SUPERZOO 2024 – THE SHOW & THE PET INDUSTRY ARE STRONGER THAN EVER!

SUPERZOO 2024 is only 4 weeks away. You will see in this advance look that the Pet Industry is stronger than ever as SUPERZOO 24 reflects the ever-increasing record level of Pet Products & Services sales.

The pandemic fueled the strong growth of Pet Products sales on the internet, which has continued because of value and convenience. 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. That’s what makes in person trade shows so important. You will see this clearly demonstrated at SUPERZOO 2024 with the strong influx of new exhibitors.

Currently SUPERZOO 2024 has 1112 exhibitors. That is equal to the pre-pandemic 2019 record. However, that record is sure to fall. There are 8 uncommitted booths, with a wait list that is now limited to 50 companies. SUPERZOO 24 will have a full house of 1120 exhibitors and set a new record. Actually, the primary reason that SUPERZOO’s growth is not even stronger is that the WPA ran out of floorspace. This situation was made even worse by many exhibitors insisting that they must have bigger booths. You will see the impact of this trend when we take a closer look at Special Floor Sections.

So how big is the SUPERZOO 2024 “full house”? There are 302,000 sq ft of booths, a 32,000 sq ft New Products Showcase, with over 1000 items, and 15,000 sq ft devoted to 28 Show Floor Education and demonstration sessions. There are also 66 educational sessions on grooming or business subjects in separate rooms off of the show floor. Combined, these sessions offer over 120 hours of valuable education. This is a great opportunity for the expected 10,000+ buyers but also a challenge. They need to make a plan to take full advantage of the amazing strength of SUPERZOO 24. Total attendance including Buyers, Exhibitors, Media/Guests is expected to be 16,000+. The show will be crowded.

New is always a focus at Pet Trade shows. That also applies to exhibitors. At SUPERZOO 2024:

  • 434 Exhibitors weren’t at SZ23
  • 596 weren’t at GPE24
  • And 344 didn’t do either show

Plus, over 325 are SUPERZOO 1st Timers and 283 haven’t done any other major pet show, at least from 2019>2024. Those are some strong arguments for attending SUPERZOO 2024. It is definitely a “must do” for all Pet Industry participants. Now, let’s look at some specifics of what you will see there. While a change in the booth count is important, I suggest that you focus on the changes in the share of booths. Changes in this measurement will indicate how a particular group or product category is performing relative to other groups. This will help identify key trends in the industry – both positive and negative. This can be very important in corporate decision making.

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

  • Because they help guide attendees’ time on the huge show floor, special sections are very important. They exceeded 50% of SUPERZOO booths for the 1st time in 2021. They are down slightly from 2023 but are still 57% of all booths.
  • Natural & Health are the unquestioned biggest trends in Pet Products. WPA combined them in 2022. They almost always go together so it makes sense to put them in one section. Natural has been the biggest section for years. They are down slightly in count (bigger booths) but are still 28% of exhibitors and 31% of total booth space.
  • Specialty & Lifestyle (Fashion) again lost share, -1.0%. This section continues to trend down.
  • Aquatics/Animals had a small lift in booths. This is an important section as non-dog/cat pets started the industry.
  • Feed & Farm had a big drop, largely because poultry products have become part of the mainstream.
  • Grooming is a major focus of SUPERZOO. This section was stable with 8% of exhibitors, the 2nd largest.
  • The International Pavilion is small and doesn’t reflect the importance of over 200 exhibitors from outside of the U.S.
  • The small drop by Emerging Brands is not significant as most new companies choose a special section or the open floor so they can have a bigger booth. In fact, 1st Time SUPERZOO exhibitors occupy 30+% of booths at the show.

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

  • All classifications but Reptile & Dog have fewer exhibitors and lost a small amount of share.
  • In terms of Animals, there are still plenty of exhibitors offering products to cover every need for Pet Parents of all animal types. Dogs are still the “Pet Kings”. They gained 1.6% in share and are found in over 4 of every 5 booths.
  • Business Services is again the exhibitor type leader. 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 2023 there were 223. In 2024, there was a small drop to 212. However, many other manufacturers also offer OEM services. The recent inflation surge and cumulative high prices have made Private Label products very appealing to consumers. Retailers also usually make more profit.

Let’s take a closer look at the “Pet Royalty”. Here are the top 10 Dog and/or Cat Categories at SUPERZOO 2024.

