2022 U.S. PET SERVICES SPENDING $12.36B…Up ↑$3.26B

Except for a small decline in 2017, Non-Vet Pet Services had shown consistent, small annual growth. In 2018, that changed as spending grew a spectacular $1.95B. The number of outlets offering Pet Services has rapidly grown and more consumers have opted for this convenience. However, spending plummeted -$1.73B in 2020 due to COVID closures and restrictions. 2021 & 2022 brought a strong recovery. Spending grew $2.21B in 2021, then $3.26B (+35.8%) in 2022 to $12.36B. In this report we will drill down into the data to see what groups drove the record lift in 2022. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Services’ Spending per CU in 2022 was $92.21, up 35.3% from $68.13 in 2021. Note: A 2022 Pet CU (68%) Spent $135.60

More specifically, the 35.8% increase in Total Pet Services spending came as a result of:

  • 0.4% more CUs
  • Spending 17.7% more $
  • 15.0% more often

The chart below gives a visual overview of recent spending on Pet Services

After the big lift in 2018, spending stabilized in 2019. Increased availability and convenience of Services has significantly increased Services spending. This happened despite a return to a normal inflation rate, +2.4%. However, inflation grew to 2.5+% and in the 2nd half of 2019 and spending declined slightly. The 2020 pandemic brought restrictions and closures which drove spending radically down. In 2021 the recovery began and accelerated through 2022 despite inflation rates of 4.9% in 2021 & 6.3% in 2022. Now, let’s look at some specific demographics of 2022 Services spending.

First, by Income Group.

Like 2018 & 2021 all groups spent more in 2022. However, the biggest lifts came from higher incomes. The <$70K groups had smaller $ increases but were up double digits in percentage growth. The 2022 50/50 dividing line in $ for Services was $134K. That is up minimally from $133K last year but it is still by far the highest of any segment. It is readily apparent that income is overwhelmingly the primary driver in Pet Services spending.

  • <30K (23.8% of CU’s) – $31.28 per CU (+39.2%) – $1.00B, Up $0.23B (+30.3%) – This segment is shrinking and money is tight, so Services spending is less of an option. However, many chose it in 2022 as spending grew 30% to $1B.
  • $30>70K (28.9% of CU’s); $45.15 per CU (+17.2%); $1.75B, Up $0.22B (+14.6%) – In 2020, they had the only increase and finished 2nd in $. In 2022 they are down to 3rd but they are the only group to spend more in 2020, 2021 & 2022.
  • $70>100K (14.1% of CU’s) – $88.53 per CU (+68.3%) – $1.68B, Up $0.63B (+60.9%) – The spending of this middle income group slowly but consistently grew 2016>19. Then it plummeted in 2020, even falling below 2016. They rebounded somewhat in 2021 but then spending took off in 2022, +60.9%, the highest % lift of any group.
  • $100>150K (15.5% of CU’s) – $122.47 per CU (+25.1%) – $2.54B, Up $0.69B (+37.1%) – They had consistent growth from 2016>19. In 2020 they had the biggest drop, -40%. They came back strong in 2021 & 2022 to reach $2.5B.
  • $150K> (17.7% of CU’s) – $227.73 per CU (+22.8%) – $5.39B, Up $1.49B (+38.0%) – They moved steadily down after peaking in 2018. Then Spending took off in 21/22. Their CU Services spending is now 2.5 times the national average.

Now, let’s look at spending by Age Group.

All age groups but <25 spent more on Services in 2022. The biggest lifts came from 65>74 & 45>54. 55>64 held onto the top spot, but you can see that spending share has become more balanced from 35 to 64. Here are the specifics:

  • 75> (11.4% of CU’s) – $49.91 per CU (+57.1%) – $0.76B – Up $0.30B (+64.9%) They have a big need for pet services, but money is always an issue. In 2019 they had the biggest lift but gave it all back in 2020. In 2021 spending surged with a big increase in frequency. In 2022 $ were up 65% as 4.9% more CU’s spent 23.8% more $, 27.0% more often.
  • 65>74 (16.2% of CU’s) – $101.08 per CU (+59.3%) – $2.20B – Up $0.83B (+61.1%). This group is very value conscious and growing in numbers. From 2017 to 2019 their spending was stable. In 2020 it fell 20%. In 2021 they came back strong but in 2022 they had the biggest $ increase as 1.2% more CU’s spent 48.7% more $, 7.1% more often.
  • 55>64 (18.2% of CU’s) $104.30 per CU (+23.8%) – $2.55B – Up $0.46B (+22.2%) 2017>2019 they slowly increased Services spending. A big drop in frequency drove spending down in 2020 but they had a strong recovery and took the top spot in Pet Services $ in 2021. They held on in 2022 as 1.3% less CUs spent 6.9% more $, 15.8% more often.
  • 45>54 (16.9% of CU’s)- $108.46 per CU (+43.5%) – $2.46B – Up $0.78B (+46.2%) This highest income group was #1 in Services $ in 2019 and held on in 2020 despite a 20% drop in frequency. In 2021 they increased frequency but had the only $ drop and fell to #3. In 2022 1.8% more CU’s spent 14.2% more $, 25.7% more often. They are now #2.
  • 35>44 (17.0% of CU’s) – $105.54 per CU (+18.2%) – $2.41B – Up $0.36B (+17.6%) A $1B increase in 2018 pushed them to #1. In 2019 and 2020 spending fell. In 2021 they had the largest increase and moved up to #2 in Services $. In 2022 $ grew 17.6% as 0.5% less CU’s spent 7.9% more $, 8.4% more often. They fell to #3 but just 5.5% below #1
  • 25>34 (15.6% of CU’s) – $87.27 per CU (+43.4%) – $1.82B – Up $0.54B (+42.6%) This group of Millennials “found” the Services segment in 2018. Their spending slowly fell in 2019 & 2020 but reached a record high in 2021 due solely to a big increase in frequency. In 2022 their $ surged +42.6% as 0.6% less CU’s spent 29.2% more $, 11.0% more often.
  • <25 (4.7% of CU’s) – $26.49 per CU (-3.5%) – $0.17B – Down $0.02B (-8.4%) After 2018 spending fell and stabilized. In 2022 they had the only drop in spending. It was small as 5.1% less CU’s spent 19.8% less $, 20.3% more often.

In 2020, 62% of the $1.7B decrease in Services $ came from the 55> groups. In 2021, only 45>54 yr-olds spent less and the biggest increase was from the 35>44 group. In 2022, only <25 spent less. 65>74 & 45>54 had the biggest lifts. However, Services spending became more balanced as all CUs from 35>74 spent 10>18% more than the average CU.

Finally, here are some key demographic “movers” that drove the big lift in Pet Services Spending in 2022. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2021. A red outline stayed the same.

You see the stability in 2022 as 13 segments held their position and there were no flips. In all of our years of analysis, we have never seen this level of stability in any industry segment. Also, 9 categories had no segments that spent less on Services. In fact, 89 of 96 segments (93%) spent more on Services. This beat the previous best of 90% in 2021 and was a big change from 2020 when 79% spent less. In fact, only 2 segments spent less in 2022 than in 2020 – $30>39K & HS Grads and the drop by $30>39K was solely due to significantly fewer CUs. The recovery has been strong and truly widespread.

You see from the graph that the winners’ changes were all substantially larger than the losers’. This speaks to the strength and widespread nature of the lift in $ in the segments. We should also note that regardless of Race/Ethnicity, housing arrangements, the number of people or makeup of your household, your occupation or work status, the region of the country or type of area that you lived in, you spent more on Pet Services. That’s a pretty all-encompassing lift.

10 of the winners held their spot. Pet Services are a regular part of their Pet Parenting, and its importance continues to grow. The winners also demonstrate the importance of income to Services. While this segment has become more demographically widespread, higher incomes dominate. 8 of the 12 winners are either 1st or 2nd in income in their categories. The only winner that is bit of a surprise is 65>74 yr olds. High need, but low income – But now all Boomers.

