021. This was enough to set a May $ales record. 10 were up YTD vs 2021 but you will see the negative impact of inflation in the real numbers.
  • All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow in 2022. Their YTD numbers turned positive vs 2019 in April but in May they are still down in real terms in all measurements vs both 2019 & 2021. Avg Growth: +0.04%, Real: -2.6%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. While May sales are up from April and vs May 2021 and YTD, their real numbers are down and only 41.2% of their 17.7% lift from 2019 is real. Avg Growth: +5.6%, Real: +2.4%.
  • Grocery – These essential stores depend on frequent purchases, so except for the binge buying in 2020, their changes are generally less radical. Inflation has hit Groceries hard. Monthly and YTD increases vs 2021 are strong but inflation is stronger. Real sales are down and only 24.5% of the growth since 2019 is real. Avg Growth: +6.3%, Real: +1.6%.
  • Health/Drug Stores – At least the drug stores in this group are essential, but consumers visit far less frequently than Grocery stores. Most of their COVID ride has been rather calm. Their inflation rate is low and sales are positive in all measurements. Plus, 90% of their 13.3% growth from 2019 is real. Their Avg Growth is: +4.2%, Real: +3.8%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth which has continued through 2022. $ are up 5.9% from April and they’re positive in all measurements. Also, 89% of their growth from 2019 is real. Avg Growth: 5.1%, Real: 4.6%.
  • Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation on Furniture is very high, so growth is slowing and their real numbers vs 2021 are negative. Only 32.4% of their growth since 2019 is real. Avg Growth: +6.9%, Real: +2.4%.
  • Electronic & Appliances – Look at the graph. This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up from April but are down across the board vs 2021. The increase from April and deflation has turned sales positive vs 2019 but only +0.9%. Avg Growth: +0.30%, Real: +0.26%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. After slowing in April, this year’s spring lift is restarting but at a lower level than 2021. When you factor in strong, double-digit inflation, the amount sold vs 2021 is significantly lower for both May and YTD. 61.5% of their strong 36.6% sales growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +7.0%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. Sales were up in May which made the month and YTD $ up vs 2021. However, all “real” measurements are down vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 79% of their 36.8% growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +8.8%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. In April & now May, they moved to the top spot in both monthly & YTD lifts vs 2021. Their YTD growth since 2019 is 2nd only to NonStore. Plus, 83% of the 44.8% growth since 2019 is real. Their Avg Growth is: +13.1%, Real: +11.1%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier for the year. Their Growth has slowed significantly in 2022 but all measurements are positive. 89% of their 71.6% increase since 2019 is real. Their Avg Growth is: +19.7%, Real: +17.8%.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Moreover, each month it is getting worse. On the surface, the impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth has slowed markedly. Overall, the market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph above illustrate this perfectly and show how widespread that it has become. 8 of 11 channels are up vs May 2021 and 9 are up YTD. However, when you factor in inflation, only 4 are up for May and 4 for YTD. Inflation is real and there are real and even worse consequences if it continues. To see an example of this, take a look at what is happening in the Auto Group.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

This list raises some questions. Here are some answers to some of the more obvious ones.

  1. Why is the group for Non-store different from the Internet?
    1. Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
  2. Why is there no Food at home included in Non-store or Internet?
    1. Online Grocery purchasing is becoming popular but almost all is from companies whose major business is brick ‘n mortar. These online sales are recorded under their primary channel.
  3. 6 Channels have the same CPI aggregate but represent a variety of business types.
    1. They also have a wide range of product types. Rather than try to build aggregates of a multitude of small expenditure categories, it seemed better to eliminate the biggest, influential groups that they don’t sell. This method is not perfect, but it is certainly closer than any existing aggregate.
  4. Why are Grocery and Supermarkets only tied to the Grocery CPI?
    1. According to the Economic Census, 76% of their sales comes from Grocery products. Grocery Products are the driver. The balance of their sales comes from a collection of a multitude of categories.
  5. What about Drug/Health Stores only being tied to Medical Commodities.
    1. An answer similar to the one for Grocery/Supermarkets. However, in this case Medical Commodities account for over 80% of these stores’ total sales.
  6. Why do SuperCtrs/Clubs and $ Stores have the same CPI?
    1. While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the mix of actual products is substantially different.

Petflation 2022 – May Update: Prices stay at +8.1% above 2021

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Inflation continues to make headlines. There have been year over year increases in the monthly Consumer Price Index (CPI) larger than we have seen in decades. In May the CPI was up 8.6% vs 2021, beating the previous high of 8.5% in March. Food at Home (groceries) prices continue to surge, up 11.9% over 2021. That’s 3 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. As we have seen in recent years, even minor price fluctuations can affect consumer pet spending, especially in the more discretionary pet segments. With that in mind, we will continue to publish monthly reports to track petflation as it evolves in the marketplace.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. The gap narrowed in March & April as Petflation accelerated to 97.6% of the national rate. In May, Inflation in the overall market became stronger. However, thanks to a price drop in Veterinary, Petflation stabilized, and the gap widened – 8.1% for Pet vs 8.6% for the national rate. Let’s look a little deeper. This and future reports will include:

  • A rolling 24 month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
  • Monthly comparisons of 22 vs 21 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month
    2. Inflation changes for recent years (20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2022 vs 2019
    4. Average annual Year Over Year inflation rate from 2019 to 2022
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from May 2020 to May 2022. We will use December 2019 as a base number in this and future reports so we can track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus those from 12 and 24 months earlier are included as are the yr-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons. (Note: the April Peak for Veterinary is also highlighted.)

