Spending, CPI, demographics of overall market

Petflation 2024 – March Update: Turns up to +3.8% vs 2023

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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, but turned up again in Jan>Mar 24. The CPI increased in March to +3.5% from +3.2% in February. Grocery prices fell -0.01% from February, but inflation rose to 1.2% from 1.0% due to a -0.2% price drop in 23. However, after 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 13 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. At 3.8% in March, it is still 9% above the national rate, but down from +52% in January. We will look deeper into the numbers. 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 March 22 to March 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 March, Pet prices were up 1.0% from February. All but Supplies were up, with Veterinary leading the way, +2.5%.

In Mar 22, the CPI was +11.9% and Pet prices were +9.2%. Like the CPI, prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. Food prices grew consistently but the other segments had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices continued to grow 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 June/July this was 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 by all but Services. Total Pet, Vet & Services are at their pricing peak.

  • 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, dipped in Oct>Dec, then rose Jan>Mar 24, but 32% of the 21.5% increase in the 51 months since Dec 2019 happened in the 6 months from Jan>Jun 2022 – 12% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. In Jun>Aug they dipped, grew Sep>Nov, fell Dec>Feb, then rose in Mar. 94% of the 22.7% lift came 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 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 grew in Jan>Feb 23. They fell in Mar, but set a new record in May, then continued the rollercoaster ride with a drop in March, after Dec>Jan lifts.
  • 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 prices got on a rollercoaster in Mar>Jun. They turned up Jul 22>Mar 23 but the increase slowed in April and prices fell in May. They rose again Jun>Aug, fell in Sep>Dec, then spiked in Jan>Mar.
  • 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 National 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, but set records in Feb/Mar.
  • 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 to a new record high. Prices are at record highs for Total Pet and the Service segments and Petflation has been above the National CPI since Nov 22.

Next, we’ll turn our attention to the Year Over Year inflation rate change for March and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation grew to 3.8%, up from 3.5% in February. It is still only 9% higher than 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 +0.6% from February but were +3.5% vs March 23, up from +3.2% last month. Grocery inflation also grew slightly to +1.2% from +1.0%. 2 of 9 categories had a price decrease from last month – Pet Supplies & Groceries. There were also 2 in January & February, but none were repeats. The national YOY monthly CPI rate of 3.5% is up but still just 70% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Veterinary & Medical Services. 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 99% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +5.3% while the CPI for Commodities is +0.6%. This clearly shows that Services are driving most of the current 3.5% inflation.

  • U.S. CPI– Prices are +0.6% from January. The YOY increase is 3.5%, up from 3.2%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 75% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 3 of 4 with lifts – not good news! The current rate is 30% below 22>23 but the 21>24 rate is still 17.9%. That is 78.2% of the total inflation since 2019. Inflation was low in early 2021.
  • Pet Food– Prices are +0.8% vs February and +1.8% vs March 23, down from 2.6%. However, they are still 1.5 times the Food at Home inflation rate. The YOY increase of 1.8% is being measured against a time when prices were 20.3% above the 2019 level and the current increase is now below the pre-pandemic 2.1% increase from 2018 to 2019. The 2021>2024 inflation surge has generated 93.6% of the total 24.9% inflation since 2019.
  • Food at Home – Prices are down -0.01% from February, but the monthly YOY increase is 1.2%, up from 1.0% last month. It is still radically lower than Jul>Sep 2022 when it exceeded 13%. The 25.9% Inflation for this category since 2019 is 13% more than the national CPI and is in 3rd place behind Vet & Pet Services. 79.5% 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 down -0.4% from February but up 0.9% vs March 2023. They have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 months of increases pushed them to a new record high in Feb 23. Prices fell in March, bounced back in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, grew again in Dec>Feb, then fell in March.
  • Veterinary Services– Prices are +2.5% from February and are +9.6% from 2023, a March record and the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +39.0% and since 2021, +28.7%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & now 24, so 73.6% 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 6% from February, and they are +2.1% vs last year. Medical Services are not a big part of the current surge as only 41% of the 15.1% 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices have surged, +0.3% from February and +4.8% vs last year. However, inflation is still well below the +8.0% back in March 23. Now, 68% of their total 19>24 inflation has occurred since 2021. In December, it was only 49%. BTW: They have the 2nd highest 19>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.1% from February and +3.8% from 23. 4 of the last 5 months have been <4.0%. Inflation has been rather consistent as 57% of the inflation from 19>24 happened in 60% of the time.
  • Total Pet– Petflation is 60% lower than the 22>23 rate and again only 9% higher than the U.S. CPI. For March, 3.8% is still the 5th highest rate since 1997. Vs February, prices grew +1.0% as all but Supplies had lifts, especially Vet at +2.5%. A Feb>Mar price increase has happened in 23 of the last 27 years, with an average lift of 0.3%. So, it was no surprise but 3 times stronger than average. In terms of Petflation, 2024 has returned to a more normal pattern with the 2 Service segments leading the way.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – 3 Pet – Pet Food, Services & Total Pet, plus Groceries. The 23>24 rate is much lower for all but Veterinary, where it actually has the highest rate of any year. 21>22 still has the highest rate for the National CPI & Pet Supplies. 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 (2.3%). It comes as no surprise that Veterinary Services has the highest average rate (6.5%), but all 5 other categories are +4.6% or higher.

  • U.S. CPI – The 23>24 rate is 3.2%, up from 3.1% February, but down 45% from 22>23 and 60% less than 21>22. It is also 24% below the average YOY increase from 2019>2024, but it’s still 71% more than the average annual increase from 2018>2021. 79% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 3.0%, down from 3.7% in February and 80% less than the 22>23 rate. Now, it is also 27% lower than 21>22 but 50% above 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. 92% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down 89% from 22>23, 87% from 21>22 and even 69% from 20>21. However, it is still 10% higher than the average rate from 2018>20. It is also down to a tie for 3rd for the highest inflation since 2019 but still beat the U.S. CPI by 15%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased in Jan & Feb, then fell in March but the 2024 inflation rate of 0.7% is only higher than the -3.2% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were ≈6.2% in 22 & 23. The 2021 deflation created a unique situation. Prices are up 12.1% from 2019 but 114% of this increase happened from 2021>24. Prices are up 13.8% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. It seemed to peak in 2023, but has now grown even stronger at the start of 2024. On the chart they are #1 in inflation since 2019 and since 2021. At +6.5%, they have the highest average annual inflation rate since 2019. It is 1.5 times higher than the National Average but 2.3 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 1.3%. Except for 19>20, it has been 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 have surged in 2024. The Ytd 23>24 inflation rate of 4.9% is 2nd to Veterinary in the Pet Industry. It is 39% less than 22>23 and 14% below 21>22. However, it is still 1.6 times higher than the 2018>21 average rate. Pet Services is 2nd in 19>24 inflation but only 5th in inflation since 2021.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 3.9%, which is 32% below the 20>21 peak but still 20% above the 18>20 average. Consumers are paying 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 4.0%, down from 4.1%. It is 61% less than 22>23 but 76% higher than the 2018>21 average rate. It is also still 1.25 times the national CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food inflation rates. Supplies inflation was stable monthly & YTD. Services inflation fell slightly despite prices reaching a new record high. Veterinary hit record monthly & YTD rates but it was not enough to overcome the drops.

Petflation is slowing, but it is still strong, with the 5th highest rate for March in history. It is also still higher than the National CPI. Back In 2021 it was only half of that rate. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 22.1% above 2021 and 26.6% higher than 2019. Those are big lifts. In fact, in March prices for Total Pet & the Service segments are the highest in history. Food prices are only 0.5% below their peak and Supplies prices are only down 0.4%. Only Supplies prices (+12.2%) are less than 24.9% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. Non-Vet 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 direct evidence of this impact at GPE 24 where a record number of exhibitors offered OEM services. Strong inflation has a widespread impact.

Retail Sales – The Path from 2019 to 2023

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In this report we fill take a closer look at the Retail journey from 2019 to 2023. It was a traumatic time for America and the retail marketplace. We experienced a massive pandemic followed by the worst inflation in 40 years. Granted, much of the pricing surge was started by supply chain issues due to the pandemic. However, they were different problems with different solutions for recovery.

Our analysis will include an overview of annual retail sales from 2019 to 2023 followed by a more in depth look in which we factor inflation into the numbers. This gives us a “real” view of the situation as it shows the change in the amount of product sold. We will look at the Big Retail groups then drill deeper into the pet relevant channels. First, here is an overview of the Big 4 Groups and Total Retail.

You immediately see the impact of the 2020 pandemic as sales dropped in Restaurants, Auto and Gas Stations. The drops were especially large in Restaurants and Gas Stations due to closures and the “stay at home” attitude. Total Retail had an increase every year, even 2020. The 2020 lift was solely due to Relevant Retail. They are the only member of the Big 4 to have consistent annual growth. The only drop outside of 2020 was by Gas Stations. They had ridiculously high inflation. In 2023, it’s cumulative impact was very visible as their total $ dropped. Now, let’s look a little deeper. The next chart tracks the actual and real (inflation factored in) annual $ changes. We have included 2018>19 so that you can compare 19>23 to a pre-pandemic year.

The first thing that you notice is that there are a lot more negatives. There were 9 “real” annual sales drops added to the 4 actual drops. 36% of all real annual measurements were negative. Plus, the average real growth in Gas Stations is negative. Only 16% of actual annual sales measurements were negative. This clearly demonstrates the impact of inflation. Another result of inflation is very evident. All groups and Total Retail had a strong COVID recovery with their biggest lift occurring in 2021. Inflation peaked in 2022. You will note that the annual actual increases were progressively smaller in 2022 & 2023 – another immediate and cumulative impact of inflation.