  • This chart shows the strong performance by the top Cat & Dog products. The current top 5 grew in booths and share while #6 > 10 had small decreases. Feeding Accessories had the biggest gains.
  • The categories are the same as 2023 & 2022 but only 1 moved up and 1 down one spot in ranking from 2023.
  • Treats & Meds/Supp secured their place in the top 2 spots and have 98 or more booths than #3.
  • Toys had a 6.4% gain in booths. They also gained 1.2% in share and stayed #3 in rank.
  • Collars/Leads gained 3.5% in booths and 0.6% in share and stayed 4th in rank.
  • Feeding Accessories had a 17.5% gain in booths, a 2.5% gain in share and moved up to 5th from 6th in ranking.
  • Food is the biggest $ producer but had a small drop in # & share. It also fell from 5th to 6th in rank.
  • Beds & Mats had 2 fewer booths and lost -0.2% in share. They held on to 7th
  • Grooming Tools had 3 fewer booths and also lost -0.3% in share but stayed #8.
  • Shampoos have 2 less booths and a -0.2% share loss. Both drops were slightly less than Grooming Tools.
  • Apparel had the biggest drops in booths & share and only leads #11 Waste Pickup by 1. Plus, they gained 2 booths.

SUPERZOO will have a Record Exhibitor count, but the house is full. One factor slowing future growth is the increase in the average booth size. In 2024 the average SUPERZOO booth was 282 sq ft, basically 10’x30’. This is only up 3% from 2023 but it is +41% from 200 sq ft in 2016. This is a big reason why the WPA ran out of space. However, new and existing Products and Services are available to fill virtually every need or want of the attendees. Plus, the continued strength of targeted special floor sections, which helps attendees fulfill their primary needs along with a massive amount of educational sessions are 2 prime examples of the WPA’s ongoing efforts to continually improve the show.

941 exhibitors (85%) focus on Dog and/or Cat. Let’s take a closer look.

There will be more Exhibitors at SUPERRZOO 2024 than at 2023. Those offering Dog and/or Cat products grew by 12. The Dog/Cat share of exhibitors increased slightly from 83.6% to 84.6%. Dogs and Cats remain the unquestioned “royalty” of the industry. Here are some of the changes from SUPERZOO 2023

  • 17 of 33 categories increased their number of exhibitors; 12 had decreases; 4 had no change
  • 16 categories increased their share of total exhibitors; 13 lost share; 4 No Change
  • Ranking changes: 6 up; 6 down; 21 no change

In terms of booth gains & losses, the Top 10 had 5 of the 17 increases. The biggest increase was 28 by the Feeding Accessories category (#5). The Top 10 also had 5 of the 12 category decreases but CBD Products had the biggest drop.

When you look at share gains & losses, the Top 10 had 5 of the 16 gains, including the biggest, +2.5% by Feeding Accessories and 4 of the 5 that were at least 1.0%. They had 5 of the 13 losses but the -1.8% drop by CBD Products was the largest. Apparel (#10) is the only other category to lose -1%.

The Top 10 only had 1 of the 6 increases in rank & 1 of the 6 drops, but the biggest changes were all outside the group.

All Dog & Cat product needs are much more than covered, with a lot of choices in each. We should also note that while the overall “Cat” share was -0.6%, 3 cat “driven” categories – Litter, Scratching & Furniture all gained in share.

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 2024 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 2024 Super Search will be available at PetBusinessprofessor.com on 7/29.)

Petflation 2024 – June Update: Increases to +2.0% vs 2023

The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices fell in Oct>Dec 23, then turned up Jan>Jun 24. However, the CPI slowed in June to +3.0% from +3.3% in May. Grocery prices increased slightly, 0.02% from May and inflation rose to 1.1% from 1.0%. After 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 16 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 22, but at 2.0% in June, it is 33.3% below the national rate, a big change from +52% in January. We will look deeper into the data. The 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 24 vs 23 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (22>23, 21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2024 vs 2019 and vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2024
  • 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 22 to June 24. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in segment patterns and compare them to the overall U.S. CPI. The year-end numbers and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In June, Pet prices were up 0.3% from May. The Product segments were up, while the Service segments were down.

In June 22, the CPI was +15.3% and Pet was +11.1%. Prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. Food prices consistently grew but the others had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices grew while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month except for 1 dip by Supplies. In May Products prices grew while Services slowed. In Jun/Jul this reversed. In August all but Services fell. In Sep/Oct this was reversed. In Nov, all but Food & Vet fell. In Dec, Supplies & Vet  drove prices up. In Jan>Mar 24 Pet prices grew despite a few drops. In April, prices in all but Vet fell. In May, all but Food grew. In June, Products drove a price lift.