The pandemic really hit home in April/May. Even the national CPI deflated for 2 months, but not the Services segments. There are 2 different patterns between the Services and the Products segments. Veterinary and Services prices generally inflated after mid-2020, a pattern similar to the overall CPI. Food and Supplies prices generally deflated until late 2021. After that time, inflation took off, but the patterns became mixed. Services paused in March and Veterinary dropped in May. Supplies prices have essentially plateaued while inflation in Food is accelerating. Here are some things to note:

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow through May 2022. 65% of the overall 13.7% increase since 2019 occurred in the last 12 months.
  • Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December. 90% of the 8.4% increase has happened since November.
  • Pet Supplies – Remember that Supplies prices were high in December 2019 due to the added tariffs. They had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022 when they turned sharply up reaching a new all-time pricing high in January, beating the 2009 record. Prices have essentially plateaued at this new, higher level since February.
  • Pet Services – Normally inflation is 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. Inflation got stronger in 2022, slowed a little in March, turned up in April and then slowed a bit in May – basically an every other month pattern
  • Veterinary – Inflation has been generally consistent in Veterinary. Prices began rising in March 2020 and increased through 2021. Then a pricing surge began in December which pushed them past the overall CPI with total inflation since 2019 reaching +15.5% in April. In May prices fell but they are still ahead of the National CPI.
  • Total Pet – The blending of the segment patterns made the Pet Industry appear calm compared to the overall market. That ended in December 2021 as prices surged in all segments. In May inflation is slowing in all but Food.

Next, we’ll turn our attention to the Year over Year inflation rate change for the month of May and compare it to last month, last year and to previous years. We’ve added some human categories to put the pet numbers into perspective.

Overall, Prices vs 2021 were up 8.6% vs 2021 with the Grocery increase now hitting 11.9%. There are some small positives. Only 3 of 9 categories had increases over 1% from last month, the same as April but down from 5 in March…. And Veterinary Services prices actually fell 1.0% from April. There is a little hope.

  • U.S. CPI – Prices are up 1.1% from last month. In April the increase was 0.6%. May Inflation was +8.6%. The targeted rate is <2%. We remain 4+ times higher than the “target”. Inflation is getting worse, and it accelerated again in May.
  • Pet Food – Prices are up 1.6% vs April and 9.1% vs May 2021. The YOY increase is being measured against a deflationary year, but that increase is more than triple the pre-pandemic 2.8% increase from 2018 to 2019.
  • Food at Home – Prices are up 1.3% from March. The increase from 2021 is 11.9%, which is the largest increase in any month since 12.3% in April 1979 and the largest May monthly increase since 16.6% in 1974. Inflation for this category since 2019 is the highest of any category on the chart and is 28% more than the national CPI.
  • Pets & Supplies – Prices grew 0.1% from April but they are slightly below March’s record high. They now have the lowest monthly increase over 2021 of any industry segment, and the lowest increase since 2019.
  • Veterinary Services – May prices fell 1.0% from April. They are up 7.4% from 2021 but now trail Pet Food in the Pet Industry. They also lost the lead in the increase since 2019 with 16.9% compared to Food at home at 18.1%.
  • Medical Services – Prices sharply increased at the start of the pandemic in 2020 but then inflation slowed and returned to a more normal rate in 2021. It appears to be turning strongly up again in 2022.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021 & 2022. Prices are up 0.5% from April and 7.4% from May 2021, beating the record 6.5% increase in February and double the rate of 2019 & 2020. However, we should note that a big part of the record May lift was due to a 0.9% drop in prices from April to May 2021.
  • Haircuts & Other Personal Services – Prices are +0.5% from April and 6.2% from 2021. They are +15.6% since 2019.
  • Total Pet – Inflation is strong and is 3+ times the rate of last year. Veterinary prices fell and Supplies prices plateaued which helped keep overall Petflation steady at +8.1%. In the past, inflation has caused a reduction in the frequency of purchase in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying big bucks and it is needed every day. We’ll see if consumers are willing to pay the new high prices for food and buy the more discretionary products/services at the same frequency as they did in the past.

Now here’s a look at Year-to-Date numbers. How does 2022 compare to previous years…so far?

The increase from 2021 to 2022 is the biggest for 7 of 9 categories. The average annual increase since 2019 is over 3% for all but Pet Food & Pet Supplies. This is due to deflation in 2021.

  • U.S. CPI – The current increase is double the average increase from 2019>2022, but over 4 times the average annual increase from 2018>2021. Inflation is a big problem that started recently.
  • Pet Food – Inflation is growing stronger, especially after deflation in 2021.
  • Food at Home – The 2022 YTD inflation beat the U.S. CPI by 19.5%. You can see the impact of supply chain issues.
  • Pets & Pet Supplies – Prices have plateaued at a new record level since February. Although the 2021>22 increase is being measured against a deflationary 2021, it is very significant and 2nd to Veterinary in the Pet Industry segments.
  • Veterinary Services – Has the most inflation since 2019 and is the only segment on the chart with a 3+% inflation rate each year throughout the pandemic and recovery. No matter what, just charge more.
  • Medical Services – Prices went up significantly at the beginning of the pandemic, but the rate has slowed since and has now essentially returned to near pre-pandemic levels.
  • Pet Services – February set a record for the biggest year over year monthly increase in history. The rate slowed in March, turned up again in April then set a new record in May. The current YTD increase of 6.1% remains 2nd only to 6.4% in 2009. Demand has grown for Pet Services while the availability has decreased, a formula for inflation.
  • Haircuts & Personal Services – The services segments, essential & non-essential were hit hardest by the pandemic. After a small decrease in March, prices turned up in April/May. The YTD rate is now down slightly from 2020>21 but still 79% more than 2018>19. Consumers are paying 14.9% more than in 2019. This usually reduces the frequency.
  • Total Pet – When we first looked at the pandemic impact on Petflation. We saw basically two different patterns. Prices in the Services segments continued to increase, and the rate accelerated as we moved into 2021. The product segments – Food and Supplies, were on a different path. They generally deflated in 2020 and didn’t return to 2019 levels until mid-year 2021. Food prices began a slow increase, but Supplies remained stable until we neared yearend. In 2022, everything changed as Food and Supplies prices turned sharply up. Food prices continued to climb as Supplies pricing stabilized and Veterinary prices dropped. The net was a YTD CPI increase vs 2021 for Total Petflation of 6.7%, 82% of the extraordinarily high 8.2% overall rate. It was only 72.5% of the National rate in March.