Now let’s take a more detailed look at each of the big groups.

Total Retail – Thanks to Relevant Retail, they eked out a +0.9% increase in 2020. Commodity prices actually deflated -0.3% in 2020. Things changed in 2021. They had a strong 18.4% recovery as sales grew by $1.1T. However, strong inflation began, +7.8% so only 53% of the growth was real. The 21>22 increase slowed to 9.6% but Inflation grew to 10.9%. (Peak: June, 13.6%) The result was a -1.2% drop in real sales. Inflation slowed to 1.2% in 23 but the $ increase dropped to 3.2%, about the same as 18>19 but 59% below average. However, 60% was real.

Restaurants – They were hit hard by the pandemic as sales fell -15.7%. Inflation also slowed from 3% to 2%. Consumers returned to eating out in 2021. Sales increased 29.5%, despite the fact that inflation more than doubled to 4.4%. The increase slowed to 15.7% in 2022 as inflation peaked at 7.5%. In 2023, sales growth was still in double digits at 11.3% and inflation fell slightly to 7.0%. But you see clear evidence of its cumulative impact. In 21, 81% of their growth was real. In 23, it was down to 35%. Overall, 36% of their 40.6% 19>23 growth is real.

Auto – In 2019, prior to the pandemic, they had a small, 2.6% increase and inflation was only 0.7%. The pandemic brought a small, -2.3% drop in sales and inflation inched up to 1.6%. In 2021, sales took off, +22.8%, but so did inflation, 13.9% (the peak). Only 35% of the growth was real. In 22, inflation was 11.4%. Sales were only up 3.1% so real sales were down -7.5%. In 23, prices deflated -1.4% and sales grew by 4.2%. However, just 5% of their 28.9% growth since 2019 is real. Essentially, they are selling the same amount as 2019, but charging 27.1% more.

Gas Stations – Amazingly, prices deflated in 2019, -3.6%, but sales still fell -1.9% because consumers only bought 1.8% more gas. Sales plummeted -16.4% in 2020, despite a -16.3% drop in prices. People bought -0.2% less gas. Prices exploded in 21 & 22, with 30+% increases in both years. Sales also increased over 30% in both years, but consumers bought 1>2% less. In 23, prices fell -10.6%, but it didn’t help as sales fell -11.4%. People bought 1.0% less. In 2020, consumers began driving a lot less, but they radically increased the amount of home deliveries. We bought -4.7% less gas in 23 than in 19 but in every year, we bought 98>99% of the amount bought the previous year.

Relevant Retail (Total less Restaurants, Auto & Gas Stations) – 2018>19 growth was 3.5%, 97% was real because inflation was only 0.1%. In 2020 they had the only growth, +7.9%, which kept Total Retail positive. Inflation was 1.4% so 81% of the lift was real. In 21, they had a strong increase, but inflation doubled to 2.9%. However, 76% of the growth was still real. In 22, prices exploded to +8.1%. Sales still increased but the lift slowed to 7.9% and real sales turned slightly negative, -0.1%. In 23, inflation plunged to 3.2% but prices were still 16.4% above 2019. The sales increase  fell to 3.5%. This was the same as 18>19 but only 6% was real – cumulative inflation.

Recap– The situation is obviously complex. In 23, all groups had a 28+% increase from 2019 but when you consider inflation, the percentage of their increase that was real peaked at 48% for Relevant Retail. Gas Stations were even really down -4.7%. Relevant Retail has a number of channels, which took many different paths. Let’s look deeper.

Here is an overview of the most Pet Relevant Retail Channels

There is a lot of consistency. 7 of 11 channels had consistent annual growth so they peaked in 2023. Of the other 4 channels, Discount Department Stores & Office, Gift & Souvenir Stores had the same pattern – drops in 2020 & 2023 with sales peaking in 2022. Home Center/Hardware stores had consistent growth until sales dropped in 2023. Sporting Goods Stores peaked in 2021 then fell in 2022. They have essentially plateaued at their 2021 peak. All channels sold more in 2023 than in 2019. The biggest increases came from the Internet, +90.6%, A/O Misc. (includes Pet),+53.7%, and Farm Stores, +53.0%. Now, let’s look at the details.

Relevant Retail, 11 Channels – 19: 8 were actually & really up. 20: Inflation was still low, at 1.4% so the number really & actually up grew to 9; 21: The CPI grew by 2.9% but actual & real sales increased for all 11. 22: Prices grew by 8.1%. 10 had sales increases but only 4 were real and Relevant Retail sales were really down -0.1%. 23: 8 were up and 5 were real. However, the lifts were smaller. The lift, 3.5%, was equal to 2019 but the percentage of real growth fell from 97% to 6%.

Home Ctr/Hardware – 19: The CPI was low at 1.5% but sales fell -2.6%. 20 & 21: Sales took off, by about +13% in both years, even as the CPI grew from 1.8% to 3.5%. 22: Prices jumped up by 10.9%. $ still increased by 6.7% but real sales were -3.7%. 23: Prices grew 7.4% and sales fell -4.2%. Now, only 14% of their 31.1% 19>23 growth is real.

Farm/Garden – 19: Unlike Home Ctrs, they had a small lift, +2.6%. 20>23: The same pattern as Home Ctrs/Hdwe but their 20 & 21 lifts were 33+% larger. Their 22 & 23 lifts were not enough to overcome inflation so real sales fell -3.1% in 22 and -4.5% in 23. However, 42% of their 53% 19>23 growth was real – 3 times better than Home Ctrs.

Supermarkets – 19: Inflation was 0.9% and sales grew 3.4%. 20: The CPI was 3.5% but the $ took off, +10.1%. 21: Inflation stayed at 3.5% but the increase slowed to 3.8%, with only 0.3% real growth. 22: The CPI jumped by 11.4%. Sales were up 8.9% but really down -2.3%. 23: Inflation slowed to 5.0% but the $ increase was only 2.8% and real sales were down -2.2%. Only 8% of their 27.9% 19>23 growth is real.

Drug Stores – 19: The CPI was 0.0% and $ grew 1.7%. 20: The increase quadrupled to 7.0% and prices only grew by 0.5%. 21: Prices deflated -1.5% and sales were +6.6%. 22: The CPI grew to 2.9% and the $ increase slowed to 2.5% so real sales were -0.4%. 23: Inflation grew to 4.2% but $ had their biggest lift, +8.3%. Despite rising inflation, 73% of their 26.5% 19>23 growth is real.

Sporting Goods – 19: The CPI was 1.2% and sales grew 2.2%. 20: Inflation stayed at 1.2% but sales took off, +17.2%. 21: inflation increased over 5 times to 6.7% but the lift increased to 22.3% reaching their 19>23 sales peak. 22: Prices grew 5.2% and sales dropped -1.2%. 23: Prices fell -0.5% but sales only grew 0.1%. They have basically plateaued near the 2021 level but 61% of their 41.8% 19>23 growth is real.

Discount Dept Strs: 19: Prices deflated -0.1% but $ still fell -2.5%. 20: The CPI was only 0.3% but sales still dropped -4.3%. 21: Prices were up 2.4% but their sales recovered, +12.3%. 22: Inflation more than doubled to 5.7% and the $ lift slowed to 1.4%. Real sales were -4.1%. 23: The CPI fell to 2.2% but sales decreased by -1.4%. Their sales are up 7.6% from 2019 but their real sales are down -3.1%.

Clubs & SuperCenters: 19: The CPI was 0.1% and sales grew 2.9%. 20: CPI was 1.6%. Sales grew 5%. 21: CPI increased to 2.8% but sales increased by 8.4%, 5.5% real. 22: Inflation peaked at 7.8%. $ again grew by 8.4% but real growth fell to 0.5%. 23: The CPI slowed to 3.4% but the cumulative impact caused growth to slow to 3.0% and real growth turned negative at -0.4%. Only 34% of their 27.1% 19>23 growth was real.

$/Value Stores: 19: CPI = 0.1%. Also, a 2.9% sales increase. 20: CPI = 1.6%. Sales spiked at +13.0%. 21: CPI = 2.8%. $ growth slowed to 3.7%. Real growth only 0.9%. 22: CPI jumped up to 7.8%. Sales growth increased to 4.3% but real growth was negative, -3.2%. 23: CPI slowed to 3.4% and sales increased by 6.9% so real growth turned positive again at 3.4%. 40% of their 30.6% 19>23 growth was real, a little better than Clubs/SupCtrs.

Office/Gift/Souvenir – 19: CPI = -0.1%. Sales fell -2.1%. 20: CPI = 0.3%. Sales plummeted, -19.2%. 21: CPI = 2.4%, Sales had a strong recovery, +23.6%. 22: CPI jumped to 5.7% and growth slowed to 6.1%. 23: The CPI moved down to 2.2% but sales fell -3.6%. Although their actual sales are up 2.2% from 2019, they are really down -7.9%.

A/O Mscellaneous (22% Pet) – 19: CPI = -0.1% and sales grew 3.4%. 20: CPI = 0.3% and sales increased by 4.8%. 21: CPI increased to 2.4% but sales took off, +22.5%. 22: The CPI jumped to 5.7% and the lift slowed a little to 14.7% so now only 58% was real. 23: The CPI dropped to 2.2% but sales growth slowed to 4.4% and only 48% was real. Their overall 19>23 growth was 53.7% (2nd best) and 72% was real.