  • 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 Jan>Sep 23, dipped in Oct>Dec, then rose Jan>Jun 24, but 31.5% of the 22.3% increase in the 54 months since Dec 2019 happened from Jan>Jun 2022 – 11.1% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They grew & peaked in May 23. In Jun>Aug they fell, grew Sep>Nov, fell Dec>Feb, rose in Mar, fell Apr>May, grew in June. 97% of the lift was in 22/23.
  • Pet Supplies – Supplies prices were high in Dec 19 due to tariffs. They then had a “deflated” roller coaster ride until mid-21 when they returned to Dec 19 prices and essentially stayed there until 22. They turned up in Jan and hit an all-time high, beating 2009. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct to a new record. Prices stabilized in Nov>Dec but grew in Jan>Feb 23. They fell in Mar, but set a new record in May, then continued the rollercoaster with Dec>Feb lifts, Mar/Apr drops & May/Jun lifts, to a new high.
  • Pet Services– Inflation is usually 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but with fewer outlets. Inflation grew in 21 with the biggest lift in Jan>Apr. Inflation was strong in 22 but prices got on a rollercoaster in Mar>Jun. They turned up Jul to Mar 23 but the rate slowed in April and prices fell in May. They rose Jun>Aug, fell Sep>Dec, rose Jan>Mar, fell in Apr, rose in May, fell in June.
  • Veterinary – Inflation has been consistent. Prices turned up in Mar 20 and grew through 21. A surge began in Dec 21 which put them above the overall CPI. In May 22 prices fell and stabilized in June causing them to fall below the CPI. However, prices rose again and despite some dips they have stayed above the CPI since July 22. In 23, prices grew Jan>May, stabilized Jun/Jul, fell in Aug, grew Sep>Dec, fell in Jan 24, grew Feb>May, then fell in June.
  • Total Pet – Petflation is a sum of the segments. In Dec 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in Dec, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, then fell in Nov. In December prices turned up and grew through March 24 to a record high. Prices fell in April then rose in May & June, a new record, but Petflation is just 2/3 of the National CPI.

Next, we’ll turn our attention to the Year Over Year inflation rate change for June and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation rose to 2.0%, up from 1.6% in May, but it is still 33% below the National rate. In January, it was +52%. The chart will allow you to compare the inflation rates of 23>24 to 22>23 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. We’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.03% from May and were +3.0% vs June 23, down from +3.3% last month because there was a bigger May>Jun price lift in 23. Grocery inflation grew slightly to +1.1% from +1.0%. Only Pet Services & Veterinary had  price decreases from last month. There were also 2 drops in May – Pet Food & Groceries. The national YOY monthly CPI rate of 3.0% is down from 3.3% and equal to the 22>23 rate but only 33% of 21>22. The 23>24 rate is also equal to 22>23 for Pet Serv & Haircuts and only more for Med Serv. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 2 segments – Medical Services & Haircuts – both Services categories. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 104% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were still recovering from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +5.0% while the CPI for Commodities is -0.4%. This clearly shows that Services are driving the current 3.0% inflation rate.

  • U.S. CPI– Prices are +0.03% from May. The YOY increase is 3.0%, down from 3.3%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 50+% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops and now 4 of 7 with drops – a little better. The current rate is equal to 22>23 but the 21>24 rate is still +15.6%, 68.7% of the total inflation since 2019. Inflation was low in June 2021.
  • Pet Food– Prices are +0.7% vs May and -0.2% vs June 23, up from -1.1%. They are still significantly below the Food at Home inflation rate, +1.1%. The YOY drop of -0.2% is being measured against a time when prices were 23.1% above the 2019 level and the current decrease is still less than the -0.7% drop from 2019 to 2020. The 2021>2024 inflation surge has generated 98.7% of the total 23.4% inflation since 2019.
  • Food at Home – Prices are up 0.02% from May and the monthly YOY increase is 1.1%, up from 1.0%. It is radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.7% Inflation for this category since 2019 is 18% more than the national CPI but still in 4th place behind 3 Services expenditures. 70.4% of the inflation since 2019 occurred from 2021>24. This mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>21 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 May and are +0.6% vs June 2023. They have the lowest increase since 2019. As we noted, prices were deflated for much of 20>21. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. Prices reached an all-time high in October 2022 then deflated. 3 months of increases pushed them to a record high in Feb 23. Prices fell in March, rose in Apr/May to a new record, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, grew again Dec>Feb, fell Mar>Apr, then rose May>Jun to a new record.
  • Veterinary Services– Prices are -0.5% from May but +6.4% from 2023, still the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +38.6% and since 2021, +27.5%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 22 & 23. It is still high in 24, so 71.2% of the cumulative inflation since 2019 occurred from 2021>24.
  • 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 2% from May, and they are +3.3% vs last year. Medical Services are not a big part of the current surge as only 50% of the 15.0% 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices surged Jan>Mar dropped in April, set a record in May, then fell to +6.3% vs 23 in June. Inflation peaked at +8.0% in March 23. Now, 69% of their total 19>24 inflation has occurred since 2021. In December, it was only 49%. They still have the 2nd highest 19>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.6% from May and +5.0% from 23. 4 of the last 6 months have been 4.0+%. Inflation has been pretty consistent. 62% of the 19>24 inflation happened 21>24.
  • Total Pet– Petflation rose to 2.0% from 1.6% in May but is still 79% less than the 22>23 rate and 33% less than the U.S. CPI. For June, 2.0% is 35.5% below the 3.1% average rate since 1997. Vs May, prices grew 0.3% as Product prices were up while Services prices fell. A May>Jun price increase has happened in 18 of the last 27 years, so this month’s data was not surprising. In terms of Petflation, even with the CPI increase, 2024 appears to be returning to a more normal pattern. However, the path to get there may be unusual and there is still a ways to go.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – All Pet – Pet Food, Services, Veterinary & Total Pet. The 23>24 rate is usually much lower than 22>23 for all but Medical Services. 21>22 still has the highest rate for Food at Home, the CPI, Pet Supplies & Haircuts. The average annual national inflation in the 5 years since 2019  is 4.2%. Only 2 of the categories are below that rate – Medical Services (2.8%) and Pet Supplies (2.2%). It comes as no surprise that Veterinary Services has the highest average rate (6.7%), but all 5 other categories are +4.5% or higher.