Inflation is strong in the Pet Market. Will it impact spending? Let’s put it into perspective. The 6.7% YTD increase in Total Pet is far below the 9.6% record set in 2009 but 4 times larger than the 1.5% avg since then. Although pet spending continues to move to higher income groups, the impact of inflation varies by segment. Supplies is the most affected as many categories are price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. Hopefully, Supplies prices will stabilize and begin to deflate. Eliminating the special tariffs implemented in September 2018 would be a big help. However, we’ll just have to wait and see the impact of the continued strong Petflation.

2020 Veterinary Spending was $24.85B – Where did it come from…?

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Now we will turn our attention to the final Industry Segment – Veterinary Services. For years, Veterinary Services prices have had high inflation. This has resulted in CU income becoming the most dominant factor in spending behavior and a reduction in visit frequency. Consumers paid more, just used Veterinary Services less often.

Things changed in 2017 as low inflation spurred a 7.2% increase in visit frequency and a $2.5B increase in spending. In 2018 inflation returned to more normal levels. Consumers spent $0.56B more (+2.7%). However, the inflation rate was 2.6% so virtually all of the lift was from increased prices. In 2019 the situation got worse. Consumers spent $0.58B (+2.7%) more but inflation was 4.14%. This means that there was an actual decrease in the amount of Veterinary Services purchased. In 2020 the pandemic hit and consumers concentrated on needs. For Pet Parents, that meant that they became focused on Pet Food & Veterinary Services. As a result, Veterinary spending grew $3.05B, (+14.0%).

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2020 and the $3.05B increase. The first chart details the biggest pet Veterinary spenders for each of 10 demographic categories. It shows their share of CU’s, share of Veterinary spending and their spending performance (Share of spending/share of CU’s). In terms of performance – 6 of 10 groups perform above 120%, the same as 2018 & 2019. This is more than Supplies & Services with 5 but much less than Food (8). This means that these big spenders are performing well but it also signals that there is still a large disparity between the best and worst performing demographics in the “needed” segments. Income remains the biggest factor in Veterinary Spending, but Education is also important as College Grads is a different group from Total Pet. The categories are in the order that reflects their share of Total Pet $.

  1. Race/Ethnic – White, not Hispanic (87.2%) down from 90.9%. This group accounts for the vast majority of spending in every segment, but they lost significant share in 2020. Their 127.5% performance is also down from 132.6% and they fell from 2nd to 3rd in importance in Veterinary Spending but still reflects the spending disparity. Minorities did narrow the gap in 2020. Hispanics & African Americans spent 50% more while the spending by Asians almost tripled.
  2. Housing – Homeowners (83.1%) down from 83.2% Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 126.3% performance rating is down from 130.5%, but they held on to 4th place. The slight decrease in share and performance came from a bigger % increase from Renters as they fell in numbers while homeownership grew. We should note that Homeownership is not as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
  3. # in CU– 2+ people (77.9%) up from 75.0% This group, which is 70% of U.S. CUs, gained share and their performance grew from 107.4% to 111.0%. Their rank in terms of importance in Veterinary Spending moved up from last to 8th. Spending by Singles and 4 person CUs was flat while 2, 3 & 5 person CUs had big gains.
  4. Area – Suburban & Rural (67.1%) down from 68.7% Suburban CU’s are the biggest spenders in every segment. Rural had a great year and was added to hit the 60% goal. Performance still fell to 106.4%, from 107.9%. The decreases in share and performance came because Suburbs 2500> were up only 3.2% while Center City was +19.8%.
  5. # Earners – “Everyone Works” (69.7%) down from 70.4% In this group, all adults in the CU are employed. Their Performance fell from 121.5% to 120.3% and they fell in rank from #5 to #6. Only No Earner, Singles spent less. The small drop in share and performance were due to a huge lift by 2+ People CUs with 1 or no earner.
  6. CU Composition – Married Couples (58.6%) up from 57.0% Their performance also grew to 120.8% from 116.7% and they returned to the 120+% club at #6. Until 2019, Married Couples had a 60+% market share and 120+% performance in all segments. Only Married Couples with an oldest child <6 spent less. The gains came because the spending by singles was essentially flat, only +0.6%.
  7. Income – Over $70K (63.4%) down from 66.3% The performance of the $70K> group fell significantly from 159.8% to 145.8%. However, higher income is still the most important factor in increased Vet spending. Only the $50>99K group spent less. The spending by the <$50K group grew by 37.0%. Those making $100K> also spent 16.4% more. The key factor in the big changes in share and performance was a 9.8% drop by the $70>99K group.
  8. Age – 35>64 (60.1%) down from 63.2% Their performance also fell from 120.7% to 112.7% and they dropped out of the 120% club. Only <25 & 35>44 yr olds spent less. All other groups had double digit % increases. The drop by 35>44 yr-olds in conjunction with a 52.1% lift by 25>34 caused the big loss in share and performance.
  9. Education – College Grads (61.3%) down from 63.9% Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Performance also fell from 144.1% to 131.2%. Education lost share and performance but moved up to 2nd from 3rd in importance. Only those without a HS diploma spent less. The big drop in share and performance came from a 48.2% lift by HS Grads without a BA/BS. Veterinary Services are very important. The pandemic caused this need to become recognized by more education levels.
  10. Occupation – All Wage & Salaried (68.1%) up from (67.3%) but their performance only increased from 110.3% to 110.7%. Tech/Sls/Clerical and Retirees spent less while most of the lift was driven by Managers & Professionals. However, the largest percentage increase was from the Self-Employed. This combination slowed the gains. It also reinforces that “the bosses” ruled in 2020.

Spending did become a little more balanced but Higher income remains the biggest single factor in Veterinary spending. We see the impact of this in many groups as it often contributes to the big spending disparity between segments. The most notable change was that the 35>64 age group fell out of the 120+% club due to a big lift by the 25>34 yr olds.

Now, we’ll look at 2020’s best and worst performing Veterinary spending segments in each category.