Internet/Mail Order – 19: CPI = -0.1%. Sales were +12.7%. 20: CPI = 0.3%. Sales skyrocketed, +35.2%. 21: CPI = 2.4%. Growth slowed but was still +15.4%. 22: CPI increased to 5.7% and sales were +12.2%. Now only 51% of the growth was real. 23: CPI dropped to 2.2% but sales growth slowed to 8.9%, 30% below 2019. They are by far the 19>23 growth leader, +90.6% and 79% of their increase was real.

Recap: The retail journey from 2019>23 was complex, so you have to look deeper than the overall sales to better understand what was happening. The Pandemic and the worst inflation in 40 years were major traumas. Factoring inflation into the data to get the real changes was especially important. You see that different channels took different paths. Retail has largely recovered from the Pandemic, but the price surge recovery is still ongoing.

Retail Channel Monthly $ Update – January Final & February Advance

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In February, Commodities inflation vs last year rose from 0.1% in January to 0.3%. Although down from its peak, cumulative inflation still impacts consumer spending. The sales increase rate is lower than in recent years for most channels and even below the inflation rate in a number of cases. A sales increase below inflation indicates a drop in the amount of product sold. The recovery continues but there is still a long road ahead, so we’ll continue to track the retail market with data from 2 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 January Final Report and then go to the Advance Report for February. Our focus is comparing to last year but also 2021 & 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 last year and vs 2021.
    • Current Month Real change vs last year and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for this year vs last year, 2021 & 2019. (For Jan, Monthly = Ytd)
    • Current Ytd Real change % for this year vs last year and vs 2021 and 2019
  • Monthly & Ytd $ & CPIs for this year vs last year and vs 2021 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the January Final. All were down from December. However, all but Gas Stations were up vs 23, 21 & 19. Considering inflation, the # of real drops vs last year & 21 (4) were the same as December. Gas Stations are still really down vs 2019 but for the 3rd straight month, Relevant Retail is “really” up vs all years. ($ are Not Seasonally Adjusted)

The January Final is $3.7B less than the Advance report. Restaurants: -$2.6B; Auto: -$0.7B; Gas Stations: +$0.1B; Relevant Retail: -$0.3B. As expected, $ were down for all vs December, but actual sales for all but Gas Stations were positive in all measurements vs 23, 21 & 19. Gas prices fell but Gas Stations sales were down vs 23. There were 5 “real” sales drops, 3 from Gas Stations. The real measurement vs last year for Relevant Retail was positive again at +2.3%. Total Retail also has all positive measurements (actual & real) vs 23, 21 & 19. Restaurants have the biggest increases vs 21 & 19 but Relevant Retail is still the top “real” performer vs 2019. However, only 53% of their growth is real.

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

Overall– All were down from December. vs 23, 6 were both actually and “really” up. Vs 21, 10 were up but only 4 were real increases. Vs 2019, Off/Gift/Souv were actually & really down. Plus, Home Ctr & Hardware were also really down

  • Building Material Stores – The pandemic focus on home has produced sales growth of 23.6% since 2019. Prices for the Bldg/Matl group have inflated 20.5% since 2021 which is having an impact. Both HomeCtr/Hdwe and Farm stores are only actually up vs 21 & 19. However, all real measurements vs 22 & 21 are negative for both and Home Ctr/Hdwe is now really down vs 19. This means that only 2.1% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 4.0%, Real: -0.2%; Farm: 6.2%, Real: 1.9%
  • 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 60% lower than Drug/Med products. Drug Stores are positive in all measurements and 68% of their 2019>24 growth is real. All actual $ are up for Supermarkets and inflation is slowing but their 24 real sales are still down vs 21. Only 5% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.1%, Real: +0.3%; Drug Stores: +4.9%, Real: +3.4%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -42.2% from December, but their only other negatives are actual & real vs 21. Prices are still deflating, -1.1% vs 23, a big change from +1.5% in 22>23 and especially the +8.2% in 21>22. The result is that 66.5% of their 50.5% lift since 2019 is real. Their Avg 19>24 Growth Rate is: +8.5%; Real: +6.0%.
  • Gen Mdse Stores – All were down vs December. Actual sales vs 21 & 19 were up for all but only $/Value had a lift vs 23. Real sales for Clubs & Disc Dept Stores were down vs 23 & 21. $/Value Stores were up vs all years. Disc Dept Strs are now really positive vs 19 but only 23% of their growth is real. The other channels average 41% in real growth. Avg 19>24 Growth: SupCtr/Club: 5.3%, Real: 2.2%; $/Value Strs: +6.3%, Real: +3.2%; Disc. Dept. Strs: +2.5%, Real: +0.6%
  • Office, Gift & Souvenir Stores – Actual sales are down -32.5% from December, and they are negative in all measurements but vs 21. Their real sales numbers are all negative including -15.0% vs 2019. Their recovery started late, and their slow progress has stalled since June. Avg Growth Rate: -1.3%, Real: -3.2%
  • Internet/Mail Order – $ are down -20.3% from December but set a new monthly record of $105.0B. All measurements are positive, but their growth is only 63.5% of their average since 2019. However, 83.4% of their 119.7% growth since 2019 is real. Avg Growth: +17.0%, Real: +14.8%. 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, fell in Jun>Aug, rose in Sep>Nov, then fell in Dec>Jan. However, all measurements vs 22, 21 & 19 are positive. They are in 2nd place, behind the Internet, in the % increase vs 19 but the leader vs 21. (Only ahead of the Internet by +0.9%). 56% of their 70.4% growth since 2019 is real. Average 19>24 Growth: +11.2%, Real: +9.1%.

Cumulative inflation is becoming more important in Retail. In actual $, 6 channels reported sales increases vs 23 & 10 vs 21. When you factor in inflation, the number with “real” growth is still 6 vs 23 but only 4 vs 21. Inflation’s is slowing but it is still lowering sales increases. The January  lift vs 23 was only 18% of the 22>23 increase. The impact is also visible in specific retail channels. The commodities CPI increased slightly in February. Let’s look for any impact on Retail $ales.

February sales vs January grew for all big groups but Relevant Retail – a big surprise. A Jan>Feb Total Retail lift has only happened once in the last 30 years -2016 (+0.7%). That was also the only year that February wasn’t on the bottom in Retail Sales. All actual $ measurements are again positive vs 23, 21 & 19 for all big groups but Gas Stations, and the lifts vs 2023 have improved. Inflation is still a big factor. The national CPI grew from 3.1% to 3.2% but is still 18.0% vs 21. The all commodities rate, which is the best pricing measure for Retail, grew from 0.1% to 0.3% and is 17.4% vs 21. Here is some “real” good news. In February only 1 measurement was “really” down vs 22 & 21 and it came from Gas Stations. Relevant Retail’s real monthly sales vs last year have now been positive for 8 straight months, but the best news is that Relevant Retail is positive in all measurements vs last year, 2021 and 2019 for the 4th consecutive month.

Overall – Inflation Reality – For Total Retail, inflation grew but all real sales are again positive. For Restaurants, inflation remains high, +4.5% but they are really positive vs 22 & 21. Gas prices are still deflating but that group is in turmoil. Auto prices are down but still up 19.6% vs 21 which significantly slowed their real sales. Inflation is down to 0.1% for Relevant Retail and all of their real sales are positive for the 4th  straight month. They continue to make slow progress.

Total Retail – Since June 20, every month but April 23 has set a monthly sales record. In 2023 Sales were on a roller coaster. Up in Jul>Aug, down in Sept, up in Oct>Dec (new record), down in Jan 24, then unexpectedly up in Feb. Inflation grew but is only 0.3%. YOY sales growth is still low. Sales are up 3.4% Ytd vs last year, but this is only 46% of their avg 19>24 growth. All real sales are positive again but only 41% of the 19>24 growth is real. YOY inflation in Total Retail has significantly slowed but we still see its cumulative impact. Growth: 23>24: 3.4%; Avg 19>24: +7.4%, Real: +3.3%.

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 $96B in December 23 and exceeding $1T for the 1st time. They have the biggest increases vs 23, 21 & 19 and all real sales are positive. Inflation slowed to 4.5% from 5.0% last month but is still +20.6% vs 21 and +25.6% vs 19. 40.4% of their 52.4% growth since 19 is real and they fell to 3rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.3%; Avg 19>24:+8.8%, Real: +3.9%. They just account for 13.4% of Total Retail $, but their performance improves the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – They 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 22 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 Y/E real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 was a true rollercoaster but the $ grew in December pushing them to a new record, $1.595T. $ fell in January but surprisingly grew in February. All numbers are positive. Prices vs 23 are -0.3%. Only 29% of their 19>24 growth is real. Growth: 3.1%; Avg 19>24: +6.5%, Real: +2.0%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. They 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, then strongly fell in Mar>Jul to -20.2%. In August they turned up to -3.7%. In Sep they were +2.7% but then began deflating and are -4.2% in Feb. Pricing is a big factor in the actual $ drop vs 23 but only Ytd real sales vs 21 & 19 are negative.  Growth: -4.3%; Avg 19>24: +5.5%, Real: -1.1%. Their data shows the cumulative impact of inflation and demonstrates 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, sales continued on the roller coaster. A December lift set a new monthly record of $494.7B and annual record of $4.997T. Sales fell in January and February which is normal for all years but 2024. The -1.6% drop is much better than the -4.4% average since 2019. However, the big news is that all real sales vs last year, 21 & 19 are positive for a 4th consecutive month. 54% of their 44.5% 19>24 growth is real – #1 in performance. Growth: 3.9%; Avg 19>24: +7.6%, Real: +4.4%. This is where America shops. They finished 2023 and now have started up 2024 with all positive sales vs last year, 21 & 19. This is great news!