  • U.S. CPI – The 23>24 rate is 3.2%, down from 3.3% in May, but also down 35% from 22>23 and 61% less than 21>22. It is also 24% below the average YOY increase from 2019>2024, but it’s still 52% more than the average annual increase from 2018>2021. 76% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 1.3%, down from 1.6% in May and 91% less than the 22>23 rate. Now, it is also 80% lower than 21>22 and 24% below the average rate from 2018>2020. Pet Food has the highest 22>23 rate on the chart and remains in 2nd place in the 21>24 rates. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022 and especially in 2023. 95% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down over 86% from 22>23, 89% from 21>22 and 50% from 20>21. Also, it is even 44% lower than the average rate from 2018>20. It remains in 3rd place for the highest inflation since 2019 but still beat the U.S. CPI by 16%. You can see the impact of supply chain issues on the Grocery category as 76% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased Jan>Feb, fell Mar>Apr then rose in May>Jun. The 2024 inflation rate of 0.2% is only higher than the deflation in 19>20 & 20>21. Supplies have the lowest inflation since 2019. The only significant increases were 4% in 22 & 5.2% in 23. The 2021 deflation created a unique situation. Prices are up 11.5% from 2019 but 115% of this increase happened from 2021>24. Prices are up 13.2% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. The rate may have peaked in 2023, but it is still going strong at the start of 2024, +8.0%, the highest on the chart. They are also #1 in inflation since 2019 and since 2021. At +6.7%, they have the highest average annual inflation rate since 2019. It is 1.6 times higher than the National Average but 2.4 times higher than the Inflation average for Medical Services. 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. Ytd it is 2.1%. In a non-pandemic year, “normal” is between 2.1>2.9%. We are still seeing the impact of 2023 when prices actually deflated (-0.3%). This was the only deflationary year since the US BLS began tracking this category in 1935.
  • Pet Services – After falling in late 2023, prices surged in 2024,except for drops in Apr & Jun. The 23>24 inflation rate of 5.3% is 2nd to Vet in the Pet Industry. It is 24% less than 22>23 and 13% below 21>22. However, it is still 1.7 times higher than the 2018>21 average rate. Pet Services is 2nd in 19>24 inflation but only 5th in inflation since 21.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 4.4%, which is 19% below the 21 & 22 peak but 40% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 2.9%, down from 3.0%. It is 72% less than 22>23 but 24% higher than the 2018>21 average rate. However, it is still 9% below the CPI. Despite the May & June price lifts, Petflation has slowed in 24. This is primarily being driven by drops in Pet Food inflation but Ytd Supplies inflation is also low. Services and Veterinary prices both fell from record highs in May, which also contributed to the slight drop in the Ytd Pet CPI.

Petflation has definitely slowed in 24. June was 35% below the average for the month and 33% lower than the National CPI. This is about the same as it was back In 2021. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 21.7% above 2021 and 25.8% higher than 2019. Those are big lifts. In fact, in June prices for Supplies & Total Pet set new records. Services & Veterinary prices are less than 0.5%s below the highest in history and Food prices are 0.4% below their peak. Only Supplies prices (+11.5%) are less than 24% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. Services will be the least impacted as it is driven by high income CUs. Veterinary will likely see a reduction in visit frequency. The product segments will see a more complex reaction. Supplies will likely see a reduction in purchase frequency and some Pet Parents may even downgrade their Pet Food. Products will see a strong movement to online purchasing and private label. We saw evidence of this at GPE 24 & will see it at SZ 24 as a huge # of exhibitors offer OEM services. Strong, cumulative inflation has a widespread impact.