Almost all of the best and worst performers are those that we would expect. However, there are 7 that are different from 2019. This is the same as Services but much more than the 3 in Supplies and much less than the 10 in Food. This suggests some spending turmoil. The changes from 2019 are “boxed”. We should note:

  • Income – The winner & losers are the expected groups but they are 30% closer together.
  • Earners – New, but not unexpected, winner and loser. They have the highest and lowest incomes.
  • Occupation – Once again, it’s all about income
  • Age – The highest income group, 45>54 yr-olds returned to the top. Despite a strong showing by the 25>34 group, only those from 35>74 perform above 100%.
  • Race/Ethnic; Education; Housing – The usual winners and losers but the performance gap narrowed a bit.
  • Area – A fundamental change in the loser based upon population. Last year it was Rural. This year it’s Center City.
  • Region – After winning for 5 straight years, the Northeast was replaced by the West at the top. The West is also the only region performing above 100%. The South has now finished last for 5 years in a row.
  • CU Composition – No change here but again the performance gap narrowed a little, 10%.
  • # in CU – Only 2 & 3 person Cu’s perform above 100%. We have seen spending movement to larger CUs. This is very apparent in Veterinary as the 5+ group spent 67% more and moved up a little after 2 years at the bottom.
  • Generation – The loser flipped from the oldest to the youngest and the performance gap widened by 30%.

It’s time to “Show you the money”. Here are segments with the biggest $ changes in Veterinary Spending.

We saw some turmoil in performance. There was even more here. There were 4 repeats and 10 segments flipped from 1st to last or vice versa. Last year they had 8 repeats and 4 flips. There were some surprise winners – 25>34 yr-olds & Center City but no surprise losers. In fact, in 4 categories all segments spent more. You should also note the increases were significantly larger than the decreases and 85% of 96 demographic segments spent more. Here are the specifics:

  • Occupation – The winner and loser flipped with the “Bosses” returning to the top.
    • Winner – Mgrs & Professionals– Veterinary Spending: $9.87B; Up $2.11B (+27.1%)                      2019: Tech/Sales/Clerical
    • Loser – Tech/Sales/Clerical – Veterinary Spending: $3.42B; Down $0.27B (-7.4%)                          2019: Mgrs & Profess.
    • Comment – The highest income groups – Self-Employed and Mgrs & Professionals accounted for 90% of the increase. Blue Collar workers did spend $0.41B more but Retirees spent a little less, -0.04B (-1.0%).
  • Region – The Northeast flipped from 1st to last. They have now flipped for 3 consecutive years.
    • Winner – West – Veterinary Spending: $7.01B; Up $2.08B (+42.1%)                                                    2019: Northeast
    • Loser – Northeast – Veterinary Spending: $4.10B; Down $0.98B (-19.3%)                                         2019: Midwest
    • Comment – The South finished 2nd for the 4th consecutive year. All but the Northeast had double digit % gains.
  • Race/Ethnic – Both groups held their spots as White, non-Hispanics maintained their dominance in this segment.
    • Winner – White, Not Hispanic – Veterinary: $21.67B; Up $1.85B (+9.3%)                                       2019: White, Not Hispanic
    • Loser – African American – Veterinary: $0.87B; Up $0.30B (+51.8%)                                               2019: African Americans
    • Comment– In 2019 only African Americans spent less. In 2020 everyone spent more. This shows that Pet Parents’ commitment to the health & wellbeing of their Pet Children is widespread across all racial/ethnic groups.
  • Housing – Homeowners w/Mtges held their position at the top.
    • Winner – Homeowner w/Mtge – Veterinary: $14.06B; Up $1.62B (+13.0%)                                    2019: Homeowner w/Mtge
    • Loser – Renter – Veterinary: $4.19B; Up $0.53B (+14.5%)                                                                      2019: Homeowner w/o Mtge
    • Comment – Every segment spent more and in fact, Homeowners w/Mtges had the lowest percentage increase. They won because they account for 56.6% of all Veterinary spending.
  • # in CU – Both the winner and loser flipped.
    • Winner – 2 People – Veterinary Spending: $9.73B; Up $1.50B (+18.3%)                                              2019: 1 Person
    • Loser – 1 Person – Veterinary Spending: $5.48B; Up $0.03B (+0.6%)                                                   2019: 2 People
    • Comment: Again, all groups spent more. 4 Person CUs and singles had increases under 2% while everyone else was in double digits, led by 5+ CUs who were up 67%.
  • Generation – Baby Boomers flipped from last to first as they focused on their Pets’ needs – Food & Veterinary.
    • Winner – Baby Boomers – Veterinary: $8.93B; Up $1.45B (+19.4%)                                                  2019: Millennials
    • Loser – Gen Z – Veterinary: $0.20B; Down $0.06B (-22.5%)                                                                  2019: Baby Boomers
    • Comments – After 2 years at the bottom Boomers returned to the top. Millennials also had a good year, +$1.1B. Gen Z was the only generation to spend less.
  • Area Type – Center City is a bit of a surprise and the big suburbs flipped from 1st to last.
    • Winner – Center City – Veterinary Spending: $8.17B; Up $1.35B (+19.8%)                                       2019: Suburbs 2500>
    • Loser – Suburbs 2500> – Veterinary Spending: $11.57B; Up $0.36B (+3.2%)                                   2019: Suburbs <2500
    • Comment – All groups also spent more. The question became “How much more?” With 33% of the $ and a 20% increase, Center City won. Suburbs 2500> have 47% of $ but were only +3%. By the way, Rural was +80%.
  • CU Composition – Married Couple Only flipped from last to 1st.
    • Winner – Married, Couple Only – Veterinary: $7.04B; Up $1.31B (+22.9%)                                2019: Singles
    • Loser – Married, Oldest Child <6 – Veterinary: $0.95B; Down $0.21B (-18.2%)                          2019: Married, Couple Only
    • Comment – After a $0.72B increase in 2019, the loser was the only segment to spend less. Single Parents spent 68% more but 63% of the total $ increase came from Married Couples Only and those with a child over 18.
  • # Earners – Both the winner and loser are new, but not surprising.
    • Winner – 3+ Earners – Veterinary Spending: $3.26B; Up $1.15B (+54.2%)                                     2019: 2 Earners
    • Loser – No Earner, Single – Veterinary Spending: $1.45B; Down $0.51B (-26.1%)                        2019: 1 Earner, 2+ CU
    • Comment – The winner and loser have the highest and lowest incomes and No Earner, Singles were the only group to spend less. Income is of primary importance to increased Veterinary Spending & # of earners is important. However, not every adult has to work. 1 Earner, 2+ Person CUs was only beaten by $0.03B.
  • Income – $100>149K flipped from last to first.
    • Winner – $100>149K – Veterinary Spending: $5.04B; Up $1.14B (+29.1%)                                    2019: <$30K
    • Loser – $70>99K – Veterinary Spending: $3.74B; Down $0.41B (-9.8%)                                          2019: $100>149K
    • Comment – Two groups spent less, $50>69K & $70>99K. Last year we had a definite spending rollercoaster. It’s still here in 2020, but with bigger groups. <$50K: +$1.82B; $50>99K: -$0.48B; $100K>: +$1.69B.
  • Age – In a bit of a surprise, the 25>34 yr-olds won while 35>44 flipped from 1st to last.
    • Winner – 25>34 yrs – Veterinary Spending: $3.74B; Up $1.11B (+42.2%)                                       2019: 35>44 yrs
    • Loser – 35>44 yrs – Veterinary Spending: $4.47B; Down $0.59B (-11.6%)                                       2019: 45>54 yrs
    • Comment: Two groups spent less, the 35>44 yr-olds and the <25 group. Everyone else had double digit percentage increases. The 25>34 group is only 4th in income and 5th in Veterinary spending performance so their win is unexpected. Apparently, they were motivated by the pandemic. Their Services $ were flat but they spent a lot more in all other segments.
  • Education – Those with an Advanced College Degree held their spot at the top.
    • Winner – Adv. College Degree – Veterinary Spending: $7.41B; Up $0.88B (+13.4%)                 2019: Adv. College Degree
    • Loser – <High School Grads – Veterinary Spending: $0.34B; Down $0.14B (-29.4%)                2019: Associates Degree
    • Comment – Only those without a HS Diploma spent less. College grads were up $1.29B (+9.3%). However, those with a HS Diploma but not a BA/BS spent $1.89B (+25.6%) more so the lift was widespread.