Inflation is still low, but the cumulative impact is still there. Sales increases are still small, but the Jan>Feb lift and the fact that all Non-Gas Station real sales numbers vs 22 & 21 are still positive is a good sign. Restaurants are still doing well, and Auto is improving. Inflation/Deflation has caused turmoil in Gas Stations’ sales. The biggest positive is from Relevant Retail. All sales measurements are again positive. This means that consumers not only spent more $ in 2023 and in Jan & Feb 24 vs last year, 21 & 19, they also bought more product. The turnaround continues to gain ground.

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

  • Relevant Retail: Growth: +3.9%; Avg: +7.6%, Real: +4.4%. 6 were up from Jan. Vs Feb 23: 8 were up, Real: 10. Vs Feb 21: 10 were up, Real: 8. Vs 19: Only Dept Stores were actually & really down. Furnishing stores were also “really” down.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are up from January. Their actual & real $ are only up vs Feb 23 & 21. All Ytd numbers are actually and really down, even vs 2019. Growth: -2.1%; Avg 19>24: +0.6%, Real: -1.3%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are up from January. In fact, both actual and real sales are positive in all measurements. However, only 44% of their 33.6% 19>24 lift is real – inflation’s impact. Note: Growth exceeds Avg. Growth: 3.1%; Avg: +2.8%, Real: +2.5%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are down from January but up monthly and Ytd vs 22, 21 & 19. However, inflation hit them hard. Real $ are down vs 21 and only 14% of the growth since 2019 is real. Growth: 2.7%; Avg 19>24: +5.7%, Real: +0.9%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are down from Jan but positive in all other measurements, actual & real. Inflation has been relatively low so 67% of their 27.4% growth from 2019 is real. Note: Their growth is above the 19>24 avg. Growth: 5.7%; Avg 19>24: +5.0%, Real: +3.4%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are up 12.8% from January and positive in all comparisons, actual & real vs 22, 21 & 19. Plus, 74% of their 19>24 growth is real. Growth: 2.4%; Avg 19>24: +3.9%, Real:+3.0%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were high in 2022. Sales are up from January but negative in all other measurements but actual vs Feb 21 & 2019. Even their 19>24 real growth is negative. Growth: -9.2%; Avg 19>24: +2.3%, Real: -0.4%.
  • 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 January, but they may have “turned it around”. Sales are now positive in all measurements. Note: Their growth also exceeds the average. Growth: +3.3%; Avg 19>24: +0.9%, Real: +3.5%.
  • 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. Prices are now deflating, and sales are up from January but they are only positive vs 21 & 19. Prices are deflating but still high, 19.7% above 21. Real sales are negative for all but vs Feb 23 & 2019. Also, just 24% of their 19>24 sales growth is real. Growth: -4.2%; Avg 19>24: +4.3%, Real: +1.5%.
  • 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 sales are down from January and vs 23. However, due in part to recent deflation, real sales are positive in all measurements. Their inflation rate has been lower than most groups so 71% of their 29.5% growth since 2019 is real. Growth: -1.0%; Avg 19>24: +5.3%, Real: +3.9%.
  • 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 up vs January and have returned to being positive in all measurements – both actual & real. They are still 2nd in increase size vs 19 and moved back up to 2nd from 3rd vs 21. 73% of their 52.3% 19>24 growth is real. Growth: +4.1%; Avg 19>24: +8.8%, Real: 6.6%.
  • NonStore Retailers – 90% of their $ 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 22/23 but is back to double digits. $ales are down from January but up in all other measurements. 81.3% of their 105.8% 2019>24 growth is real. Growth: 10.0%; Avg: +15.5%, Real: +13.2%

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. Overall, inflation has slowed considerably from its peak in June 2022, which has helped the Retail Situation. Surprisingly, Sales grew from January for all but Relevant Retail. Their drop was driven by NonStore, Grocery, Health/Drug & Sporting Gds. Inflation is slowing in most channels and even deflating in some. However, we are still seeing the impact of high cumulative inflation in some channels. Only a few channels are doing well. The new problem is that the YOY sales increase rate for almost all channels has markedly slowed. In February, only SupCtr/Club/$, Health/Drug & Electronics had a Ytd lift above their 19>24 Avg. This is bad, but better than January, when there was only 1. Some great news is that Relevant Retail has been positive in all measurements for 4 straight months. However, in February, 5 of 11 channels were really down vs 23. The slow turnaround continues, and we are making progress, but we still have a long way to go for a full recovery.

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 since 2021 to show cumulative inflation.

Monthly YOY 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?
    1. While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the actual product mix is different.

 

Petflation 2024 – February Update: Drops to +3.5% vs 2023

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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, but turned up again in Jan>Feb 24. The CPI increased slightly in February to +3.2% from +3.1% in January. However, Grocery inflation continues to slow. After 12 straight months of double-digit YOY monthly increases, grocery inflation is now down to +1.0%, 12 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. At 3.5% in February, it is still 9% above the national rate, but down from +52% in January. We will look deeper into the numbers. 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 February 22 to February 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 February, Pet prices were up 0.3% from last month as lifts in Vet, Services & Supplies overcame a -0.9% drop in Food.

In Feb 22, the CPI was +10.4% and Pet prices were +7.0%. Like the CPI, prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. Food prices grew consistently but the other segments had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices continued to grow 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 June/July this was 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/Feb Pet prices grew despite 2 drops by Food & 1 by Vet. Now, Total Pet and all but Food are at their pricing peak.

  • 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, dipped in Oct>Dec, then rose Jan>Feb 24, but 33% of the 20.8% increase in the 50 months since Dec 2019 happened in the 6 months from Jan>Jun 2022 – 12% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. In Jun>Aug they dipped, grew Sep>Nov, then fell in Dec>Feb. 99% of the 21.7% increase occurred 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 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. They fell in Mar, but set a new record in May, then continued the rollercoaster ride with lifts in Dec>Feb, back to May prices.
  • 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 prices got on a rollercoaster in Mar>Jun. They turned up Jul 22>Mar 23 but the increase slowed in April and prices fell in May. They rose again Jun>Aug, fell in Sep>Dec, then spiked in Jan>Feb.
  • 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 National 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, then set a record in Feb.
  • 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 February to a new record high. Prices are at a record high for all segments but Food and Petflation has been above the National CPI since Nov 22.

Next, we’ll turn our attention to the Year Over Year inflation rate change for February and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation fell to 3.5%, down from 4.7% in January. It is now only 9% higher than 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 +0.6% from January but were +3.2% vs February 23, up from +3.1% last month. Grocery inflation is down again, to +1.0% from +1.2%. 2 of 9 categories had a price decrease from last month – Pet Food & Medical Services. There were also 2 in January. That’s 3 consecutive months for Pet Food. The national YOY monthly CPI rate of 3.2% is up but still only 53% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories. 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 97.9% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover 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 +0.7%. This clearly shows that Services are driving most of the current 3.2% inflation.

  • U.S. CPI– Prices are +0.6% from January. The YOY increase is 3.2%, up from 3.1%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 60% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 3 lifts – not good news! The current rate is 47% below 22>23 but the 21>24 rate is still 18.0%. That is 78.9% of the total inflation since 2019. Inflation was low in early 2021.
  • Pet Food– Prices are -0.9% vs January and +2.6% vs February 23, down from 4.8%. However, they are still 2.6 times the Food at Home inflation rate. The YOY increase of 2.6% is being measured against a time when prices were 20.7% above the 2019 level, but that increase is still 1.5 times the pre-pandemic 1.7% increase from 2018 to 2019. The 2021>2024 inflation surge has generated 91.8% of the total 24.5% inflation since 2019.
  • Food at Home – Prices are up +0.1% from January, but the monthly YOY increase is 1.0%, down from 1.2% last month and radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.2% Inflation for this category since 2019 is 15% more than the national CPI and is in 3rd place behind Vet & Pet Services. 79.8% 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 January and 0.9% vs February 2023. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 months of increases pushed them to a new record high in Feb 23. Prices fell in March, bounced back in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, then grew again in Dec>Feb back to the May record level.
  • Veterinary Services – Prices are +0.9% from January, but they are +7.9% from 2023, again the highest rate in the Pet Industry. Plus, they are still the leader in the increase since 2019 with 36.3% compared to Pet Services, 26.4% and Groceries, 26.2%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & now 24, so 69% 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 fell -0.02% from January, but they are +1.1% vs last year. Medical Services are not a big part of the current surge as only 39% of the 14.7% 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices have surged, +1.0% from January but +5.2% vs last year. However, inflation is still well below the +8.0% back in March 23. Now, 78% of their total 19>24 inflation has occurred since 2021. In December, it was only 49%. BTW: They have the 2nd highest 19>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.3% from January and +3.9% from 23. 3 of the last 4 months have been <4.0%. Inflation has been rather consistent as 59% of the inflation from 19>24 happened in 60% of the time.
  • Total Pet– Petflation is 68% lower than the 22>23 rate and now only 9% higher than the U.S. CPI. For February, 3.5% is still the 8th highest rate since 1997. Vs January, prices grew +0.3% as all but Pet Food had strong lifts. A Jan>Feb price increase has happened every year but 2018 since 1997, with an average lift of 0.4%. In terms of Petflation, 2024 started just as we should have expected with 1 exception. Veterinary & Pet Food are still the Petflation leaders since 2021 but Pet Services replaced Pet Food in the #2 spot for Petflation since 2019.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 5 of 9 categories – 4 Pet – Pet Food, Services, Vet & Total Pet, plus Groceries. The 23>24 rate is much lower for all but Veterinary, Pet Services & Haircuts. It actually has the 2nd highest rate in Veterinary. 21>22 still has the highest rate for the National CPI & Pet Supplies. 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 (2.3%). It comes as no surprise that Veterinary Services has the highest average rate (6.4%), but all 6 other categories are +4.6% or higher.