Almost all of the losers are not unexpected. Once again, if we look at income, 8 of 12 are at or near the bottom in income in their category. 3 are definitely not – Asians & the Northeast have the highest income in their category and 5+ CUs are 2nd. Asians are not a surprise loser. Apparently, cultural differences cause them to spend less on their Pets than other Racial/Ethnic groups. Center City has the lowest income but is still somewhat of a surprise. Services spending tends to skew towards more populated areas. They also “lost” despite a 27.4% increase in $.

With 93% of demographic segments spending more on Services from 2021 and 99% from 2020, the recovery was strong and almost universal. There are no truly unique patterns, but one trend should be noted. Income continues to be the most important factor in Services spending. The 50/50 income dividing line in Services spending is now up to $134,000. That is 43% more than the average CU income and 80% more than the median income. $134K> is 23% of all CUs but accounts for 50% of Services $ and 52% of the $3.26B lift from 2021, but 60% of the $5.5B increase from 2020.

Overview – After the huge lift in 2018, Services spending plateaued in 2019. That changed with the pandemic in 2020. Like many retail services segments, Pet Services outlets were deemed nonessential and subject to restrictions. This resulted in a radically reduced frequency of visits and was the biggest reason behind the 20% drop in spending.

2021 brought a strong recovery with the biggest increase in history. The segments that were hit the hardest by the pandemic generally had the strongest recovery. However, the recovery had a widespread demographic reach. In 2022 the “recovery” accelerated with a new record increase of $3.26B to $12.36. The lift was largely driven by the same groups as 2021 but 93% of all segments spent more. With the humanization of our pets, Pet Services have become more important to Pet Parents and the Pet Industry. For Pet Stores, offering Services provides a key point of differentiation and a reason to shop in their store. You can’t get your dog groomed on the internet. Like other segments, Services had strong inflation in 2022. This had a minimal impact on this segment as both transaction size and frequency increased.

Retail Channel Monthly $ Update – August Final & September Advance

Commodities inflation rose in August & September. This was largely due to a big increase in Gasoline prices. Inflation slowed for most product expenditures. Although down from its peak, inflation is still impacting consumer spending. The sales increase rate is lower than the inflation rate in a number of channels, which indicates a drop in the amount of product sold. A recovery may have started but there is still a long road ahead, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in a targeted CPI from US BLS data.

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 will begin with the August Final Report and then go to the Advance Report for September. Our focus is comparing to last year but also 2021 and 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’ll focus on Pet Relevant Channels.

The data will be presented in detailed charts to facilitate visual comparison between groups/channels. The charts will show 11 separate measurements. To save space they will be displayed in a stacked bar format for the channel charts.

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2022 and 2021.
    • Current Month Real change for 2023 vs 2022 and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for 2023 vs 2022, 2021 and 2019.
    • Current Ytd Real change % for 2023 vs 2022, 2021 and 2019
  • Monthly & Ytd $ & CPIs for 22>23 and 21>23 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the August Final. All but Restaurants were up from July and all, but Gas Stations were up vs 22, 21 & 19. When you consider inflation, the # of real drops vs 22 & 21 (8) was down from July (10). Gas Stations are still really down vs 2019. A significant fact to note is that Relevant Retail is again “really” up monthly vs 22. (All $ are actual, Not Seasonally Adjusted)

The August Final is $3.2B more than the Advance report. Specifically, Restaurants: +$0.4B; Auto: +$0.4B; Gas Stations: +$1.2B; Relevant Retail: +$1.2B. $ were up from July in all but Restaurants but actual sales for all but Gas Stations were positive in all measurements vs 22, 21 & 19. Deflated, but now rising prices caused Gas Stations sales to again drop monthly & YTD vs 22. There were 8 “real” sales drops, 5 vs 21. Restaurants have the most growth and are the only group with all positives. Monthly real sales for Relevant Retail vs 22 are up but have been down in 15 of the last 18 months. Their YTD real measurements vs 22 & 21 are both negative. They are the top “real” performer vs 2019 but only 48% of the growth is real.

Now, let’s see how some Key Pet Relevant channels did in August in the Stacked Bar Graph Format

Overall– 9 were up from July, but vs 22, 7 were up vs August and 10 YTD. 5 were “really” down monthly & 7 Ytd. Vs 2021, 10 had increases but only 6 monthly & 3 Ytd were real. Vs 2019, Off/Gift/Souv & Disc Dept Strs were really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 34.9% since 2019. Prices for the Bldg/Matl group have inflated 19.9% since 2021 which is having an impact. HomeCtr/Hdwe stores are down monthly & Ytd vs 22 but up vs 21 &19. Farm Stores are up in all measurements but vs Aug 22. However, both have all negative real numbers vs 2022 & 2021. Importantly, only 20.6% of their 19>23 lift was real. It was only this high because most of the lift came prior to the inflation wave. Avg 19>23 Growth: HomeCtr/Hdwe: 7.2%, Real: 1.2%; Farm: 11.4%, Real: 5.2%
  • Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. They have been very different in inflation and the situation has flipped as the Grocery rate is now 33% lower than Drug/Med products. Drug Stores are positive in all measurements and 73% of their growth since 2019 is real. While the $ are up for Supermarkets, except vs Aug 22 their 23 real sales are down vs 22 & 21 and just slightly positive vs 2019. Only 6% is real growth. Avg 19>23 Growth: Supermarkets: +6.2%, Real: +0.4%; Drug Stores: +5.6%, Real: +4.1%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up from July and are actually & really up vs 2022 and 2019. Vs 2021, real & actual $ vs August are up. YTD is down. Prices are still deflating -1.2%, a big change from +5.4% in 21>22 and +6.5% in 20>21. The result is that 59% of their 42.2% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +9.2%; Real: +5.7%.
  • Gen Mdse Stores – All were up vs July and actual sales vs 22, 21 & 19 were up for all but Disc Dept Stores vs August 22. In real sales both SupCtr/Clubs & $/Value Stores were up vs Aug 22 & 21 and $ stores were also up YTD vs 22. Disc Dept Stores are the worst performer and are the only real negative vs 2019, -1.6%. The other channels average 35% In real growth. Avg 19>23 Growth: SupCtr/Club: 6.2%, Real: 2.2%; $/Value Strs: +6.7%, Real: +2.7%; Disc. Dept.: +2.3%, Real: -0.4%
  • Office, Gift & Souvenir Stores – Actual sales are up 0.2% from July but down vs August 22 & 21. They were up in YTD measurements vs 22, 21 & 19. Their real sales numbers are all negative including -7.4% Ytd vs 2019. Their recovery started late, and their slow progress appears to have stalled in Jun>Aug. Avg Growth Rate: +0.7%, Real: -1.9%
  • Internet/Mail Order – Sales are up from July and still above $100B at $105.6B – another record for the month. All measurements are positive, but their growth is only 49% of their average since 2019. However, 79% of their 96% growth since 2019 is real. Avg Growth: +18.3%, Real: +15.2%. As expected, they are still by far the growth leaders since 2019.
  • A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level of $100B for the first time in 2021. In 2022 their sales dipped in January, July, Sept>Nov, rose in December, fell in Jan>Feb 23, grew Mar>May, then fell in Jun>Aug, However, all measurements except actual & real vs August 2022, are positive. They are still the % increase leader vs 2021 (barely) and 71% of their 54.3% growth since 2019 is real. Average 19>23 Growth: +11.5%, Real: +8.5%. They are still 2nd in growth since 2019 to the internet. Pet Stores are definitely contributing.