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 12 Demographic Categories. The 2020 pandemic brought strong  growth in Veterinary spending. However, there was some turmoil as only 4 segments held their spot from 2019 while 10 flipped from first to last or vice versa, but with almost no surprising winners. The surprise was in how widespread the spending lift was. In 4 categories, no segments spent less and overall, 85% of all demographic segments spent more. This means that there were “hidden” segments that didn’t win but made a significant contribution to the $3B increase. These groups don’t win an award, but they certainly deserve….

HONORABLE MENTION

Center City won but Rural came in second – the opposite ends of the population spectrum. Income matters as Self-Employed finished 2nd to Managers & Professionals. However, spending became a little more balanced in both Income & Education which is reflected by the performance of the $30>39K, 1 Earner, 2+CU and HS Grads w/some College groups. It also wasn’t all about Baby Boomers and Gen X. The younger Millennials certainly stood up with a $1B increase in spending. There are many more groups that could be included as 82 of 96 segments (85%) spent more on Veterinary Services. That is significantly better than 57% in 2019 and 63% in 2018. 2020 was a good year!

Summary

2016 and 2017 produced a combined increase of $3.6B in Veterinary Spending as inflation moved to record low levels. In 2018 we had the Baby Boomer Spending “Bust” which especially impacted Food and Veterinary. The Boomers spending continued to fall in 2019. Fortunately, Gen X and Millennials stepped up to produce a small. 2.7% increase in both years. In 2020 the pandemic focused Pet Parents on the needed segments. This drove a $3B increase in Veterinary $. Boomers & Millennials led the way, but the lift was widespread as 85% of demographic segments spent more.

There was some turmoil in the segment, but the net result is that spending became a little more balanced in most demographic categories. In general, the size of the increases far exceeded the size of the decreases. In fact, in 4 categories all segments increased spending. Income and Education remain of primary importance in terms of increased spending.

Income: Performance generally increases with income and reaches it’s highest level, nearly 200% at $150K>. The “halfway” point (50%) occurred at $70>99K in 2020. This is the 1st time that the halfway point has fallen below $100K. Spending may be more balanced, but you can see that there is still a huge disparity.

Higher Education: Performance increases with Education but doesn’t reach 100% until you have a BA/BS degree. The performance of HS Grads with an Associate Degree or at least some college is now over 90%. Those with a College Degree perform at 131%. The disparity is not as bad as Income but still big. Equality in both categories is a long way off.

The performance of other big spending groups is also very important in the Veterinary segment. We identified six demographic categories with high performing large groups. (There were 5 for Supplies and Services but 8 for Food).  Consumers have no control over Race/Ethnicity but in addition to Income and Education, Homeownership, # Earners & Marriage are also important factors in Veterinary spending. All groups but Marriage are tied to income and their high performance demonstrates that there are still big spending disparities among segments within these categories.

There were some changes of note. Marriage returned to prominence while a strong year by the 25>34 yr-olds drove the performance of the 35>64 age group significantly down.

In 2019 Veterinary spending increased +2.7% while prices rose 4.14% – a net decrease in the amount of Services. In 2020 spending grew +14.0% while inflation was 3.7%. That’s over 10% in real growth, a very positive situation. Also, although Boomers and Millennials drove the lift, increases were widespread across demographics making Veterinary spending more balanced. In 2021, the overall U.S. economy has largely recovered. We’ll see if Pet Parents continue to spend heavily on Veterinary Services.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of 3 people – a married couple and their 18 yr old child. They are 45 to 54 years old. They are White, but not of Hispanic origin. At least one of them has an Adv. College Degree. Both are Mgrs/Professionals and their child also works. Their total income is $150>$200K. They live in a small suburb, adjacent to a big city in the Western U.S. and are still paying off the mortgage on their home.