  • U.S. CPI – The 23>24 rate is 3.1%, the same as January, but down 50% from 22>23 and 60% less than 21>22. It is also 26% below the average YOY increase from 2019>2024, but it’s still 72% more than the average annual increase from 2018>2021. 79% of the 20.6% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 3.7%, down from 4.8% in January and 75% less than the 22>23 rate. However, it is still 16% higher than 21>22 and 2.3 times the average rate from 2018>2021. Pet Food has the highest 22>23 rate on the chart but has fallen to 2nd 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. 91% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down 90% from 22>23, 86% from 21>22 and even 69% from 20>21. However, it is still 32% higher than the average rate from 2018>20. It has the 2nd highest inflation since 2019 and beat the U.S. CPI by 16%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased in Jan & Feb, but the 2024 inflation rate of 0.7% is only higher than the -3.5% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were ≈6.2% in 22 & 23. The 2021 deflation created a unique situation. Prices are up 12.1% from 2019 but 113% of this increase happened from 2021>24. Prices are up 13.7% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022, peaked in 2023 and now continues at the start of 2024. On the chart they are #1 in inflation since 2019 and since 2021. At +6.4%, they have the highest average annual inflation rate since 2019. It is 1.5 times higher than the National Average but 2.3 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 0.8%. Except for 19>20, it has been between 2.4>3.0%. 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 have surged in 2024. The Ytd 23>24 inflation rate of 5.0% is 2nd to Veterinary in the Pet Industry. It is 38% less than 22>23 and 17% below 21>22. However, it is still 1.7 times higher than the 2018>21 average rate. Also, for the first time, Pet Services prices have inflated over 20% vs 2019 and 2021.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 4.0%, which is 29% below the 20>21 peak but still 21% above the 18>20 average. Consumers are paying 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 4.1%, down from 4.7%. It is 62% less than 22>23 but 80% higher than the 2018>21 average rate. It is also still 1.3 times the national CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food Prices. Veterinary prices are still 8.7% higher than last year and inflation in Supplies and Services actually increased in February.

Petflation is slowing, but it is still strong, with the 8th highest rate for February in history. It is also still higher than the National CPI. Back In 2021 it was only half of that rate. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 21.0% above 2021 and 25.6% higher than 2019. Those are big lifts. In fact, in February prices for all segments but Food are the highest in history. Food prices are only 1.3% below their May peak and only Supplies prices (+12.1%) are less than 25% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. Non-Vet 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. Both segments will see a strong movement to online purchasing and private label products. Some direct evidence of this impact is apparent at GPE 24 where a record number of exhibitors are offering OEM services. Strong inflation has a widespread impact.

Comparing the Spending Demographics of the Industry Segments – SIDE BY SIDE

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The first reports of our Pet Spending Demographics analysis have been very detailed and intense. We looked at the industry as a whole and each of the individual segments. Recent years have seen some turmoil. We have seen the very real impact of outside influences on the industry. In the 2nd half of 2018, the FDA warning on grain free dog food caused a $2.3B drop in Food $ and new Tariffs flattened Supplies $, but Services had a record lift. In 2019, Food rebounded but the tariffs really hit the Supplies segment with a $3B drop. Veterinary $ grew slightly while Services $ fell a bit. The net was -0.2% drop in Total Pet. The 2020 pandemic had varied impacts as Pet Parents focused on needs. This caused a lift in Veterinary and a huge increase in Food because some demographics binge bought out of fear of shortages. Services spending plummeted due to outlet closures and restrictions while Supplies $ continued to fall because consumers saw them as more discretionary. 2021 brought a big change, Food $ fell because there was no “binge” repeat. However, Pet Parents focused on their “children” producing a widespread record lift in all other segments and a record $16B increase. In 2022, after the record lift in 2021, spending fell in Supplies and Veterinary but Food had a strong 12.5% increase and Services continued to surge. This combination produced a 2.7% increase in Total Pet $

We have often referenced the similarities and differences in spending between Total Pet and the individual industry segments. Total Pet Spending is a sum of the parts and not all parts are equal. In this final report we are going to put the segments side by side to make the parallels, differences and changes from 2021 more readily apparent. We will address:

  • “The big spenders” – those groups which account for the bulk of pet spending.
  • The best and worst performing segments in each of twelve demographic categories
  • The segments with the biggest changes in spending $ – both positive and negative
  • “Honorable Mention” – Only segments that received this “honor” at least twice in 2022
  • And of course, the “Ultimate Spending CUs”

The emphasis is on “visual” side by side comparisons to allow you to quickly compare the industry segments. We’ll try to minimalize our comments. You can always reference one of the specific reports for more details. We’ll also break the charts up into smaller pieces that are demographically related to make the comparison more focused and easier.

Before we get started, let’s take a look at the current market share of the industry segments. The following 2 charts show the 2022 share of spending for each segment and the evolution over the past 30 years. 1992 was the last year that the Food Segment accounted for 50% of Total Pet Spending. By the way, Total Pet Spending was $16.2B in 1992. We have come a long way, +534%; annual growth rate of 6.35%. This will help put our comparisons into better perspective.

2021>2022 CHANGE IN SHARE of TOTAL PET $

Food: 37.7%; Up from 34.4%

Supplies: 21.4%; Down from 23.8%

Veterinary: 28.9%; Down from 32.7%

Services: 12.0%; Up from 9.1%

In 2022, Supplies & Veterinary lost almost 7% of share in Total Pet $ which was picked up by Food & Services. The most notable trend from 1992 to 2012 was the decline in Food share while Supplies gained in importance. Both of those have ended. In recent years, the Product Segments have been on a rollercoaster. Food reached 44% in 2020, the highest level since 44.8% in 1998. Supplies have been trending down since 2012, hitting bottom at 18.1% in 2020. The Services segments have been more stable. They have generally trended up since 2012. After falling to 8.2% in 2020, Non-Vet Services peaked at 12% in 2022. Except for the big lift in 2021 which pushed them above 30%, Veterinary has been in the 25>28% range since 2012. All are impacted by outside influences but big trends in Food and Petflation in Supplies tend to make the Product Segments more volatile than the Services Segments.

Now let’s get started with a look at the “Big Spenders”. The following 2 charts will compare the market share and performance in all Pet Industry segments by the groups responsible for the bulk of the spending in 10 demographic categories. These are the groups that we identified in our Total Pet analysis to generate at least a 60% market share of spending. As you recall, to better target the spending we altered 3 groups in Services (Area, Education and Income) and 1 in Veterinary (Education). However, to have a true side by side comparison we need to use the same groups for all. Since these 4 groups are a different size from our original analysis, the share of spending will be different. However, all meet or exceed our 60% share minimum.

The chart makes it especially easy to compare share and performance across categories. Remember, performance levels above 120% show a very high level of importance for this category in terms of increased spending. Unfortunately, it also indicates a high spending disparity among the segments within the category. There are 2 charts, each with 5 categories. The categories are listed in their order of share of Total Pet $ – from highest to lowest.

  • White, Non-Hispanic – This group has an 81+% market share in every Segment. Minorities account for 32.8% of CUs but only 14>18% of spending in any segment. Factors: Lower income for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. Whites lost share in Total & Products but gained in both Service segments. Asians had the same pattern and Hispanics were down in all but Food. African Americans gained in all.
  • Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. Only the Supplies share is below 80%. The group gained 1.2% in Total Pet share. The only decrease was -0.2% in Food. The lift was driven by those w/o a mortgage. They had gains in all but Veterinary. Those with a mortgage also had a small increase in Total but their only segment gain was a 3.1% increase in Veterinary.
  • 2+ People in CU – 2+ is still the key in pet ownership. However, the results were mixed by size. Singles had more CUs but lost share in all but Services so 2+ CUs had the opposite pattern. 2 People only gained in Supplies & Services. 4 people had the opposite pattern but 3 People gained in all. 5 People was the only 2+ size to gain in share of CUs but they only gained share in Food spending and had the biggest drop in Total Pet.
  • Suburban & Rural – They lost -0.1% in Total Pet but gained in Food & Services. Both the Suburbs 2500> and Areas <2500 had drops in Veterinary but opposite patterns in Total and the other segments. The Big Suburbs were only up in Food. The areas <2500 only lost share in Food. Center City was up in Total due to gains in Veterinary & Supplies.
  • Associate’s Degree > – A huge drop in spending by College Grads caused us to expand this group to include those with an Associate’s Degree to reach our 60% minimum share. This resulted in an increase in share but a drop in performance for all segments. Despite a great year from Associate’s Degree, the new group lost share in all but Services from 2021. Overall, Higher Education is also less important. In 2021, it usually ranked 2nd. In 2022, it is still 2nd for Services but fell in Total and all other segments, even falling to 7th in Food.