Inflation remains an important factor in Retail. In actual $, 7 channels reported increases in sales vs 2022 and 10 vs 2021. When you factor in inflation, the number with “real” growth drops to 6 vs 2022 and vs 2021. Inflation’s impact may be slowing but it is still lowering sales increases. The August lift vs 2022 was still only 50% of Jan/Feb. The impact is also visible in specific retail channels. The overall CPI stabilized in September but most product expenditures deflated. Let’s look for any impact in the Advance Retail $ales

The big change from August is that all channels, big and small, had a sales decrease from last month. This is 8 straight years for an Aug>Sep decrease in Retail $. This has happened in 18 of the last 23 years so it is normal. Prior to 2001, there was almost always an increase. The avg drop since 2001 is -4.9% so 2023 is a little bigger. On the plus side, all actual $ measurements are again positive vs 22, 21 & 19 for all big groups but Gas Stations. However, you will also see that the lifts vs 2022 are still low. Inflation is a big factor. The national CPI stabilized at 3.7% but the all commodities rate, which is the best pricing measure for Total Retail, rose from 1.0% to 1.4%. This lift was largely driven by rising gasoline prices. Inflation slowed for most Product expenditures. Remember, back in June & July, commodities prices actually deflated from 2022. Again, this was largely driven by Gasoline prices, which were down over 20%. There is some significant “real” good news. The groups have 20 “real” sales measurements vs 22 & 21. In September, only 6 were negative and 4 of those came from Gas Stations. Relevant Retail’s real monthly sales vs 22 has now been positive for 3 straight months. Note: The monthly % lift vs 22 for Relevant & Total Retail is less than half of Jan & Feb levels

Overall – Inflation Reality – Gas prices turned up, but Auto prices are still down vs 22. For Total & Relevant Retail, the rate was again below the sales lift. For Restaurants, inflation remains high, +6.0% but they are really positive vs 22 & 21. Monthly real sales for Relative Retail vs last year are positive again. That’s 4 of the last 5 months but only 4 of the last 19. Also, their Ytd Real sales are now only down vs 2022. They continue to make slow progress.

Total Retail – Since June 2020, every month but April 23 has set a monthly sales record. December 22 $ were $748.9B, a new all-time record. Sales have been on a rollercoaster. After lifts in July & Aug, they fell in September. Inflation is only 1.4% but sales growth is still low. Sales are up 3.4% vs last year. That’s only 43% of their average 19>23 growth. All real sales measurements are now positive but only 34% of the 19>23 growth is real. Inflation in Total Retail has radically slowed vs 2022 but we still see its cumulative impact. Avg 2019>23 Growth: +7.9%, Real: +3.0%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, setting an all-time monthly record of $91B in December and exceeding $1T in 2022 for the 1st time. They have the biggest increases vs 22, 21 & 19 and all real sales are positive. Inflation slowed to 6.0% from 6.5% last month but is still +14.8% vs 21 and +21.9% vs 19. 38.1% of their 40.9% growth since 19 is real but they remain 2nd in performance behind Relevant Retail. Recovery started late but inflation started early. Avg 2019>23 Growth: +8.9%, Real: +3.7%. They just account for 13.2% of Total Retail $, but their performance improves 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 but much of it was due to skyrocketing inflation. In 2022 sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual sales which are the only reported sales negatives by any big group in 21>22. This is bad but their real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 started off a little better. $ grew in Jan>Feb, fell in Mar>Apr, grew in May, fell in Jun>Jul, grew in Aug, then fell in Sep. Only Ytd real sales vs 21 are negative. Prices vs 22 are -2.3% monthly & -1.5% Ytd but only 7% of 19>23 growth is real. Avg 2019>23 Growth: +6.7%, Real: +0.5%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. This group started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb 23, strongly dropped in Mar>Jul to -20.2%. In August they turned up to -3.7%. In September, they are +2.7% and +21.9% vs 21. Pricing is a big factor in the monthly & Ytd sales drops vs 22. Real sales vs 22, 21 & 19 are now down monthly & YTD.  Avg 2019>23 Growth: +6.5%, Real: -1.3%. The numbers show the cumulative impact of inflation and demonstrate how strong deflation can be both a positive and a negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for 60+% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022 but all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, Jan & Feb had normal drops then grew in March, starting another roller coaster. Sales fell in Jun>Jul, turned up in Aug, then fell in Sep. All actual sales are up vs 22, 21 & 19. Real sales are only down Ytd vs 22. Monthly Real sales vs last year are again positive. That’s 4 of the last 5 months, but only 4 of the last 19. 48% of their 19>23 growth is real – #1 in performance. Avg 2019>23 Growth is: +8.3%, Real: +4.3%. This group is where America shops. Another month of positive real sales is a good sign.

Inflation is still relatively low but the cumulative impact is still there. Sales increases are still low, but the fact that 88% of all Non-Gas Station real sales numbers vs 22 & 21 are positive is a good sign. Restaurants are still doing well, and Auto is improving. Inflation/Deflation has caused a drop in Gas Stations’ actual sales. Our biggest concern is Relevant Retail. Their situation is improving. Ytd real sales vs 22 are still negative, which shows the impact of cumulative inflation, but monthly real sales vs 22 have now been positive in 4 of the last 5 months. A slow turnaround appears to be continuing.

Here’s a more detailed look at September by Key Channels in the Stacked Bar Graph Format

  • Relevant Retail: Avg Growth Rate: +8.3%, Real: +4.3%. All were down from August but 5 were up vs 22 & 8 vs 21. Only 4 had a “real” increase vs 22 & 5 vs 21. Inflation continues to slow sales increases.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Their Actual $ are down from August and for all comparisons but Ytd vs 21 & 19. Their real sales are down in all measurements, even vs 2019. Avg 2019>23 Growth: +0.2%, Real: -2.5%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. $ales are down from August but up in all other measurements. Their real sales are up in all measurements but Ytd vs 22 & 21. Only 36% of their 28.2% 19>23 lift is real – the impact of inflation. Avg Growth: +6.4%, Real: +2.4%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are down from August but up in all measurements vs 22, 21 & 19. However, inflation hit them hard. Real sales are down for all but Ytd vs 2019 and only 6.2% of the growth since 2019 is real. Avg Growth: +6.2%, Real: +0.4%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are down from August but positive in all other measurements, actual and real vs 22, 21 & 19. Their inflation rate has been relatively low so 73% of their 25.2% growth from 2019 is real. Avg 2019>23 Growth: +5.8%, Real: +4.3%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Actual $ales are down from August but up vs 22, 21 & 19. Their real sales are now down monthly vs 22 & 21 and Ytd vs 22. However, 64% of their 19>23 growth is real. Avg 2019>23 Growth: +3.9%, Real:+2.5%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were very high in 2022. Sales are down from August and negative in all other measurements but actual Ytd vs 2019. Their real sales are even down -2.7% vs 2019. Avg 2019>23 Growth: +3.3%, Real: -0.7%.
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. $ales are down from August and in all measurements but Ytd vs 19. However, consistent deflation has caused real sales to be up in all measurements. Avg 2019>23 Growth: +0.5%, Real: +2.6%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. In 2022 the lift slowed as inflation grew to double digits. Inflation is still high at 6.3%. Sales are down from August and they are again all negative vs 2022. They still have the highest Inflation of any channel so real sales are negative in all but Ytd vs 2019. Also, just 21% of their sales growth since 2019 is real. Avg 2019>23 Growth is: +7.8%, Real: +1.8%.
  • 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. Actual $ales are down from August, but positive for all but vs Sep 22. Real sales are down for all but YTD vs 22 & 19. Prices deflated again and their inflation rate has been lower than most groups so 66.1% of their 29.8% growth since 2019 is real. Avg 2019>23 Growth: +6.7%, Real: +4.6%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 at +0.9% but sales took off in March 21 and have continued to grow. Sales are down vs August but positive in all but vs Sep 22. Real sales are only down vs Sep & Ytd 22. They are 2nd to NonStore in increases vs 21 & 19. 65% of their 41.8% 19>23 growth and 46% of their 21>23 growth is real. Their Avg 19>23 Growth is: 9.1%, Real: 6.2%.
  • 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 as sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier. Their growth slowed significantly in 2022 and now 2023. $ are down from August but all other measurements are up. 78% of their 87.2% growth since 2019 is real. Their Avg Growth: +17.0%, Real: +13.8%.