U.S. Pet Services Spending (Non-Vet) $12.77B (↑$1.90B): 2023 Mid-Year Update

In our analysis of Supplies Spending, we saw a big drop in the 2nd half of 2022, but the $ mostly rebounded in 2023. Food was different. After the big drop in Mid-2021, following the 2020 binge, spending has had strong growth for 2 years. Strong inflation was a factor in both. Now we turn our attention to Pet Services. The Mid-year numbers show that spending in this segment was $12.77B, up $1.90B (+17.5%) from the previous year. Up until 2018, this segment was known for consistent, small growth. In 2018, increased outlets and competitive prices brought on a wave of new users and spending increased +$1.95B. Spending remained near this new high normal until 2020. Pandemic closures drove spending down $1.73B, essentially returning to the level of 2017. In 2021 things opened up and spending spiked until growth slowed in 2023. This deserves a closer look. First, we’ll look at Services spending history since 2014.

Here are the 2022 Mid-Yr Details:

Mid-Year 2023: $12.77B, ↑$1.90B (+17.5%) vs Mid-Yr 2022

The $190B Came From:

Jul > Dec 2022: ↑$1.49B;     Jan > Jun 2023: ↑$0.41B

Pet Services is by far the smallest industry segment. However, except for 2010 and 2011, the period immediately following the Great Recession, it had consistent annual growth from 2000 through 2016. Spending in Food and Supplies have been on a roller coaster ride during that period. Services Spending more than tripled from 2000 to 2016, with an average annual growth rate of 7.6%. Spending in the Services Segment is the most discretionary in the industry and is more strongly skewed towards higher income households. Prior to the great recession, the inflation rate averaged 3.9% with no negative impact. The recession affected every industry segment, including Services. Consumers became more value conscious, especially in terms of discretionary spending. Services saw a slight drop in spending in both 2010 and 2011, but then the inflation rate fell to the 2+% range and the segment returned to more “normal” spending behavior. In mid-2016 inflation dropped below 2% and continued down to 1.1% by the end of 2017. This was primarily due to increased competition from free-standing businesses but also an increase in the number of Pet Stores and Veterinary Clinics offering pet services. While prices still went up slightly, there were deals to be had and consumers shopped for the best price. There was no decrease in purchase frequency. Consumers just paid less so spending fell slightly. In the 2nd half of 2017 spending turned up again. More Consumers began to take advantage of the value and convenience of the increased number of outlets offering Services. This deeper market penetration caused Services Spending to take off in 2018, up $1.95B, the biggest annual increase in history. Prices turned up again in the 1st half of 2019, +2.8% from 2018. However, Services spending inched up $0.09B. In the 2nd half of 2019 consumers Value Shopped again so spending fell -$0.19B. Then came 2020 and the pandemic. Many of these nonessential businesses were forced to close and spending fell precipitously, -$1.73B to $6.89B, about the same as yearend 2017. In 2021 things opened up again and spending bounced back, +$0.55B vs the 1st 6 months of 2020. Unlike Food and Supplies the increase continued to accelerate through 2022 with record increases until slowing in 2023. This lift happened despite an inflation rate of over 6% and sales reached a new record highof $12.77B in Mid-2023.

Let’s take a closer look at some key spending demographics – Age and Income.

In the graphs that follow we compare spending for the 12 months ending 6/30/23 to the previous 12 months. The graphs also include the 2022 yearend $, so you can see spending changes in the 2nd half of 2022 and the 1st half of 2023.

The first graph is for Income, the single most important factor in increased Pet Spending, especially in Services.

Here’s how you get the change for each half using the Over $70K group as an example:

Mid-yr Total Spending Change: $10.13B – $8.41B = Up $1.72B (Note green outline = increase; red outline = decrease)

  • 2nd half of 2022: Subtract Mid-22 ($8.41B) from Total 2022 ($9.61B) = Spending was up $1.20B in 2nd half of 2022.
  • 1st half of 2023: Subtract Total 2022 ($9.61B) from Mid-23 ($10.13B) = Spending was up +$0.52B in 1st half of 2023.

  • Services Spending is definitely skewed towards higher incomes. The halfway spending point is about $137K so about 23% of CUs spend 50% of Services $.
  • All groups $50K> increased spending while the $ dropped slightly for the <$50K but we should note that all groups had increases in the 2nd half of 2022. However, only $50>70K and $100K> had increases in both halves.
  • All groups $50K> had double digit growth with those from $50>150K having spending increases of 28+%. Also, the 2 decreases were small, about -6%.
  • The $50>70K group had the worst performance in 22, -20.9%. In 23, they were the best, +39.4%.
  • The over $150K group has 18.7% of the CUs but accounts for 44.4% of Services $. This is actually a much larger share than the 37.6% that they had in pre-pandemic 2019. The pandemic has increased the importance of this group.
  • Income, especially when it is over $150K, is still by far the biggest factor in the discretionary spending in the Services segment so Services spending is more unbalanced in regard to income. The highest income groups are more driven by convenience than value so high inflation rates are likely to actually increase spending because of higher prices.