2020 Pet Services Spending was $6.89B – Where did it come from…?

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Next, we will look at Pet Services. It is by far the smallest Segment and after a $1.73B, 20.1% decrease, it got a lot smaller and returned to the level of 2016 – 2017. After the great recession, Services’ annual spending slowly but steadily increased. During this time, the number of outlets offering Services strongly grew as brick ‘n mortar retailers looked for a way to combat the growing influence of online outlets. After all, you can certainly buy products, but you can’t get your dog groomed on the Internet. This created a highly price competitive market for Pet Services. In 2017 there was a slight increase in visit frequency, but Pet Parents just paid less. This resulted in a 1.0% decrease in Services spending. In 2018 consumer behavior changed as a significant number decided to take advantage of the increased availability and convenience of Pet Services and spending literally took off, +$1.95B (+28.9%), by far the biggest increase in history. In 2019 Pet Parents, especially the younger ones, value shopped, and spending turned down $0.10B. That brought us to 2020 and the onset of the pandemic. Because Services outlets were often deemed nonessential, they were subject to restrictions and closures. This drove the huge drop in spending.

We’ve seen that the pandemic caused binge buying in Food, while it slowed the more discretionary Supplies segment. Services  spending is arguably the most discretionary of any Pet Expenditure. Let’s look deeper into 2020 demographics.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2020 and the $1.73B decrease. The first chart details the biggest Pet Services spenders for each of 10 demographic categories. It shows their share of CU’s, share of Services spending and their spending performance (Share of spending/share of CU’s). In order to better target the bulk of the spending we had to alter the groups in two categories – education and area. The performance level should also be noted as 5 of 10 groups have a performance level above 120%. This is the same as Supplies and Total Pet but less than the 6 for Veterinary and far less than the 8 for Food. Last year they also had only 5 over 120%, down from their peak of 7 in 2018. This indicates that there continues to be a little less disparity between the best and worst performing segments in 2020. Although performance is down from 2019, Income is still the biggest factor in Services Spending. The categories are presented in the order that reflects their share of Total Pet $ which highlights the differences of the 8 matching groups. One big difference is that higher education is a much bigger factor in Services $.

  1. Race/Ethnic – White, not Hispanic (87.9%) up from 87.3%.This big group accounts for the vast majority of spending in every segment. Services Spending became slightly less diverse in terms of race and ethnicity in 2020 as their performance grew from 127.4% to 128.5% and they remained in 4th place in terms of importance.
  2. Housing – Homeowners (78.3%) down from 84.5%. Homeownership is a big factor in spending in all industry segments. The Homeowners’ share of Services fell to the lowest level of any segment in 2020. Their performance plummeted from 132.6% to 119.3% and they dropped out of the 120+% club. Plus, Renters spent 10.5% more.
  3. # in CU – 2+ people (78.3%) up from 75.9% The share for 2+ CU’s is over 75% for all segments and Services is now 2nd to Food’s 82.5%. Their performance also increased from 108.7% to 111.6% and they moved up to 8th from 9th in importance. Only 4 person CUs spent more. 2+ CUs primarily gained ground because Singles had a 50% bigger drop.
  4. Area – City/Suburbs >2500 (83.3%) down from 87.1% in share, while performance fell from 106.9% to 102.7%, last place. Services is an Urban Segment so it makes sense that they would be the most impacted by pandemic related restrictions and closures. Led by Rural, the areas under 2500 population actually spent more on Services.
  5. # Earners – “Everyone Works” (69.9%) up from (67.6%) All adults in the CU are employed. Income is important so a high market share is expected. Their performance grew to 122.0% from 115.6% and they rejoined the 120% club at #5. Only CUs with 3+ Earners spent more. However, when all adults in a CU work, Services become more needed.
  6. CU Composition – Married Couples (62.8%) up from 61.4%. Married couples are a big share of $ and have 120+% performance in all segments. Their performance increased to 129.4% from 125.7% and they moved up from 5th to 3rd in terms of importance to Services spending. In 2020, kids were the key. Only Married Couples with children over 6 and Single Parents spent more.
  7. Income – Over $70K (69.2%) down from 75.0% This group’s performance rating is 159.2%, down markedly from 180.7%. However, CU income is still the single most important factor in increased Pet Services Spending. Only the $50>69K and $150>199K income groups spent more. With a $ drop due to closures and restrictions, it’s to be expected that the group that spent the most pre-pandemic would shoulder the brunt of the negative impact.
  8. Age – 35>64 (62.5%) up from 61.2%. Their performance grew minimally from 117.0% to 117.1% All age groups spent less. The <35 group had the smallest drop, -$0.06B. The 35>64 yr-olds spent -$0.97B less and the $ for 65+ fell -$0.70. The big drop by the oldsters combined with the small drop by the youngsters kept things on par with 2019.
  9. Education – College Grads (68.5%) down from 72.2% Income generally increases with education. Services spending moves up with each increasing level of education. College Grads spend the most so they were most impacted by the pandemic. Performance fell from 162.6% to 146.6% but a college education is still the 2nd most important factor.
  10. Occupation– All Wage & Salaried (66.8%) down from 69.8% – Only Self-Employed spent more. All white and blue collar work groups along with Retirees had a 20+% drop in Services’ spending. As expected, the high income Managers & Professionals who regularly spend the most on Services had the biggest drop, -$0.76B. All Wage & Salaried workers’ performance rating decreased from 114.5% to 108.7%. Services spending became a little more balanced in terms of Occupation but for the wrong reason.

We changed 2 of the groups for Services – Education and Area, to better target the biggest spenders. We should also note that Income is still more important to spending in Services than in any other segment but # Earners was the only income related category to gain in importance. Marriage also grew in importance but spending became a little more balanced in most categories with gains by renters and larger CUs.

Now, we’ll look at 2020’s best and worst performing Pet Services spending segments in each category.