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 and by the end of 2021 it had become very widespread. In 2022, there was a new challenge, the worst inflation in 40 years. Despite the recent uptick in Commodities prices, inflation has slowed considerably from its peak in June 2022, which should help the Retail Situation. Sales were down from August for all groups & channels. Inflation is slowing in many channels and even deflating in a few. However, some channels like Gas Stations, Grocery and Bldg Material stores still have high cumulative inflation rates so they are still struggling. Only a few channels are doing well. The new problem is that the sales increase rate vs 2022 for many channels has slowed and is even below the lower inflation rate. Real monthly sales for Relevant Retail have been positive vs 22 for 4 of the last 5 months but are still negative for 7 of 11 channels. The turnaround for Relevant retail is not widespread. It is primarily being driven by NonStore with a little help from Health Care. September was truly a mixed bag of pluses and minuses compared to August. We still have a long way to go for a full recovery from the inflation tsunami.

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 of these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates. The data also includes the CPI changes from 2021 to 2023 to show cumulative inflation.

Monthly 22>23 CPI changes of 0.2% or more are highlighted. (Green = lower; Pink = higher)

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?

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 actual product mix is different.

Petflation 2023 – September Update: Drops again to +5.7% vs 2022

While inflation is slowing, it is still a concern. The huge YOY increases in the monthly Consumer Price Index peaked in June 2022 at 9.1% then began to slow until turning up in July & August 2023. In September prices grew 0.2% from August but the CPI remained stable at +3.7% vs 2022. However, Grocery inflation continued to drop. After 12 straight months of double-digit YOY monthly increases, grocery inflation is down to +2.4%, 7 consecutive months below 10%. As we have learned, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Petflation was +4.1% in December 2021 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 2022. National inflation has slowed considerably since June 2022, but Petflation generally increased until June 2023. It passed the National CPI in July 2022 and at 5.7% in September, it is still 1.5 times the national rate of 3.7%. We will look deeper into the numbers. 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 23 vs 22 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • 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 September 2021 to September 2023. We will use December 2019 as a base number 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 yearend and those from 12 and 24 months earlier are included. This will give you some key waypoints. In September, Pet prices were up from last month overall and in all segments but Non-Vet Services.

In September 21, the CPI was +6.7% and Pet prices were +3.2%. Like the CPI, prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation took off. Food prices grew consistently but the other segments had mixed patterns until July 22, when all increased. In Aug>Oct Petflation accelerated. In Nov>Dec, Services & Food prices continued to grow while Vet & Supplies prices stabilized. In Jan>Apr, prices grew every month except for 1 dip by Supplies. In May Products prices grew while Services slowed. In June/July this was reversed. In August all but Services fell. In September this pattern was reversed. Petflation has been above the CPI since November 2022.

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 21 and continued to grow until flattening out in Jul>Dec 22. Prices turned up again in Jan>Sep but 34% of the overall 19.8% increase in the 45 months since December 2019 happened in the 6 months from January>June 2022 – 13% of the time.
  • Pet Food – Prices were at or below December 2019 levels from Apr 20>Sep 21. They turned up with a sharp lift in Dec which continued until the Jun>Aug 23 dip. Prices then grew in September. 93% of the 23.1% increase since 2019 has occurred since 2022.
  • Pet Supplies – Supplies prices were high in December 2019 due to the added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued Feb> May, grew in June, flattened in July, then turned up in Aug>Oct setting a new record. Prices stabilized in Nov>Dec but turned up in Jan>Feb 23, a new record. They fell in March, set a record in May, fell in Jun>Aug then grew in September.
  • 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 was stronger in 2022 but it got on a rollercoaster in Mar>June. It turned up again July 22>Mar 23 but the increase slowed to +0.1% in April. Prices fell -0.3% in May, turned up again in Jun>Aug, then fell in September.
  • Veterinary – Inflation has been consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A surge began in December 21 which put them above the overall CPI. In May 22 prices fell and stabilized in June causing them to fall below the National CPI. However, prices turned up again and despite some dips they have stayed above the CPI since July 22. In 2023 prices grew Jan>May, stabilized Jun>Jul, fell in August, then increased in September.
  • Total Pet – Petflation is a sum of the segments. In December 21 the pricing surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in December, turned up Jan>May 23, fell in Jun>Aug, then grew in September. Except for 5 individual monthly dips, prices in all segments increased monthly Jan>Jun 23. In Jul>Aug there 5 more dips but only 1 in September – Services. Petflation has been above the U.S. CPI since November. 2022.

Next, we’ll turn our attention to the Year Over Year inflation rate change for September and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Petflation fell again to 5.7% in September, but it is still 1.5 times the National rate. The chart will allow you to compare the inflation rates of 22>23 to 21>22 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.2% vs August and were up 3.7% vs September 22 the same as August. Grocery inflation is down again, to +2.4% from +3.0%. Haircuts prices were unchanged from last month but only 1 of 9 categories had a decrease, compared to 4 in August. Pet Services had the decrease, -0.5%. The national YOY monthly inflation rate for September is unchanged from August but only 45% of the 21>22 rate. The 22>23 inflation rate for all categories is now below 21>22. However, the difference is slight for Non-Vet Services and Haircuts. In our 2021>2023 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in only 4 segments – Total Pet, Pet Food, Pet Supplies and Veterinary – All Pet. We should also note that the segments with the lowest percentages are Haircuts, Pet Services and Medical Services. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Services expenditures account for 60% of the National CPI so they are very influential. We also see that Pet Products have a very different patttern. The 21>23 inflation surge provided over 93% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period.

  • U.S. CPI– Prices are +0.2% from August. The YOY increase remained stable at +3.7%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 85% higher than the target. After 12 straight declines, we had 2 lifts, so stability is an improvement. The current inflation rate is below 21>22 but the 21>23 rate is still 12.2%, 62% of total inflation since 2019. How many households “broke even” by increasing their income by 12% in 2 yrs.
  • Pet Food– Prices are +0.3% vs August and +7.6% vs September 2022. They are also 3.2 times the Food at Home inflation rate – not good news! The YOY increase of 7.6% is being measured against a time when prices were 14.4% above the 2019 level, but that increase is still 2.3 times the pre-pandemic 3.3% increase from 2018 to 2019. The 2021>2023 inflation surge has generated 96.2% of the total 23.5% inflation since 2019.
  • Food at Home – Prices are up +0.1% from August. The monthly YOY increase is 2.4%, down from 3.0% in August and considerably lower than Jul>Sep 2022 when it exceeded 13%. The 25.8% Inflation for this category since 2019 is 30% more than the national CPI and remains 2nd to Veterinary. 61% of the inflation since 2019 occurred from 2021>2023. The pattern mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>2021 then the rate accelerated. It appears that the pandemic supply chain issues in Food which contributed to higher prices started early and foreshadowed problems in other categories and the overall CPI tsunami.
  • Pets & Supplies– Prices were up +1.0% from August but only +0.1% vs September 2022. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. However, even with recent price drops the 2021>2023 inflation surge accounted for 87% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 straight months of increases pushed them to a new record high in February. Prices fell in March, bounced back in Apr>May to a new record high, fell in Jun>Aug, then turned up in September.
  • Veterinary Services – Prices are up +0.9% from August. They are +7.5% from 2022 and are still in 2nd place behind Food (+7.6%) in the Pet Industry. However, they are still the leader in the increase since 2019 with 28.7% compared to Food at home at 25.8%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 70% of the 4 years’ worth of inflation occurred in the 2 years from 2021>2023.
  • Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 20>21. Prices grew 1% from August but are -2.6% vs 2022. Prices have now deflated for 5 straight months. Medical Services are not a big part of the current surge as only 38% of the 2019>23 increase happened from 21>23.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. September 23 prices were -0.5% from August but +6.0% vs 2022, which is down from 7.2% in last month and much lower than 8.0% in March. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 59% of the total since 2019 occurred from 21>23.
  • Haircuts/Other Personal Services – Prices are unchanged from August but +4.8% from 2022, the lowest rate since 2019. Inflation has been rather consistent as just 47% of the inflation from 19>23 happened from 21>23.
  • Total Pet– Petflation is now 48% lower than the 21>22 rate, but stll 1.5 times the National CPI. For September, +5.7% is the 3rd highest rate since 1997 (2022: 11.0%; 2008: 9.5%). Vs August, prices grew for all but Services so Total Pet was +0.4%. An Aug>Sep increase has happened in 13 of the last 24 years so it was not a surprise. Food & Veterinary are still the Petflation leaders, but all segments have an influence. Pet Food has been immune to inflation as Pet Parents are used to paying a lot, but inflation can reduce purchase frequency in the other segments.