Now, Services’ Spending by Age Group.

  • All groups spent more. The only negatives were small 1st half 2023 drops by 25>34 & 65>74.
  • The 45>54 group had the biggest increase, up +$0.8B (+41.5%) and moved from #3 to #1in Services spending.
  • The 55>64 yr-olds spent only +$0.13B more (+5.1%) and fell from the top spot to 2nd in spending.
  • The 35>44 yr olds had a small increase +$0.07B (+3.0%) and dropped to #3 from #2 in spending.
  • Although spending dipped in 23, the 25>34 yr-olds are the only group with 3 consecutive mid-year increases.
  • The 65> groups were up $0.47B (+19.0%), driven by a +$0.49B lift in the 2nd half of 2022. You see the importance of Services to older Pet Parents. They actually spend the most. The 65>74 Baby Boomers set the pattern – No Surprise.
  • Although <25 spends very little, they had lifts in both halves and an 82% increase over 2022.

Now let’s look at what is happening in Pet Services spending at the start of 2023 across the whole range of demographics. In our final chart we will list the biggest $ moves, up and down by individual segments in 12 demographic categories. The lift in the 1st half of 2023 was +$0.41B vs 2022. Last year it was +$1.77B vs 2021.

2023 has started slower than 2022 but spending continues to grow. There were no categories where all segments spent more. Last year, there were 5. Back in 2020, there were 4 categories in which all segments spent less. Also, except for CU Comp, the $ changes for the winners are still much larger than the negatives of the losers. The +$0.41B increase in Pet Services came from 52 of 82 demographic segments (63%) spending more. Last year it was 90% and in 2021, 78%. The strong recovery has slowed, but spending is still up +85% from 2020 and even +45% from 2019.

The usual winners have overwhelmingly returned with only 1 minor surprise  –  5+ People

Virtually all of the Losers were also expected. Here are the surprises:

  • Self-employed
  • BA/BS Degree
  • Boomers

The older Gen Xers are driving the 1st half lift, replacing the Baby Boomers. Gen X CUs have the largest number of people. Gen Xers have a high income and are educated. 70% own a home, usually in a larger suburb of a major metropolitan area. Also, 70% of Gen X homeowners still have a mortgage. They match most of the “winners”.

Services $ are at a record high and still growing. Let’s review how they got here and speculate on what comes next.

Except for the trauma caused by the Great Recession which hit Services in 2010>11, from 2000 to 2016 the Services segment had slow but consistent growth. The number of outlets also was increasing. Services were gaining in popularity and many retail pet stores were looking for a competitive edge over the growing pet product sales of online retailers. Afterall, you can buy product, but you can’t get your dog groomed on the internet. By 2017 the number of outlets offering Pet Services had radically increased. This created a highly competitive market and the inflation rate dropped to near record lows. Value conscious consumers saw that deals were available, and they took advantage of the situation. However, they didn’t increase the frequency of purchase. They just paid less. This drove overall Pet Services spending down in the 1st half of 2017. The segment started to recover in the 2nd half but not enough to prevent the first annual decrease in Pet Services spending since 2011. However, it was a start. In 2018, more consumers started to recognize the convenience offered by more outlets. The latest big food upgrade was also winding down. The result was that Services started a deeper penetration into the market, especially in the younger groups. The <45 groups spent $1.47B more on Services in 2018, 74% of the total $1.95B increase in the segment. After such a big lift, a slight downturn in 2019 was not unexpected and it happened, -$0.1B. Then came 2020 and COVID. Although the consumer use of Services was becoming increasingly widespread, many Services outlets were deemed nonessential and were subject to pandemic restrictions and closures. Services Spending fell -$1.73B (-20.1%) in 2020 and nearly wiped out the big gain made in 2018.

In 2021, things opened up and Services spending began to rebound with a +$0.55B lift in the 1st half. This lift accelerated in the 2nd half and continued through 2022. Spending slowed in the 1st half of 2023 but reached a new record high of $12.77B, with an annual growth rate of 9.7% since mid-yr 2019. That’s 90% higher than the 5.1% rate from 2009 to 2019. Pet Services have become an important option that is exercised by an increasing number of Pet Parents. However, much of the growth is increasingly being driven by higher incomes. There is some good news in this trend. Higher incomes are less negatively impacted by strong inflation. They buy the same amount, just pay more. This means that Services Spending growth will probably slow but the $ are likely to continue to increase.