Most of the best and worst performers are not a surprise. There are 7 that are different from 2019 – 3 of the best and 4 of the worst, the same as last year. The 3 new winners are more family oriented. The high income Gen Xers, including 45>54 yr-olds stayed on top but you can see a move away from the oldest Americans. 75+ yr-olds, those Born before 1946 and No Earner, singles all moved to the bottom. Changes from 2019 are “boxed”. We should note:

  • Income is even more important to Pet Services. While the 283.8% Performance by the $150K> group is about the same as last year’s 284.3%, it is still the best performance by any group in any Industry segment.
  • # Earners – Winner and loser are new. They are the segments with the highest and lowest incomes. Not a surprise.
  • Generation – Gen X retained Top Spot and the oldest group, born before 1946 replaced Millennials at the bottom. Gen X had the only 100+% performance but the younger groups all improved while the older groups lost ground.
  • Age – 45>54, the highest income group. is by far the best performer. All groups from 25>64 perform at 100+%. The lowest performers were at both ends of the age spectrum.
  • Area –Suburbs 2500> kept the lead in $ and performance. Services is an Urban segment but the gap narrowed a bit in 2020. Suburbs 2500> performed at 109.3, up from 106.9%. Areas <2500 performed at 88.3%, up from 69.6%.
  • CU Composition – Children mattered in 2020. Married couples with children and even Single Parents spent more on Services. Marriage is the key. Married Couples only and those with children of any age all perform over 100%.

In Pet Services spending performance, income is still the major factor. After the youth movement in 2018, spending skewed towards older groups in 2019. This was reversed in 2020 as the younger groups basically held their ground while the older CUs drove the big decrease.

It’s time to “Show you the money”. Here are segments with the biggest $ changes in Pet Services Spending.

The pandemic closures and restrictions drove Pet Services Spending down $1.73B. In this chart you immediately see a difference from last year. In 2020 there were 3 categories in which all segments spent less on Services. In 2019, there were none. In 2019 the changes by the winner and loser tended to cancel the other out. In 2020, the changes by the losers were radically larger than the winners. The tumult that began in 2019 continued in 2020. Again, there were only 2 repeats and 8 of 24 segments switched from first to last or vice versa. In 2019 there were 9 flips. Here are the specifics:

  • # in CU – Both the winner and loser are new.
    • Winner – 4 People – Pet Services Spending: $1.19B; Up $0.15B (+14.2%)                                  2019: 5+ People
    • Loser – 2 People – Pet Services Spending: $2.49B; Down $1.10B (-30.6%)                                2019: 3 People
    • Comment: The winners in both 2019 and 2020 reflect the growing strength of the younger generations.
  • CU Composition – Married, oldest child 6>17 kept their spot at the top.
    • Winner – Married, Oldest Child 6>17 – Services: $1.31B; Up $0.15B (+12.5%)                       2019: Married, Oldest Child 6>17
    • Loser – Married, Couple Only – Services: $1.80B; Down $0.95B (-34.6%)                                2019: Married, Oldest Child <6
    • Comment – This reflects the strength of the 25>54 year olds. It also demonstrates the importance of “family”, especially children. All married groups with children over 6 spent more. The loser was more likely to be older.
  • Housing – Renters flipped from last to first and were the only segment to spend more.
    • Winner – Renter – Services: $1.48B; Up $0.14B (+10.5%)                                                                  2019: Homeowner w/o Mtge
    • Loser – Homeowner w/Mtge – Services: $3.80B; Down $1.16B (-23.4%)                                      2019: Renter
    • Comment – Homeowners w/mtge spend the most so they have the most to lose and they did.
  • Occupation – Mgrs & Professionals, the biggest Services spenders were again the group with the biggest decrease.
    • Winner–– Self-Employed – Pet Services Spending: $0.71B; Up $0.14B (+24.3%)                          2019: Retired
    • Loser – Mgrs & Professionals – Pet Services Spending: $2.79B; Down $0.76B (-21.4%)             2019: Mgrs & Profess.
    • Comment – The highest income Self-Employed group spent more in every industry segment.
  • Area Type – Big Suburbs flipped from 1st to last. It’s the 1st time since 2016 that Center City didn’t either win or lose.
    • Winner – Rural – Pet Services Spending: $0.38B; Up $0.13B (+50.7%)                                            2019: Suburbs 2500>
    • Loser – Suburbs 2500> – Pet Services Spending: $3.33B; Down $0.95B (-22.2%)                        2019: Center City
    • Comment – Rural was the only group to spend more on Services but they increased spending in all segments.
  • Income – The winner flipped from last to first.
    • Winner – $50 to $69K – Pet Services Spending: $0.74B; Up $0.12B (+18.6%)                                2019: $30>39K
    • Loser – $100 to $149K – Pet Services Spending: $1.19B; Down $0.79B (-40.0%)                            2019: $50 to $69K
    • Comment – Last year we had an up/down spending rollercoaster in income groups. In 2020 only $50>69K & $150>199K spent more. The winning $50>69K group only spent more on Services. The losing group cut back on the more discretionary Supplies and Services to help fund their $9.6B increase in Food & Veterinary.
  • Generation – Gen Z is a surprise, but they had an increase because many are just beginning as Pet Parents.
    • Winner – Gen Z – Services: $0.13B; Up $0.07B (+118.8%)                                                                    2019: Born <1946
    • Loser – Boomers – Services: $2.19B; Down $0.59B (-21.3%)                                                                2019: Gen X
    • Comment – Boomers had the biggest decrease, but it was only slightly larger than Gen X or those born before 1946. Gen Z spent more but the drop by Millennials was minimal, only -$0.16B, 9% of the total decrease.
  • Education – College Degree flipped from 1st to last.
    • Winner – HS Grads – Pet Services Spending: $3.30B; Up $0.05B (+8.9%)                                        2019: Adv. College Degree
    • Loser – Adv. College Degree – Services Spending: $0.93B; Down $1.04B (-31.7%)                        2019: HS Grad w/some College
    • Comment – Only those with no college courses, including those w/o a high school diploma spent more. They only account for 10.6% of Services $ but that’s up significantly from 7.4% in 2019.
  • # Earners– Like the Occupation category, the 2 highest income groups provided both the winner and the loser.
    • Winner – 3+ Earners – Pet Services Spending: $0.57B; Up $0.04B (+56.0%)                                  2019: No Earner, Single
    • Loser – 2 Earners – Pet Services Spending: $2.25B; Down $0.85B (-14.4%)                                     2019: 1 Earner, Single
    • Comment – All but 3+ Earner CUs spent less. No Earner, Singles had the biggest % decrease, -44.7%.
  • Race/Ethnic – Both the 2019 winner and loser flipped.
    • Winner – Hispanic – Services: $0.52B; Down $0.01B (-2.6%)                                                            2019: White, Not Hispanic
    • Loser – White, Not Hispanic – Services: $6.06B; Down $1.47B (-19.6%)                                        2019: Hispanic
    • Comment– All groups spent less. Hispanics are 2nd in spending but the total minority share of Services $ is 12.1%.
  • Age – The 75+ yr olds flipped from 1st to last.
    • Winner – <25 yrs – Pet Services Spending: $0.16B; Down $0.03B (-14.3%)                                     2019: 75+ yrs
    • Loser – 75+ yrs – Pet Services Spending: $0.34B; Down $0.42B (-55.1%)                                           2019: 35>44 yrs
    • Comment: In 2018, all age groups spent more on Services. In 2019 all groups under 45 yrs old spent less, while all groups over 45 spent more. In 2020 all age groups spent less but the <35 group was down only -$0.06B while the 35>64 yr olds were -$0.97B and the 65+ group spent -$0.7B less.
  • Region – The Midwest lost and has now flipped for three consecutive years.
    • Winner – South – Pet Services Spending: $2.65B; Down $0.30B (-10.2%)                                       2019: Midwest
    • Loser – Midwest – Pet Services Spending: $1.23B; Down $0.59B (-32.5%)                                       2019: Northeast
    • Comment – In 2018 all regions spent more. In 2019 it was only the Midwest and West. In 2020 all spent less.