Now, let’s look at the YTD numbers

The increase from 2022 to 2023 is the biggest for 4 of 9 categories – All Pet. The 22>23 rate for Haircuts is equal to 21>22. However, the Total CPI, Pet Supplies, Medical Services and Food at Home are significantly down from 21>22. The average annual increase since 2019 is 4.5% or more for all but Medical Services (2.8%) and Pet Supplies (2.5%).

  • U.S. CPI – The current increase is down 47% from 21>22 and 2.2% less than the average increase from 2019>2023, but it’s 91% more than the average annual increase from 2018>2021. 69% of the 19.0% inflation since 2019 occurred from 2021>23. Inflation is a big problem that started recently.
  • Pet Food – Strong inflation continues with the highest 22>23 & 21>23 rates on the chart. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022. 95.6% of the inflation since 2019 occurred from 2021>23.
  • Food at Home – The 2023 YTD inflation rate has slowed but still beat the U.S. CPI by 41%. You can see the impact of supply chain issues on the Grocery category as 72% of the inflation since 2019 occurred from 2021>23.
  • Pets & Pet Supplies – Although prices rose in September, the YTD inflation rate is down to 3.8%. Prices deflated significantly in both 2020 & 2021 which helped to create a very unique situation. Prices are up 10.6% from 2019 but 107% of this increase happened from 2021>23. Prices are up 11.3% from their 2021 “bottom”.
  • Veterinary Services – They are still #1 in inflation since 2019 but they have only the 2nd highest rate since 2021. At +6.4%, they have the highest average annual inflation rate since 2019. Except for a sight slowing in 2020, inflation has consistently increased since 2019. Regardless of the situation, strong Inflation is the norm in Veterinary Services.
  • Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2023 prices have been deflating and are now at -0.1% YTD, the only deflation in any segment.
  • Pet Services – May 22 set a record for the biggest year over year monthly increase in history. Prices fell in June but began to grow again in July, reaching record highs in Sep>Apr 23. The January 2023 increase of 8.4% set a new record. YTD September fell a little from 7.0% to 6.8%. Interestingly, although the rates are not as high, they have the exact same annual inflation pattern as Veterinary. The Services segments in the Pet Industry are definitely unique.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. After a small decrease in March 22, prices turned up again. Since 2021 inflation has been a consistent 5+%, 90% higher than 18>19. Consumers are paying 21% more than in 2019, which usually reduces the purchase frequency.
  • Total Pet – There were two different patterns. After 2019, Prices in the Services segments continued to increase, and the rate grew as we moved into 2021. Pet products – Food and Supplies, took a different path. They 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 near yearend. In 2022, Food and Supplies prices turned sharply up. Food prices grew until Jun>Aug 23. Supplies prices stabilized Apr>May, grew Jun>Oct, fell in Nov, rose in Dec>Feb, fell in Mar, rose in Apr>May then fell in Jun>Aug. Prices in both segments turned up in September. The Services segments have also had ups & downs but have generally inflated. The net is a YTD Petflation rate vs 2022 of 9.1%, 2.1 times the CPI. In May 22 it was 5.8% below the CPI.

Petflation is slowing, but still strong. Petflation dropped from 6.6% in August to 5.7% in September. This is less than half of the record 12.0% set in November, but still the 3rd highest rate for the month. More bad news is that 9 of the last 14 months have been over 10% and the current rate is still 3.6 times the 1.6% average rate from 2010>2021. It’s also 1.5 times the national rate. There is no doubt that the current pricing tsunami is a significant event in the history of the Pet Industry, but will it affect Pet Parents’ spending. In our demographic analysis of the annual Consumer Expenditure Survey which is conducted by the US BLS with help from the Census Bureau we have seen that Pet spending continues to move to higher income groups. However, the impact of inflation varies by segment. Supplies is the most affected as since 2009 many categories have become commoditized which makes them more price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices generally just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a decrease in visit frequency. Spending in the Services segment is the most driven by higher incomes, so inflation is less impactful. This spending behavior of Pet Parents suggests that we should look a little deeper. Inflation is not just a singular event. It is cumulative. Total Pet Prices are up 5.7% from 2022 but they are up 17.4% from 2021 and 22.2% from 2019. That is a huge increase in a very short period. It puts tremendous monetary pressure on Pet Parents to prioritize their expenditures. We know that the needs of their pet children are always a high priority but let’s hope for a little relief – stabilized prices and even deflation. This is not likely in the Service segments, but it has happened before in Products. The Pet Food inflation rate is dropping, and Pet Supplies prices are now only up 0.1% vs September 22. It’s just a start. Let’s hope that it accelerates “down”.

2022 U.S. PET SUPPLIES SPENDING $21.94B…Down ↓$1.86B

Total Pet spending grew to $102.71B in 2022, up $2.73B (+2.7%) from 2021. After a record $8.75B (+57%) increase in 2021 the Supplies segment fell $1.86B, (-7.8%) to $21.94B in 2022. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Supplies Spending fell -$4.6B 2018>2020 due to Tarifflation and the Pandemic. In 2021, Pet Parents caught up with their needs. Spending turned up in the 1st half then skyrocketed in the 2nd half. In 2022, it plateaued in the 1st half then fell sharply in the 2nd half. We’ll drill down into the data to determine what and who was behind the drop in Spending.

In 2022, the average household spent $163.64 on Supplies, down 8.2% from $178.20 in 2021. (Note: A 2022 Pet CU (68%) Spent $240.65) This doesn’t exactly match the -7.8% total $ decrease. Here are the specific details:

  • 0.4% more CU’s
  • Spent 10.0% less $
  • 2.1% more often

Let’s start with a visual overview. The chart below shows recent Supplies spending history.

Since the great recession, spending in the Supplies segment has been driven by price. Although many supplies are needed by Pet Parents, when they are bought and how much you spend is often discretionary. When prices fall, consumers are more likely to buy more. When they go up, consumers spend less and/or buy less frequently.

2014 was the third consecutive year of deflation in Supplies as prices reached a level not seen since 2007. Consumers responded with a spending increase of over $2B. Prices stabilized and then moved up in 2015.

In 2015 we saw how the discretionary aspect of the Supplies segment can impact spending in another way. Consumers spent $5.4B for a food upgrade and cut back on Supplies – swapping $. Consumers spent 4.1% less, but they bought 10% less often. That drop in purchase frequency drove $1.6B (78%) of the $2.1B decrease in Supplies spending.

In 2016, supplies’ prices flattened out and consumers value shopped for their upgraded food. Supplies spending stabilized and began to increase in the second half. In 2017 supplies prices deflated, reaching a new post-recession low. The consumers responded with a $2.74B increase in Supplies spending that was widespread across demographic segments. An important factor in the lift was an increase in purchase frequency which was within 5% of the 2014 rate.

In 2018 prices started to move up in April and rapidly increased later in the year due to the impact of new tariffs. By December, Supplies prices were 3.3% higher than a year ago. This explains the initial growth and pull back in spending.

In 2019 we saw the full impact of the tariffs. Prices continued to increase. By yearend they were up 5.7% from the Spring of 2018 and spending plummeted -$2.98B. The major factor in the drop was a 13.1% decrease in purchasing frequency.

2020 brought the pandemic. Prices deflated but with retail restrictions and the consumers’ focus on needed items, both the amount spent and frequency of purchase of Supplies fell.

In 2021 the recovery began with a strong lift in the 1st half that reached record levels in the 2nd half. Pet parents bought all the supplies that they had been putting off for 2 years because of Tarifflation and the Pandemic. It was the greatest lift in history, but 2021 spending ended up where it was headed in 2018 before being “derailed” by outside influences.

In 2022 inflation took off, especially in the 2nd half. Spending plateaued then fell -$2.44B in the 2nd half. Consumers just spent less per transaction. This was not a surprise after the buying binge in 2021.

That gives us an overview of the recent spending history. Now let’s look at some specifics regarding the “who” behind the 2022 drop. First, we’ll look at spending by income level, the most influential demographic in Pet Spending.