  • Over $70K Income – INCOME MATTERS MOST IN PET SPENDING! Income has grown in importance in recent years and all Industry segments, but Food performed at 140+%. Over $70K gained 2.5% in CU share but lost -0.7% in Total, -2.6% in Food and -1.8% in Veterinary. The other segments gained share – Supplies, +2.6% & Services, +3.0%. The <$70K group obviously had the exact opposite pattern. Food & Veterinary spending became slightly more balanced while the income spending disparity gap widened for the discretionary Supplies & Services segments.
  • Everyone Works – Income is important, but the importance of # of Earners fell for all but Food in 2022. Despite a strong year for 3+ Earners the Everyone works group lost share in all but Food. The Food lift was strong enough to generate a gain in Total. In terms of performance, only Services is 120+%. In 2021, Supplies & Vet were also 120+%.
  • All Wage & Salary Earners– Incomes vary widely in this group, so performance is often lower. 2022 was different. The group gained 0.9% in CU share. Total Pet and all segments, but Veterinary gained in spending share. Veterinary lost -0.5% in share and -2.6% in performance. Supplies had the biggest lift – +7.8% in share and +11.4% in performance. The increase was driven by a combination of Managers/Professionals and Blue Collar workers.
  • Married Couples – Marriage is 1st in importance to spending in Food, 2nd in Total, Supplies & Veterinary but falls to 3rd in Services. In 2022 their share & performance increased in Total, Food & Services but fell in Veterinary & Supplies. The best performer inside the group was CUs with a child 18>. Outside of the group, it was Single Parents.
  • 35 to 64 yrs – Includes the 3 highest income segments. They only gained share in Total Pet (+0.3%) and Food (+6.0%). The 45>54 yr-olds gained share in all segments but their lift couldn’t overcome big losses by the 35>44 yr-olds in all segments but Food. The good news is that their Food share is now above 60% (61.1%).

Now we’ll look at the Best/Worst performers in each category. Highlighted cells are different from Total Pet; * = New Winner/Loser; ↑↓ = 5+% Performance Change from 2021. The categories are divided into related groups. 1st, Income

  • Income – Income matters. All winners were $150K>. The Supplies winner was $150>199K down from $200K> in 2021 and the disparity between 1st and last place fell by 90%. The disparity gap in Veterinary narrowed by only 5% but it narrowed by at least 30% for Food, Services & Total Pet. More balanced spending.
  • # Earners – More earners = more income. The highest income 3+ Earners segment is now on top for all. Note: They are most likely Gen Xers. No Earner, Singles (70+ yr-olds) retained their position at the bottom. The spending disparity gap narrowed by only 6% for Supplies. In the other segments it shrank by at least 15%.
  • Occupation– Mgrs & Professionals are #1 in CU income and expenditures and again the best performer in all segments. Blue Collar workers had a strong year in all but Services. They were replaced at the bottom by Service Workers or Retirees. The spending disparity actually increased by 21% in Services and by 4>9% in Food, Supplies & Total Pet. It did fall slightly, -3.5% in Veterinary.

Next are demographics of which we have no control – Age, Generation and Racial/Ethnicity

  • Racial/Ethnic– As expected, White Non-Hispanics are the top performer in all segments and African Americans occupy all the bottom slots. African Americans have the lowest income and only 25% own Pets. However, they had a strong 2022. They got the performance gap below 100% in all segments, including a 24% drop to 75% in Supplies.
  • Age – The 45>54 yr-olds now “rule”. The bottom is a mixture of young & old. 75> is the worst in Products while <25 loses in Services & Total. The spending disparity increased by 10% to 110% in Veterinary, but it fell in Total and all other segments, including a 62% drop in Supplies to 75%. Now, only the disparity in Veterinary is above 100%.
  • Generation – Gen X still “rules”. Gen Z is still at the bottom in Service segments while Born <1946 is the worst in the others. The disparity gap narrowed for all. The drop was in double digits for all but Veterinary. Now, all are <100%.

In the next 6 categories, we have at least some control

  • Education – Winning is tied to higher Education which generally correlates with income. The losers are all below an Associate’s degree. The disparity gap shrank significantly for all with an average drop of 53%. Only Services is 100+%.
  • CU Composition – 7 of 10 best/worst are different from 2021. Except for Services, kids win. The oldest kid 18> aligns with the 45>54 age group. Singles are the most common worst. Disparity lessened for all – an average drop of 32%.
  • CU Size– The top CU number is mixed, but generally 3+. “1” remains solidly on the bottom. The disparity is also bigger in all but Supplies. Disparity dropped 60% in Supplies and 4% in Services but rose in Total & other segments.
  • Housing – The perennial winner and loser. Disparity dropped slightly in Products & Services but rose in Vet & Total.
  • Area– <2500 population is on top & Central City is on the bottom. The disparity dropped by 9+% for Total and all but Services, which increased by 11%. This is a surprise. Services spending usually skews towards higher population.
  • Region – A strong year for the Midwest. The South is at the bottom in all but Supplies. The disparity in Food increased by 0.3%. Total & all other segments had double digit drops, led by Supplies which fell 62%.

Here are the categories with the biggest & smallest disparities for Total Pet & each industry segment.

I’m sure the fact that income produces the biggest spending disparity for all is no surprise. Pet spending is driven by income. The Regional “wins” reflect the growing national balance in product spending. In Area Type, Services spending is expanding beyond high population areas while Veterinary spending is now growing in Center City.

Now, here are two summary charts. The first compares the averages.

The return to “normal” is very apparent as the differences for all but Supplies are below 2019 levels. Supplies did have the biggest drop from 2021 (40%) and are less than 1% above 2019. Food has the lowest disparity for the 2nd straight year. The difference grows as you move from Products to Services. Non-Vet Services is again on top. The Veterinary disparity also fell but it is back to the 2nd highest. Total Pet fell 16% from 2021 to 78%, much more balanced.

  • Food – Down 13% from 2021, 16% from 2019, but 145% from the 2020 binge. Now they are the most balanced.
  • Supplies – The record 2021 increase produced a record disparity. The drop in 2022 brought a return to normal.
  • Veterinary – Their record lift increased the difference to over 100%. The sales drop pushed them below 2019.
  • Services – Despite a record lift in 2022, the gap narrowed by 8%, but they are the only segment over 100% .

This chart shows the number of new winners/losers.

There was much less turmoil than in 2021 but Food again led the “pack” with nearly half of the winners & losers changing as their spending rebounded from the drop in 2021.

  • With a 12.5% increase in 2022, Pet Food spending returned to a more normal pattern in 2022. The biggest change in performance was that over half of the losers moved off of the bottom.
  • Supplies spending fell sharply in 2022 but the impact only changed 4 of the 12 winners and 1 loser.
  • The Veterinary spending drop was also big but there were even fewer total changes than in Supplies.
  • Services had another record increase. It was widespread but produced few significant changes in performance.

Now, let’s look at the Demographic Segments with the Biggest Changes in $. We’ll truly see some differences between the Industry Segments. We have color highlighted differences from Total Pet. Plus:

  • ↔ = Winner/Loser same as 2021
  • ↕ = Flipped from 1st to Last or vice versa

First, the Income related categories.

  • Income – 3 winners & 5 losers were new with 3 flips. The winners are all over $100K but so are 2 of the losers. Only the loser in Services has a below average income. The $ drop in Vet & Supplies was driven by the big spenders in 21.
  • # Earners – All but 1 are new with 4 flips. In Food & Services, the winner & loser were driven by income. In Vet 2 Earners flipped to last & the lowest income won. 2+ CU Retirees had the smallest increase in Services but spent less in all other segments, especially Food. This flipped them to a more usual position at the bottom in Total Pet.
  • Occupation – 3 repeats while 4 flipped. The high income, Mgrs & Professionals had the biggest increase in all but Vet where they had the biggest drop – no surprise after their $2.3B lift in 21. Although not as large, Tech/Sls/Clerical had a similar spending pattern in Supplies. Blue Collar had a small increase in Services but stayed at the bottom. Petflation may have caused Retirees to downgrade their Food and pushed them to the bottom in Total & Food.

Now the Age and Racial/Ethnic Categories

  • Racial Ethnic – 3 repeats & 5 flips. White, non-Hispanics won in all but Supplies & Veterinary, where they were the big loser. In 2021 they had the biggest lifts in these segments. A strong year for African Americans while other minorities, Asians & Hispanics didn’t fare so well. Asians lost in Services & Food but Hispanics lost overall.
  • Age – All new with 5 flips. There were 3 different winners but all were over 45. In 2021, 35>44 had 3 wins. In 2022 there were 4 different losers. 35>44 lost overall and in Supplies. The 55>64 yr-olds flipped from 1st to last in Veterinary. Perhaps due to a downgrade, 75> lost in Food. <25 had a great year but it was driven by Products. They were down in both Services segments, including the only spending decrease by any age group in Non-Vet Services.
  • Generation – 2 repeats & 3 flips. Gen Z made their presence known with wins in Supplies and Total. They finished last in Services but still spent more. Gen X won Food & Veterinary but flipped to the bottom in Supplies. Millennials flipped from 1st to last in Veterinary. The Food & Total Pet losers were new – the oldest group, Born <1946.

Now, here are more Demographic Categories in which the consumers can make choices.