 

U.S. PET SUPPLIES SPENDING $23.59B (↓$0.79B): MID-YR 2023 UPDATE

In our analysis of Pet Food spending, we saw that spending had continued strong growth after the up & down due to the pandemic. Supplies had a different pattern. At the beginning of 2020, Supplies Spending was down due to Tarifflation. The pandemic caused consumers to focus on needs so Supplies $ continued its steady decline from its 2018 peak reaching a low point below 2016. In 2021, that all changed. Supplies Prices had been steadily deflating and Consumers finally responded. In 2021 Pet Supplies spending took off, especially in the 2nd half. The increase slowed significantly in the 1st half of 2022 and fell in the 2nd half of 22 as inflation reached 8.0%. Inflation slowed to 5.2% in 23 and spending rebounded to $23.59B, only -3.2% below the record high in Mid-2022. The following chart should put the recent spending history of this segment into better perspective.

Here are this year’s specifics:

Mid 2023: $23.59B; $0.79B, -3.2% from Mid 2022.

The -$0.79B came from:

Jul > Dec 2022: ↓$2.44B

Jan > Jun 2023: ↑$1.65B

The 2nd half 22 drop was big but not unexpected after the $6.39B increase in the 2nd half of 2021, by far the biggest YOY 6 month increase in history. Like Pet Food, Pet Supplies spending has been on a roller coaster ride, but the driving force is much different. Pet Food is “need” spending and has been powered by a succession of “must have” trends and the emotional response to the Pandemic. Supplies spending is largely discretionary, so it has been impacted by 2 primary factors. The first is spending in other major segments. When consumers ramp up their spending in Pet Food, like upgrading to Super Premium, they often cut back on Supplies. However, when they value shop for Premium Pet Food, they take some of the saved money and spend it on Supplies. The other factor is price. Before breaking the record in 2022, Pet Supplies prices reached their peak in September of 2009. Then they began deflating and in March 2018 were down -6.7% from 2009. Price inflation in this segment can retard sales, usually by reducing the frequency of purchase. While deflation generally drives Supplies spending up. A new “must have” product can “trump” both of these influencers. Unfortunately, we haven’t seen much significant innovation in the Supplies segment recently.

Recent history gives a perfect example of the Supplies roller coaster. In 2014 Supplies prices dropped sharply, while the movement to Super Premium Food was barely getting started – Supplies spending went up $2B. In 2015, consumers spent $5.4B more on Pet Food. At the same time, Pet Supplies prices went up 0.5%. This combination caused Supplies $ to fall $2.1B. In 2016 consumers value shopped for Food, saving $2.99B. Supplies spending stabilized then increased by $1B in the 2nd half when prices fell sharply. Consumers spent some of their “saved” money on Supplies. Supplies prices continued to deflate through 2017. Food spending increased $4.61B in 2017 but this generally came from older CUs, less focused on Supplies. The result was a $2.74B increase in Supplies spending.

In the 1st half of 2018 Pet Food spending slowed, +$0.25B. Supplies’ prices began inflating but were only +0.1% vs 2017. During this period Supplies Spending increased $1.23B. Inflation grew in the 2nd half of 2018 due to impending new tariffs in September. By June 2019 they were 3.4% higher than 2018. The impact of the tariffs on Supplies was very clear. Spending flattened in the 2nd half of 2018, then plummeted in the 1st half of 2019, -$2.09B. Prices stayed high for the rest of 2019 and spending fell an additional -$0.9B. In 2020 prices turned up again through March before plummeting, -3.8% by June, but due to the pandemic focus on “needs”, spending dropped an additional -$0.54B. The situation worsened in the 2nd half as the $ fell an additional -$1.12B. However, 2021 brought a record resurgence as consumers “caught up” on the Supplies purchases that had been delayed due to the pandemic. Supplies spending increased +$8.65B in 21 and passed $24B in  Mid-yr 22. Inflation in Supplies took off at the beginning of 22 and spending dropped in the 2nd half. Inflation slowed a little in 23 as prices peaked and the $150K> income group drove most of a $1.65B lift.

Here’s what Pet Supplies inflation looked like in Mid-2023:

  • Mid-Yr 23 vs 22: 6.6%       • 2nd Half 22 vs 2021: 8.0%       • 1st half 23 vs 22: 5.2%

You can see that the rate slowed in early 2023 but prices still reached a record high. The 6.6% rate is the 2nd highest in history. Surprisingly, Pet Parents continued to spend at a near record level. However, they bought -9.8% less product. Inflation slowed significantly in the 2nd half of 2023. We’ll see if that impacts spending.

Now, let’s take a closer look at the data, starting with two of the most popular demographic measures – income and age. The graphs that follow will show both the current and previous 12 months $ as well as 2022 yearend. This will allow you to track the spending changes between halves.

The first graph is for Income, which has been shown to be the single most important factor in increased Pet Spending, especially in Pet Supplies and both of the Service segments.