National: $163.64 per CU (-8.2%) – $21.94B – Down $1.86B (-7.8%).

Only the $70>100K & $100>$150K income groups spent more but the 50/50 $ divide stayed the same at $114K.

  • <$30K (23.8% of CUs)- $63.42 per CU (-17.4%); $2.02B– Down $0.59B (-22.7%). This group is very price sensitive, so they had the biggest percentage decrease and spending fell to the pre-pandemic 2019 level.
  • $30K>70K (28.9% of CUs)- $111.91 per CU (-9.6%); $4.34B – Down $0.57 (-11.6%). This big, lower income group matches both the national spending pattern and that of the $150K+ group. 2019 Tarifflation and 2022 inflation had big impacts. Amazingly enough, until 2019 they were the leader in Total Supplies $. Now, they rank 3rd.
  • $70>$100K (14.1% of CUs) – $172.08 per CU (+7.3%); $3.26B – Up $0.08B (+2.6%). This middle-income group had consistent spending. 2020 hit them hard but they rebounded strong in 21 and spending even grew slightly in 22.
  • $100K>$150K (15.5% of CUs) – $238.62 per CU (+4.0%); $4.96B – Up $0.61B (+14.0%). This high income group had the 2nd biggest COVID drop. In 21 they had the 2nd strongest recovery. In 22, they had the only significant increase.
  • $150K> (17.7% of CUs) – $310.84 per CU (-25.2%); $7.36B – Down $1.39B (-15.9%). This highest income group had the biggest $ drop, which is not surprising after a $4.6B lift in 2021. They still remain the Supplies spending leader. BTW, the $150>200K group actually spent $1.3B more on Supplies in 2022 while $200K> spent $2.7B less.

All groups $70K>199K spent more. The drop came in the 2nd half because it was impossible to repeat the $6.4B lift in 2021.

Now, we’ll look at spending by Age Group.

National: $163.64 per CU (-8.2%) – $21.94B – Down $1.86B (-7.8%)

It’s simple. Under 25 and over 45 spent a little more. 25>44 spent less, especially the 35>44 yr-olds.

  • 55>64 (18.2% of CUs) $190.04 /CU (+5.4%); $4.64B – Up $0.18B (+4.1%). Tarriflation caused a spending drop in 2019. Spending fell again in 2020 as they binge bought pet food. They had a strong recovery in 2021 and slowly grew in 2022 as 1.3% less CUs spent 3.1% more on Supplies, 2.3% more often.   They are back in the #1 spot.
  • 45>54 (16.9% of CUs) $201.44 per CU (+8.0%); $4.57BUp $0.42B (+10.0%). From 2007>2018 this highest income group was the leader in Supplies spending. They came back from the pandemic drop with growth in 21 and again in 22 as 1.8% more CUs spent 1.8% less, 10.0% more often. They were #1 in 2020 but are now #2.
  • 35>44 (17.0% of CUs) $190.89 per CU (-38.9%); $4.35B – Down $2.81B (-39.2%) They are 2nd in income and expenditures. Strong inflation drove their $ down in 2019 but the Pandemic had little impact. Spending took off in 2021 but plummeted in 2022 as 0.5% less CUs spent 40.5% less $, 2.7% more often. They fell from #1 to #3.
  • 25<34 (15.6% of CUs) $175.18 per CU (-1.0%); $3.66BDown $0.06B (-1.6%). After trading Supplies $ for upgraded Food and Vet Care in 2016, these Millennials turned their attention back to Supplies. Tarriflation hit them hard in 2019 but they actually increased spending in the pandemic. The lift grew even stronger in 2021 but then spending fell slightly in 2022 as 0.6% less CUs spent 0.2% more $, 1.2% less often.
  • 65>74 (16.2% of CU’s) $132.82 per CU (+1.9%); $2.89B – Up $0.09B (+3.1%). This older group is very price sensitive so rising prices caused them to cut back on spending in 2019. Like the 25>34 yr-olds, they also increased spending in 2020 and spending soared in 2021. However, unlike 25>34 yr-olds, their spending grew in 2022 as 1.2% more CUs spent 0.1% less $, 2.1% more often.
  • 75> (11.4% of CU’s) $77.89 per CU (+16.0%); $1.19B – Up $0.21B (+21.8%). This low-income group is price sensitive but they are committed to their pets. Their spending was severely impacted by the Pandemic, but they had a strong recovery in 2021 and now 2022 as 4.9% more CU’s spent 20.5% more, 3.7% less often.
  • <25 (4.7% of CUs) $101.89 per CU (+27.2%); $0.64B – Up $0.11B (+20.7%). Many formed CUs with other young adults or got married, but most made Pets a priority. In 2022 5.1% less CUs spent 46.4% more $, 13.1% less often.

The 25>44 2021 binge buyers didn’t repeat in 2022. All other groups spent a little more in 2022.

Next, let’s take a look at some other key demographic “movers” in 2022 Pet Supplies Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2020. The red outline stayed the same.

In 2021, 97% of all segments spent more and in 9 categories all segments had increases. In 2022, despite the decrease, 52% of segments still spent more. 15 of 24 segments flipped from 1st to last or vice versa. Only 1 segment held its spot. 5 flipped from last to 1st but 10 flipped from 1st to last. The 2021 binge buy was clearly not repeated.

Only 3 of the winners are the “usual suspects”

  • $150>199K
  • Mgrs & Professionals
  • 45>54 yr-olds

The other 9 are all somewhat surprising.

In the losers group, only 2 – Tech, Sls, Clerical and 5+ are not surprises. The others are and all 10 flipped from 1st to last.

The 2021 $8.65B increase in Supplies $ was the biggest in history. This was a binge buy as Pet Parents purchased all of the needed Supplies that they had put off buying during the pandemic. Like the 2020 panic binge buy in Pet Food, there was no need for it to be repeated so spending fell in the following year. The drops in both segments were relatively small compared to the binge lifts. Supplies fell $1.86B (-7.8%) in 2022 but there were still many positives as 52% of all demographic segments spent more on Supplies than they had in 2021. There is another factor to be considered to put 2022 Supplies spending in a better perspective. Many Supplies categories have been commoditized, so the segment is very susceptible to price changes. Prices rose in 2018/19 and spending fell -$4.6B. Prices fell 2016>18 and spending grew by $5B. In 2022 the inflation rate was 7.7%. That means that the drop in the amount of Supplies purchased in 2022 was really -14.4%. That’s almost double the actual $ drop. Plus, all segments with an increase below 7.7% bought less.

2022 U.S. PET FOOD SPENDING $38.69B…Up ↑$4.29B

After the record increase in 2021, Total Pet spending grew slightly to $102.71B, up $2.73B (+2.7%). Pet Food spending had double digit growth while Veterinary and Supplies $ fell after their record increases in 2021. The big news was Services. They had a record increase of $3.26B and 2 consecutive years of 30+% growth. However, a new factor affected 2022 Pet spending – strong inflation in every segment. Here are the 2022 spending specifics

  • Pet Food – $38.69B; Up $4.29B (+12.5%)
  • Pets & Supplies – $21.94B; Down $1.86B (-7.8%)
  • Veterinary – $29.71B; Down $2.95B (-9.0%)
  • Pet Services – $12.36B; Up $3.26B (+35.8%)

The industry truly is a “sum” of its integral segments, and each segment has very specific and often very different buying behavior from the many consumer demographic segments. For this reason, we’re going to analyze each of the industry segments first. This will put the final analysis of Total Pet’s 2022 Spending into better perspective. Note: The numbers in this report come from or are calculated by using data from the current and past US BLS Consumer Expenditure Surveys. In 2022, this was gathered by the U.S. Census Bureau from over 42,000 interviews and spending diaries. The final data was then compiled and published by the US BLS. All inflation numbers are also provided by the US BLS.