  • Education – 1 repeat & 4 flips. Higher education is usually tied to increased income and pet spending but not in 2022. Services had the only “normal” pattern. It was a strong year for <BA/BS, especially for Associates Degree. Adv. College Degree had a huge lift in 2021 and the biggest drops in Total and all segments but Services.
  • CU Comp. – Married with Children were the best performers in Total Pet and all segments but Services. The success generally skewed a little older. Those with kids 6>17 lost in Total & Supplies and Unmarried CUs lost in both Service segments. Married, couple only lost in Food, a big turnaround from 2021 when they won in all but Supplies.
  • CU Size– 1 repeat & 4 flips. “3” was the magic number with wins in all but Services. The loser in Food & Veterinary was 2 People while the biggest CUs, 5+ lost in Supplies, Services & Total Pet.
  • Housing – 5 repeats, the most for any category & 3 flips. In Food & Services, all segments spent more. In Veterinary all spent less. Homeowners are on top. In Supplies & Total, it was those without a Mortgage. Except for the dual flip in Supplies which put Homeowners w/Mtges on the bottom, Renters were the biggest losers, which is the norm. However, we should note that they “lost” Food & Services while increasing their spending.
  • Area – 3 repeats with 5 flips. The big Suburbs are the normal winner. They held onto the top spot in Services & Total and won in Food. After big lifts in 2021, they dropped to last in Supplies & Veterinary. Central City also had a strong but mixed year. They flipped to the top in Supplies & Veterinary although they spent less in Vet $. They lost in Food & even in Services, despite a $0.8B lift. Rural Areas lost in Total despite a lift that was only 18% less than the winner.
  • Region – No repeats but 6 flips. The Midwest took control with wins in all but Supplies, where the South edged them out by $0.06B for the win. In an unusual situation, the West finished at the bottom in Total, Food & Supplies. However, they did have the biggest lift in 2021. The Northeast lost in both Service segments despite a lift in Non-Vet.

The next chart compares the number of repeats, “flips” and new segments among the 12 winners and 12 losers for each industry segment. The idea is to look for patterns in the data that cross segments. Let’s take a look.

  • Food & Services $ grew while Supplies & Veterinary $ fell. The resulting turmoil is most apparent in the $ changes.
  • With 2 straight record increases, Services led the way in stability with repeats by 83% of 2021 winners.
  • With big turnarounds in spending, Supplies (15), Veterinary (14) and Food (11) had the most flips. Veterinary & especially Supplies were mostly 1st to last while the Food flips were slightly positive. In a clear demonstration of widespread stability, Services had no flips.
  • Both patterns were evident in Total Pet as 42% flipped but 1st to last & last to 1st were equal in number.
  • There are a total of 24 winners and losers. Here’s the number different from 2021. Food: 22; Supplies: 23; Veterinary: 21; Services: 11; Total: 21. Any change in growth pattern causes more turmoil at the segment level.

Next, there were so many positive contributors that in each individual report we recognized 6 segments that didn’t win but still performed so well that they deserved Honorable Mention. I reviewed that list again and came up with segments that won Honorable Mention at least twice. Here are the 9 “SUPER Honorable Mentions” for 2022…

9 segments made the list, the same as 2021. Services had the biggest increase, +36%, but had only 1 segment on the list. 5 of their honorees either won in other segments or didn’t make the honor role. Food & Total Pet both had spending increases and tied for the lead with 6 segments on the “Super” list. All segments on this year’s list are generally “low profile” but contributed notably to the industry. We should give special kudos to Single Parents and those with an income of $40>49K. These 2 groups won Honorable Mention in 2 Industry segments and Total Pet.

Although the results were mixed, with numerous individual changes, here are some trends of note:

  1. Older Youth Movement – Boomers must inevitably fade. The Gen Xers are firmly at the top with spending skewing towards their older, wealthier members. Millennials are close behind and now Gen Z is “in the game”.
  2. The “Magic” number is 3+ – As spending has skewed younger the best performers in all but Services have 3 or more people. However, 2 person CUs still have the largest share of CU’s, 32.7% and 100+% performance in Total Pet and every segment. They’re not done yet.
  3. Improved spending balance – The performance gap between the best and worst narrowed in Total Pet and all segments. The disparity is now less than in 2019 for all but Supplies. However, we should note that Supplies narrowed the gap by 40% and their current disparity is only 0.7% more than 2019.
  4. Income is still the most important factor – The gap between best and worst narrowed in Total and all segments, but the disparity is still the biggest of any category. The best performer is always $150K+, while the worst is <$30K.

And Finally, What you have all been waiting for…

THE ULTIMATE 2022 PET SPENDING CUs – Side by Side

Color Highlighted cells are different from Total Pet; * = New in 2022

Methodology – The segments are chosen because they have the highest annual CU spending of any segment in the category. They may or may not have the most total dollars. That would depend upon the number of CUs in the group.

Final Comment – These “winners” further reinforce the key factors in increased pet spending:

Marriage– A commitment to another person demonstrates that you can make a commitment to your pet “children”.

CU Size – The “magic” number is 3+ for all but Services.

Homeownership/Area – Owning and controlling your own space has long been a key factor in Pet Parenting.

More space – Small suburbs near a big metro area offer the convenience of the city, plus room for more pets.

Income Matters Most – High Income, A High Paying Occupation, A College Degree, Everyone works with 2+ Earners. These are characteristics present in all of the Ultimate Pet Spending CUs.

Generation/Age – The highest income, 45>54 yr-old Gen Xers “rule”.

Region – Take your pick – Midwest or West, just not the Northeast or South.

I hope that this Visual Comparison helped you to get a “satellite view” of Pet Industry Spending in 2022. Please refer back to the individual segment reports to get more details.

There is one consistent winner in the Pet Industry…

…OUR PET CHILDREN

 

Petflation 2024 – January Update: Down to +4.7% vs Last Year

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Inflation slowed in January. 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 but turned up in January. However, the CPI actually decreased to +3.1% from +3.4% due to a big monthly price lift in 2023. Grocery inflation continues to slow. After 12 straight months of double-digit YOY monthly increases, grocery inflation is now down to +1.2%, 11 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 4.7% in January, it is still 51.6% above the national rate of 3.1%. 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 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 2023 vs 2019 and vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • YTD comparisons (Since it is January, this month’s numbers are the YTD rate.)

In our first graph we will track the monthly change in prices for the 24 months from January 22 to January 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 January, Pet prices were up from last month as lifts in Services & Supplies overcame drops in Food & Veterinary.

In January 22, the cumulative CPI was +9.4% and Pet prices were +5.6%. 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 took off. In Nov>Dec, Services & Food prices continued to grow 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 June/July this was reversed. In August all but Services fell. In Sep/Oct this was reversed. In November, all but Food & Vet fell. In December Supplies & Vet  drove Total Pet prices up. In January, Food & Vet prices fell while Supplies & especially Services prices surged. Note: With cumulative inflation, all but Supplies are now at or within 0.4% of their pricing peak.

  • 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, dipped in Oct>Dec then rose in Jan. but 30% of the 22.4% increase in the 49 months since December 19 happened in the 6 months from Jan>Jun 22 – 12.2% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. They have essentially stabilized at this record level. 93% of the 22.9% increase has occurred since 2021.
  • Pet Supplies – Supplies prices were high in Dec 19 due to added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to Dec 19 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued in 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. They fell in March, peaked at a new record in May, then continued their rollercoaster ride with lifts in Dec>Jan.
  • Pet Services– Normally inflation is 2+%. Perhaps due to closures, the rate slowed in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. It was stronger in 2022 but it got on a rollercoaster in Mar>Jun. It turned up again Jul>Mar 23 but the increase slowed in April. Prices fell -0.3% in May, turned up Jun>Aug, fell in Sep>Dec. then surged to a new record high in January.
  • Veterinary – Inflation has been consistent. Prices turned up in March 20 and grew through 21. 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 rose again and even with 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 (Record high) then fell in January.
  • 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, fell in Nov then grew in Dec>Jan to a new record high. The January lift came from Services (+5.6%) and Supplies (+0.7%) which overcame drops in Food & Vet. However, the YOY CPI fell from 5.1% to 4.7%.

Now, we’ll turn our attention to the Year Over Year inflation rate change for January and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation slowed to 4.7%, down from 5.1% in December but it is still 1.5 times higher than the National rate. The chart will allow you to compare the inflation rates of 23>24 to other years but also see how much of the total inflation since 2019 came from the current pricing surge which took off in 2022. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.5% from December but were +3.1% vs January 23, down from +3.4% last month. Grocery inflation is down again, to +1.2% from +1.3%. 7 of 9 categories had a price increase from last month – only Vet & Pet Food prices fell. There were 5 increases in December. Pet Services had a big turnaround. After 4 monthly drops, prices rose 5.6%. The national YOY monthly CPI rate of 3.1% is only 48% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Veterinary Services. 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 95.6% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +4.9% while the CPI for Commodities is +0.1%. Services are driving virtually all of the current 3.1% inflation.