Here’s how you get the change for each half using the $70K> group as an example:

Mid-yr Spending Change: $17.12B – $17.26B = Down $0.14B (Note: green outline = increase; red outline = decrease)

  • 2nd half of 2022: Subtract Mid-22 ($17.26B) from Total 2022 ($15.58B) = Spending was down $1.68B in 2nd half of 22.
  • 1st half of 2023: Subtract Total 2022 ($15.58B) from Mid-23 ($17.12) = Spending was up $1.54B in 1st half of 23.

  • There are a mixture of patterns. The groups <$50K and $150> had decreases in the 2nd half of 2022. They also had lifts in 2023 along with the $70>100K group. The biggest lift in 2023, +$1.13B came from $150K>. The other groups had only small changes. No group had a decrease in both halves and only $70>100K had increases in both. The net result was that sales  for <$50K and $150K> were down vs 2022 while the middle income $50>150K groups were up.
  • Supplies spending is a little more balanced but it still driven by the higher incomes, especially the $150K> group. Over $100K has 35.1% of CUs but accounts for 56.8% of Supplies $. That’s a performance level of 161.9%. However, the $150K> is even stronger with 18.7% of CUs generating 36.0% of Supplies spending – performance: 192.8%. The highest performance for any group under $100K is from $70>100K at 112.2% but the averages were: <$100K = 66.5%; <$70K = 53.9%. The halfway point in Supplies spending is an income of $116K, down from $124K in 2022 but still 17% higher than the new elevated level for Food. Pet Supplies spending is still very much driven by income.

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

  • Except for 35>44, which had a drop in 22 and a lift in 23, all groups were either up or down in both halves. All those with an annual increase spent more in the 1st half of 23 than they did in 22 – <25, 45>54 and 65>.
  • The biggest lift came from 45>54, +$2.0B. Most of their increase came in the 1st half of 23.
  • The biggest drop came from 35>44, -$2.56B. All of the decrease came in the 2nd half of 22 as they had a lift in 23.
  • Supplies spending skews a little younger but it moved up in age in 2023. The halfway point is now 49 yrs old, a little younger than Food at 53 but in the middle of the highest income group. Income is still the biggest driver.

Now let’s look at what happened in Supplies spending at the start of 2023 across the whole range of demographics. In our final chart we will list the biggest $ moves, up and down by individual segments in 12 demographic categories.

  • The lift didn’t equal the 2nd half drop but the biggest increases are still radically larger than the biggest decreases.
  • The increase was relatively widespread across the marketplace as 77% of segments spent more. There was 1 category in which all segments spent more – Race/Ethnic. Last year there were none.
  • Many of the winners are the “usual suspects”, like $150K>, 3+ Earners, 45>54, White & Homeowners w/Mtge but there are a couple of surprises – Tech/Sls/Clerical & Associates degree.
  • In regard to the losers, only a couple are expected – Center City & 2+ Adults. Most are surprising, especially $100>149K, Mgrs & Prof., 2 Earners and Adv. College Degree.
  • One of the biggest trends is that Gen X returned to the top with a $1.64B lift. This highest income, family oriented group passed recent strong showings by Millennials & Boomers.
  • While Supplies spending became slightly more balanced, income is still very important. 5 of the 12 “winners” have the highest income of any segment in their category.

Since the Great Recession the Supplies segment has become commoditized and very sensitive to inflation/deflation. Plus, since most categories are discretionary, Supplies spending can be affected by spending changes in other segments, as Pet Parents trade $. In 2018, the Pet Industry was introduced  to a new “game changer” – outside influence. The FDA warning on grain free dog food caused a big decrease in food spending but the government also radically increased tariffs which drove Supplies prices up and spending down, a record $2.98B.

However, we weren’t done yet. That brought us to 2020 and a new, totally unexpected outside influence, the COVID pandemic. This affected all facets of society, including the Pet Industry. Consumers, including Pet Parents, focused on needs rather than wants. In the Pet Industry, this meant that their attention was drawn to Food and Veterinary Services. This led to a huge lift in Pet Food $ due to binge buying but also a big increase in Veterinary spending. The more discretionary segments, Supplies and Services, suffered. Services had an extra handicap. Many outlets were not considered essential, so they were subject to restrictions and closures. Supplies were still available, but many were considered optional by consumers so spending continued to decline throughout 2020. By yearend, $ had reached the lowest level since 2015. This all happened while prices continued to deflate. That brought us to 2021. The retail economy had largely recovered and spending patterns were returning to “normal”. This was also true in Pet Supplies. Pet Parents opened their wallets and  bought the Pet Supplies that they had been holding back on for a year. The result was the biggest annual increase in history. At the end of 2021 and throughout 2022, inflation came back into the picture with the highest YOY increases in history. Supplies spending slowed in the 1st half of 22 then plummeted in the 2nd half but that spending was going against a record increase in 21. Despite record high prices, spending had a widespread sales rebound in 23 but the amount purchased fell by -9.8%.  Prices remain high. We’ll see if that has an impact.