We will start with the largest Segment, Pet Food (and Treats). In 2022 Pet Food Spending totaled $38.69B in the U.S., a $4.29B (+12.5%) increase from 2021. Pet Food inflation was 10.2% in 2022 so 82% of the lift came from higher prices. In earlier research we discovered a distinct, long-term pattern in Pet Food Spending. In 2018 we broke the pattern due to outside influences – 1st the FDA warning, then with COVID in 2020. Here is Pet Food Spending since 1997 in full Retail Dollars and adjusted for inflation. Blue highlight indicates  plateau year and a red outline is a spending drop.

The pattern began in 1997. Retail Pet Food Spending increases for 2 consecutive years then reaches a plateau year or even drops. There was a notable exception in the period from 2006 to 2010. During this time, there were two traumas which directly impacted the Pet Food Retail market. The first was the Melamine recall, which resulted in radically increased prices as consumers insisted on made in USA products with all USA ingredients. The second affected everyone – the great Recession in 2009. This was the first time that annual U.S. retail spending had declined since 1956. The net result was that the plateau period was extended to include both 2009 and 2010.

For 20 years, Pet Food was driven by short term trends. A new trend catches the consumers’ attention and grows …for 2 years. Then sales plateau or even drop…and move to the next “must have”. After 2014, the changes  became bigger and the situation got more complex due to a number of factors starting with the move to high priced super premium foods, but including increased competition, especially from the internet, and behavioral changes, like increased value shopping. In 2018, outside influences came into prominence. The first was the FDA warning on Grain Free dog food. This caused many Pet Parents to back away from certain foods. When the warning was declared bogus, the Food segment began to recover. Then came COVID. Fear of possible shortages caused some groups to binge buy food. That ended and spending dipped in 2021. It turned up again in 2022. However, it may have been largely due to 10.2% inflation. Of note: Considering inflation, only 45% of the 97>22 growth is real. Now, let’s take a closer look at spending since 2014.

First, some specifics behind the $4.29B (+12.5%) increase to $38.69B. In 2022, the average U.S. Household spent a total of $288.75 on Pet Food. This was an +11.9% increase from the $258.09 spent in 2021, which doesn’t exactly “add up” to the +12.5% increase in total Food Spending. With additional data provided from the US BLS, here is what happened.

  • 0.5% more U.S. CUs
  • Spent 6.5% more $
  • 5.1% more often

By the way, if 68% of U.S. CUs are pet parents then their annual Pet Food Spending is $424.63. Here’s a recent rolling history.

2014 marks the beginning of the Super Premium era. It began in the 2nd half of 2014 with the 25>34-year-old Millennials making the 1st move. In 2015 the Baby Boomers got on board in a big way, producing a $5.42B increase in spending, the biggest lift in history at the time. 2016 saw a spending change that was accelerated by the high prices of Super Premium Pet Foods. After consumers upgraded to a more expensive pet food, their #1 priority became, “Where can I buy it for less?” Value Shopping on the internet was a major contributing factor in the big spending drop in 2016.

2017 was an up year which should have been due to a “must have” trend. However, a closer look at the data showed that the $4B increase in Pet Food spending in 2017 came not from a new trend but from a deeper demographic penetration of Super Premium foods. Value shopping in a highly competitive market, especially on the internet, had made Super Premium pet foods more accessible to a broad swath of consumers.

Like Pet Food, human behavior has changed over the years in regard to our pets. In the 90’s, Pet Owners became Pet Parents. Then, after 2000 we began truly humanizing our pets, which is very accurately reflected in the evolution of Pet Food. We became more focused on fulfilling the health needs of our pets, beginning with the first move to premium foods in 2004. This radically increased after the Melamine scare in 2007. Now consumers read pet food labels, research ingredients and expect their pet foods to meet the same quality standards as the best human foods. This was very evident in 2018. It should have been a year of increased spending but the consumers’ reaction to the FDA grain free warning threw the pattern out the window. In 2019 the warning lost credibility. Pet Food spending stabilized in the 1st half of the year and then grew by $2.3B in the 2nd  half. Some Pet Parents began to return to the topline Super Premium Foods while others opted for even more expensive varieties. Also, new groups got on board the Super Premium Express.

After the 2019 recovery came the pandemic of 2020. There is nothing more necessary to a Pet Parent than pet food. This spurred binge buying, especially in the 1st half of the year and drove the biggest annual spending increase in history. However, binge buying doesn’t increase usage and it causes an overstock in home supply. In 2021, Pets “ate down” the extra food so spending fell. Another factor was the ongoing strong search for value & convenience which continues to drive many consumers online. In 2022, Pet Food spending returned to a more normal pattern. There were 0.5% more CUs. They spent a little more and bought a little more frequently. Inflation was a big factor in the spending increase in transactions. The increase in frequency came from more regularly scheduled deliveries and in an effort to lower the transaction price due to skyrocketing inflation, some pet parents also downsized their purchases but bought more often.

The growth of Pet Food spending since 2014 reflects the rise of Super Premium but also another trend – the spectacular increase in the number and use of Pet Medications and Supplements, which are often produced in the form of treats. Together, the strength of Pet Food and these product subcategories reflect the Pet Parents’ absolute number 1 priority –

the health, wellbeing and safety of their Pet Children, which starts with the quality of their food.

Now let’s look at some specific 2022 Pet Food Spending Demographics. The first is income. Prior to 2014 it was less of a factor in Food spending. However, the move to Super Premium has brought it more to the forefront. In 2015 the spending of the over $70K group exceeded the <$70K for the first time. In 2022, <$70K had a bigger lift but was still only 65% of the $70K> spending. The $30>70K group had the biggest increase and $70>100K had the only decrease. In 2015, the 50/50 divide on Pet Food spending was about $70K. By 2020, it was up to $107K, breaking the $100K barrier for the first time. In 2021 it fell to $92K and is down to $91K in 2022. That’s about 3% less than the average CU income but 22% more than the median income. Higher income is still important in Pet Food spending. Although all incomes over $40K have 100+% performance (Share of $/Share of CUs) the $150K> group is by far the best at 159%. The chart below shows annual spending for major income groups from 2017>2022. This should put the 2022 numbers into better perspective.

In 2022, only one group spent less on Food. 2017 was the only year since 2015 with spending growth in every major income group. Since 2017, we have seen the major impact on various groups by outside influences. In mid-2018 it was the FDA grain free warning. In 2020 it was the pandemic and in 2022 it was +10.2% inflation. The high inflation means that any demographic segment with an increase below 10.2% actually bought less Pet Food in 2022.

2022 National: $288.75 per CU (+11.9%); $38.69B; Up $4.29B (+12.5%);  2017>2022: Up $7.58B (+24.3%); Avg: +4.4%

The biggest lift came from the $30>70K group, which is surprising. The only drop in spending was by the middle income $70>100K group. This comes after their big lift in 2021. The $100>150K group is back to normal after their 2020 binge.

Here are 2022 specifics:

  • Under $30K: (23.8% of CU’s) – $158.24 per CU (+11.0%) – $4.75B – Up $0.08B (+1.7%). Obviously, this group is very price sensitive. The number of CU’s was down 6.4% in 2022 after a small increase in 2021. Their CU count is down 17.0% from 2015. Their spending lift in 2022 was primarily due to higher prices. The average CU bought a little more Pet Food but paid a lot more. They are still fully committed to their Pets. This is evidenced by the fact that they spend 1.00% of their Total CU expenditures on their pets, including 0.45% on Pet Food. The national averages are: Total: 1.05%; Food: 0.40%.
  • $30K>$70K: (28.9% of CU’s) – $260.52 per CU (+34.0%) – $10.54B – Up $2.52B (+31.4%). They are also very price sensitive so inflation had an impact. Their average income was up 0.8% while the national average increased by 7.5%. They had a 2.2% decrease in the number of CUs but a 4.6% increase in CU spending. However, their Pet Food spending was far stronger with a huge increase by all segments. The $30>39K group lost 7% in CUs but increased CU spending by 31.7% and $ +$0.44B (+21.7%). The $40>49K group fell -1.8% in numbers but they increased their CU spending by 33.7% and $ grew by +$0.84B (+40.5%). $50>69K gained 0.9% in CUs and spent 34.8% more per CU on Pet Food. This pushed their Total Pet Food Spending up $1.23B (+31.5%). This low-income group is very committed to their pets and quality food. They spent 1.09% of total expenditures on their pets and 0.5% on Pet Food.
  • $70K>$100K: (14.1% of CU’s) – $302.80 per CU (-3.5%) – $5.81B – Down $0.40B (-6.5%). The only $ drop. This group has a regular up/down spending pattern. They committed to Super Premium food in 2017 but they became very sensitive to outside influences – the FDA warning in 2018, COVID in 2020 and now inflation in 2022. They have big family responsibilities and are under considerable monetary pressure. We’ll see if they make a comeback in 2023.
  • $100>150K (15.5% of CU’s) – $325.92 per CU (+12.5%) – $6.71B – Up $1.25B (+23.0%). This group was the driver in the binge buying of Food in 2020. It was pure emotion, but they had the $ to do it. In 2021, they “ate down” the excess inventory but the drop was $0.46B more than the 2020 lift. In 2022, mostly thanks to inflation and a 9.6% increase in CU’s they had a 23% increase in $. Their Pet Food spending is now 13.3% above pre-pandemic 2019.
  • $150K> (17.7% of CU’s) – $457.91 per CU (-5.8%) – $10.89B – Up $0.83B (+8.3%). Their Pet Food CU spending fell by -5.8% after a 68.6% lift in 21 but a 12.4% increase in CUs pushed their total $ up 8.3%. However, when you factor inflation into the numbers, they actually bought 1.7% less pet food. Inflation has made comparisons more complex. In performance, share of $/share of CUs, their score of 159.3% is the clear winner. Higher income is still important.

The pandemic certainly caused turmoil. First, the fear-based binge buy which caused a record increase in 2020. This couldn’t be repeated so spending fell in 2021. Spending returned to more normal, positive behavior in 2022 as only the $70>100K group spent less. The biggest lifts came from $30>70K and groups over $100K. Inflation was high at 10.2% but the welfare of their Pet children mattered more than the price so most Pet Parents just paid more. It is significant in this year of record inflation that the 50/50 income divide in Pet Food $ still fell slightly from $92K to $91K.

Now, Spending by Age Group…

2022 National: $288.75 per CU (+11.9%); $38.69B; Up $4.29B (+12.5%);  2017>2022 – Up $7.58B (+24.3%); Avg: +4.4%

The 25>34 yr-old and 75+ yr-old groups spent less, while all other age groups spent more.

  • 55>64 (18.2% of CU’s) – $359.76 per CU (+30.4%) – $6.75B – Up $1.86B (+27.5%). This group has been at the forefront of recent major spending swings. In 2015 they upgraded to Super Premium. In 2016 they shopped for a better price. In 2017 they led a deeper penetration of the upgrade. In 2018 they had a -$3.5B reaction to the FDA warning. They began to recover in 2019 but then came 2020, which saw a huge lift in spending. There were 3 major factors. First was panic, binge buying due to pandemic. They also were still recovering from the FDA warning. Finally, the pandemic caused the loss of over 2 million <25 CUs. Many of them moved back with their parents bringing their pets with them. In 2021, there was a big drop in $ as they “ate up” the “panic” extra stock and many of their kids moved out again. 2022 brought another big lift as 2.3% fewer CUs spent 22.8% more $, 6.2% more often.
  • 45>54 (16.9% of CU’s) – $353.45 per CU (+20.8%) – $7.87B – Up $1.29B (+19.6%). This group is #1 in income and total CU expenditures. Up until 2015 they were #1 in Pet Food spending. They bought premium food but didn’t “buy in” to Super Premium until 2017. They were negatively impacted by the FDA warning, but they rebounded stronger than any other group. In 2020, their spending dropped significantly. It is likely that much of the decrease was due to value shopping on the internet. In 2021, they opted for even more expensive food, spending 24% more on each purchase. In 2022 they had 0.9% fewer CUs, but spent 12.8% more, 7.0% more often. The result: +19.6% more $.
  • 65>74 (16.2% of CU’s) – $314.66 per CU (+7.8%) – $6.64B – Up $0.51B (+8.4%). This group is all Baby Boomers. They are starting to retire but many are still working (0.7 per CU). Their Pets are a major priority. They spent 1.26% of their total CU expenditures on their pets and 0.5% on Pet Food, the highest percentages of any group. They are also the only group to spend more on Pet Food every year since 2016. In 2022, 0.5% more CUs spent 2.8% more $, 4.9% more often. Inflation affected them as an 8.4% increase was really a -1.7% decrease in the amount purchased.
  • 35<44 (17.0% of CU’s) – $302.24 per CU (+20.9%) – $7.18B – Up $1.56B (+27.6%). They are 2nd in income and CU spending but have the biggest families. Their spending pattern matches the 45>54 yr-olds but is usually less volatile. 5.5% more CUs spent 17.1% more $, 3.3% more often. They had the 2nd biggest $ lift and are now 3rd in Food $.
  • 25>34 (15.6% of CU’s) – $224.30 per CU (-0.5%) – $80B – Down $0.11B (-2.2%). In the early Super Premium years their spending pattern often foreshadowed the overall market for the following year. In pandemic 2020 they spent 22.3% more then essentially held their ground in 2021. In 2022, 1.7% fewer CUs spent 7.9% less $, 8.0% more often.
  • 75> (11.4% of CU’s) – $152.14 per CU (-41.8%) – $2.23B – Down $1.53B (-40.8%). Both the effort and the expense of Pet Parenting become issues as we reach 75+. High inflation affected them the most. They strongly moved to Super Premium Food in 2021. In 2022, many downgraded as 1.6% more CUs spent 41.8% less $, 0.2% more often.
  • <25 (4.7% of CU’s) – $198.10 per CU (+101.5%) – $1.37B – Up $0.72B (+108.6%). Many moved in with other adults or got married. They also added a lot of pets. This is apparent as 5.1% less CUs spent 109.6% more $, 4.4% more often.

In 2020 the 55>64 yr olds binge bought Pet Food. In 2021 their spending naturally plummeted, the only decrease by any age group. In 2022 we had high inflation. It affected everyone but only 25>34 and 75> spent less $ on Pet Food and only 3 groups bought less product (add 65>74 to the other 2). Quality pet food remains a high priority for Pet Parents.

Next, let’s take a look at some other key demographic “movers” in 2022 Pet Food Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2021. The red outline stayed the same.

The first thing that you notice is that the biggest increases are almost always radically larger than the biggest decreases. We should also note that whether you rent or own your home, you spent more on Pet Food in 2022 than in 2021. The lift was also widespread as 82% of 96 demographic segments spent more in 2022. These are good signs that Pet Food spending is doing well.

You also see that half of the 24 segments flipped from last to first or vice versa. Only 2 held their position from 2021. 7 winners flipped from last to 1st and 2 held their position. 5 losers flipped to last from 1st in 2021.

Most of the winners are the “usual suspects”:

  • Suburbs 2500>
  • White, Not Hispanic
  • 2 Earners
  • Homeowners, w/Mtge
  • Mgrs & Professionals
  • Gen X
  • 55>64
  • Married, Child 18>
  • $100>149K

There is only 1 surprise winner – High School Grads or Less

These winners indicate a return to more normal spending patterns but you should also consider that most have a higher income so they would be less impacted by strong inflation.

Among the losers, most of the segments are not unexpected. There are some that were obviously affected by  inflation:

  • No Earner
  • Retired
  • Born <1946
  • 75>
  • $70>99K.

There were a few surprises – Adv. College Degree, 2 People and Married Couple Only

The pandemic trauma may now be over. The $4.29B (+12.5%) increase was widespread across 82% of 96 demographic segments. However, 10.2% inflation is a new problem. The amount of Pet Food sold in 2022 was really only +2.2% from 2021 and only 59% of segments bought more. Pet Food spending is now up $7.5B from 2019, +24.0%, a growth rate of 7.4%, 40% more than the 5.3% from 2014>19. The downside is that 46% of that growth came from inflation…almost all in 2022. Real 19>22 growth: 4.1%. Inflation fell below 10% in August 2023. We’ll see what happens to prices & spending.