We’ve seen the winners and losers in terms of change in Services Spending $ for 12 Demographic Categories. Income still matters and the younger groups, especially those with children have come to the forefront. Spending has become more balanced but for the wrong reasons. Here’s some data which shows the monumental change from the 2018 peak.

  • Sales:
    • 2018: $8.72B
    • 2019: $8.62B
    • 2020: $6.89B
  • % Segments Spending More:
    • 2018: 88%
    • 2019: 49%
    • 2020: 21%
  • Avg Biggest Increase:
    • 2018: $1.04B
    • 2019: $0.25B
    • 2020: $0.05B
  • Avg Biggest Decrease:
    • 2018: -$0.02B
    • 2019: -$0.27B
    • 2020: -$0.89B

We found the winners in performance and $, but there were others who performed well but didn’t win. They deserve….

HONORABLE MENTION

As you see on the chart, sometimes we had to include both 2nd and the 3rd place finishers to reach our 6 positive segment goal. Higher income is important, but the results were mixed in 2020. The $50>69K group won but there were also positive performances by the $150>199K and $30>39K groups. In a reversal from last year, CUs with kids spent more unless you were married and your oldest child was under 6. This also included single parents. The only area spending increase came from Rural areas but urban areas with a population of 100>249K also posted an increase. A College Degree is more important in Services Spending than in any other industry segment. In 2020 those with only a High School diploma and those who didn’t finish high school were the only 2 education segments to spend more on Services. Only 21% of all demographic segments spent more on Services so our choices for Honorable Mention were limited.

Summary

For years, Services’ spending slowly but steadily increased. However, the number of outlets offering Services was radically increasing. In 2017, this competitive pressure caused Pet Parents to shop for value and spending fell 1%. In 2018, the abundance of outlets and competitive prices finally had their intended impact. Many more consumers took advantage of the convenience of Pet Services and spending literally took off. In 2019 Consumers held their ground at the new higher level but we saw turmoil similar to 2017. Again, value shopping likely contributed to the small decrease.

2020 brought the pandemic and Services outlets were often deemed nonessential so they were subject to restrictions and closures. Services are definitely needed by some groups. However, for most demographics, Services are a convenience and spending is very discretionary in nature. The reduced availability and the pandemic driven focus on the “needed” segments – Food and Veterinary caused a 20% drop in Services $. High Income is still important in Services spending, but we saw mixed results in 2020. However, the $70K> group still has its highest performance in Services.

Performance is an important measurement. There were 5 categories with high performing big groups, the same as 2019. This is equal to Supplies, but less than Veterinary (6) & Food (8). This indicates a little less disparity in Services Spending.

  1. Income
  2. Higher Education
  3. CU Composition
  4. Race/Ethnicity
  5. # Earners

The Housing category dropped out and was replaced by # of Earners. These changes were caused by the spending again skewing a little younger. The younger crowd is more likely to have all adults in the CU working. They also are more like to rent than own their home. Renters had the only increase in the Housing segment and pushed Homeownership below the 120% marker. While Spending did move a little younger, Gen X and Boomers are still the top 2 spenders.

A radical increase in the number of outlets caused a competitive market which broadened the appeal of Services and drove a record increase in 2018. Value shopping caused a small decrease in 2019 but Services stayed at the new “normal” level. The pandemic changed all that. Outlets closed and people stayed home so DIY became the new trend even in Pet Services. Services did become more demographically balanced, but it was due to the huge drop in spending by those who normally spent the most, not by any big increases. As Retail America recovers from the 2020 pandemic, we assume that many services outlets will re-open. However, to get back to the previous high level of spending, Pet Parents will also have to move away from DIY and back to “I need help with my pet children, and I have the money to pay for it.” Services were hit the hardest by the pandemic in 2020. We’ll see what happens in 2021.

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 4 people – a married couple with 2 kids. The oldest child is 6>17. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. They are 45 to 54 years old and both work in their own business which generates an income of over $200K. They live in a large suburb of a metropolitan area of 2.5>5 MM in the Western U.S. and are still paying off their mortgage.