  • U.S. CPI– Prices are +0.5% from December. The YOY increase is 3.1%, down from 3.4%. It peaked at +9.1% in June 2022. The targeted inflation rate is <2% so we are still 55% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 2 lifts – not good news! The current rate is 52% below 22>23 but the 21>24 rate is still 17.9%. That is 79.6% of the total inflation since 2019. Inflation was very low in early 2021.
  • Pet Food– Prices are -0.1% vs December and +4.8% vs January 23, down from 5.1%. However, they are still 4 times the Food at Home inflation rate. The YOY increase of 4.8% is being measured against a time when prices were 17.3% above the 2019 level, but that increase is still 4 times the pre-pandemic 1.2% increase from 2018 to 2019. The 2021>2024 inflation surge has generated 90.2% of the total 26.5% (Now: 2nd highest) inflation since 2019.
  • Food at Home – Prices are up +0.7% from December, but the monthly YOY increase is 1.2%, down from 1.3% last month and radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.4% Inflation for this category since 2019 is 17% more than the national CPI and is in 3rd place behind Vet & Pet Food. 79.5% 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 0.7% from December and 0.5% vs January 2023. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 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, grew in Sep>Oct, fell in November, then grew sharply in Dec>Jan.
  • Veterinary Services – Prices are -0.1% from December, but they are +9.6% from 2023, again the highest rate in the Pet Industry. Plus, they are still the leader in the increase since 2019 with 36.5% compared to Pet Food, 26.5% and Groceries, 26.4%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & now 24, so 68% 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 1.0% from December and after 8 straight months of deflation are now +0.6% vs last year. Medical Services are not a big part of the current surge as only 42% of the 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. January 24 prices surged, +5.6% from December and were +4.8% vs last year, a big change from +0.7% last month, but well below the 8.0% back in March. Now, 77% of their total 2019>24 inflation has occurred since 2021. Last month it was only 49%.
  • Haircuts/Other Personal Services – Prices are +0.7% from December and +4.2% from 23, after 2 consecutive months below 4.0%. Inflation has been rather consistent as 59% of the inflation from 19>23 happened in 60% of the time.
  • Total Pet– Petflation is 56% lower than the 22>23 rate, but still 1.5 times the U.S. CPI. For January, +4.7% is the 4th highest rate since 1997 (2023: 10.6%; 2009: 10.3%; 2008: 5.2%). Vs December, prices fell -0.1% for Pet Food & Veterinary Services but grew strongly in Non-Vet Services, +5.6% and Supplies, +0.7% so Total Pet was +0.4%. A Dec>Jan price increase has happened 9 straight times and in 25 of the last 27 years with an average lift of 0.4%. In terms of Petflation, 2024 started just as we should have expected. Veterinary & Food are still the Petflation leaders, but all segments have an influence. Pet Food has largely been immune to inflation as Pet Parents are used to paying a lot, but inflation can reduce purchase frequency in the other segments.

Petflation is slowing, but it is still strong, with the 4th highest rate for January and 2023 had the 2nd highest annual rate in history. It is also 1.5 times the National CPI. In 2021 it was only 75% of that rate. Even if it slows to 0%, you can’t ignore the fact that inflation is cumulative. Pet prices are 20.9% above 2021 and 26.1% higher than 2019. Those are big lifts. Since price/value is the biggest driver in consumer spending it is likely to affect the Pet Industry. The Non-Vet Services segment will be the least impacted as it is the most driven by high income CUs. Supplies and Veterinary will likely see a reduction in purchase frequency. Food is the most needed segment so the response will be complex. It could include a movement to online shopping, switching to private label or even downgrading the quality of food.

In fact, one impact of high cumulative inflation will be very visible soon at the industry’s preeminent trade show, Global Pet Expo 2024. There are over 1100 exhibitors with 120+ actively soliciting OEM (Private Label) customers. Because many have expertise in OEM this private label trend has caused a record surge in Foreign Exhibitors, 36% of all booths including 250 from China. Inflation has further enhanced  the importance of “Value” to consumers.

2022 Veterinary Spending was $29.71B – Where did it come from…?

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Now we will turn to the final Industry Segment, Veterinary Services. For years, Veterinary Services have had high inflation. This has resulted in CU income becoming the dominant factor in spending and a reduction in visit frequency.

In 2017 low inflation spurred an unusual 7.2% increase in visit frequency and a $2.5B increase in spending. In 2018 inflation returned to more normal levels. Consumers spent $0.56B more (+2.7%), but inflation was 2.6% so virtually all of the lift was from increased prices. In 2019 the situation got worse. Consumers spent $0.58B (+2.7%) more but inflation was 4.14%. This means that there was an actual decrease in the amount of Veterinary Services purchased. In 2020 the pandemic hit, and Pet Parents focused on needs – Food & Veterinary. Veterinary spending grew $3.05B, (+14.0%). In 2021, this behavior grew even stronger and produced a record $7.82B (+31.5%) increase. In 2022 inflation reached 8.8%. Spending fell -$2.95B (-9.0%) but the amount of Veterinary Services sold fell 16.4%. Pricing matters to almost everyone.

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2022 and the $2.95B decrease. The first chart details the biggest Veterinary spenders for each of 10 demographic categories. It shows their share of CU’s, share of Veterinary spending and their spending performance (Share of spending/share of CU’s). In terms of performance – 5 of 10 groups perform above 120%, 1 less than 2018>2021. This is currently 2 less than Supplies (7) and 1 less than Services (6) but 1 more than Food (4). This means that these big spenders are performing well but it also signals that there is still disparity between the best and worst performing demographics in this “needed” segment. Only the College Grads group is different from Total Pet and the categories are listed in the order that reflects their share of Total Pet $pending. Again, High Income is the most important factor in Spending.

  1. Race/Ethnic – White, not Hispanic (86.0%) up from 84.7%. This group accounts for the vast majority of spending in every segment and gained share in Vet $ in 2022. Their 128.0% performance is also up from 126.0% but they fell from #4 to #5 in importance in Veterinary Spending. Whites spent $2.2B less but African Americans (+$0.18B) and Asians (+$0.09B) spent more. Whites gained in share & performance because of a -$1.1B decrease by Hispanics.
  2. Housing – Homeowners (83.9%) up from 81.0% Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 128.9% performance rating is up from 125.2%, and they moved up to 4th from 5th place. All segments decreased spending but the biggest drop was by Renters, -$1.40B (-22.6%). This is produced the gains for Homeowners. However, we should note that Homeownership is still not nearly as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
  3. # in CU – 2+ people (79.8%) up from 79.7% This group, which is 69.0% of U.S. CUs, gained minimally in share and their performance grew from 114.7% to 115.7%. Their rank in terms of importance in Vet Spending stayed at #8. All sizes spent less. The gains happened because Singles had a slightly bigger % decrease (-9.7%) than 2+ CUs (-8.9%).
  4. Area – Suburban & Rural (70.9%) down from 73.0% Suburban CU’s are the biggest spenders in every segment. All areas spent less. The Big Suburbs had the biggest decrease, -$1.93B (-12.1%) while Center City was only down -2.3%. This drove the big decrease in share and caused their performance to fall substantially to 108.2%, from 113.2%.
  5. Education – College Grads (60.9%) down from 65.4%. Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Their performance also dropped from 138.1% to 130.3% and they fell from #2 to #3 in importance. In 2022, College grads spent -$3.27B less while those without at least a BA/BS spent $0.31B more. This lift was small but widespread as only HS Grads with some college spent less.
  6. Income – Over $70K (69.9%) down from 71.7% Their performance also fell significantly from 160.0% to 147.8% but higher income is still the most mportant factor in Veterinary spending. The only lifts were from $200K>, +$0.39B and $30>49K, +$0.04B. The biggest drops were $150>199K, -$1.51B and $70>99K, -$1.47B.
  7. # Earners – “Everyone Works” (67.7%) down from 68.6% Their Performance also fell from 121.0% to 116.1%. They dropped out of the 120+% club & fell from #6 to #7 in importance. All adults in the CU work. Only Single, No Earner CUs spent more. 2 Earners had the biggest $ drop, -$0.99B while 1 Earner, Singles had the biggest % drop, -15.8%.
  8. Occupation – All Wage & Salaried (65.9%) down from 66.4% and their performance decreased from 111.9% to 109.3%. Only Blue Collar Workers and Tech/Sls/Clerical spent more. The group lost share and performance primarily because of big drops by Mgrs/Professionals, -$1.47B and Service Workers, -$1.23B. Their perforrmance drop was also accelerated because they had 1.6 million more CUs than in 2021.
  9. CU Composition – Married Couples (62.5%) up from 60.9% Their performance also grew to 130.8% from 128.4% and they moved up to #2 from #3 in importance. Only 2 segments spent more – Married Couple with an Oldest Child 6>17, +$0.67B and Single Parents, +$0.25B. The biggest drop was by All Adult, Unmarried CUs, -$1.26B.
  10. Age – 35>64 (61.1%) down from 62.1% Their performance also fell from 118.7% to 117.1% but they moved up to 6th from 7th place in importance. Only 45>54, +$0.80B and 75>, +$0.18B spent more. The 2 biggest drops were 55>64, -$1.51B and 35>44, -$1.45B. These caused the group’s drops in share and performance.

Spending disparity fell in 6 categories and the average group performance was 123.2%, down from 125.7% in 2021. Spending became slightly more balanced. Notably, higher income & education became a little less important. Also, Married Couples reached #2 in iimportance. In 2020, they were #6.

Now, we’ll look at 2022’s best and worst performing Veterinary spending segments in each category.

Almost all of the best and worst performers are those that we would expect and there are only 4 that are different from 2021, down from 5 last year. This is 1 more than Services, but 1 less than Supplies and far fewer than the 11 in Food. Also, the average difference between Best & Worst was 88.8%, down from 94.4% in 2021.There was slightly less turmoil and spending disparity between segments in 2022. The changes from 2021 are “boxed”. We should note:

  • Income– The Winner & Loser are the same. The gap is 181.8% but 5.3% less than 2021.
  • Earners – This repeat winner and loser have the highest and lowest incomes. The gap narrowed by 23.2%.
  • Occupation – Service workers replaced Retirees at the bottom, but the gap was 3.5% smaller.
  • Age – The 45>54 yr-olds, the highest income group, replaced 55>64 at the top. The gap actually widened by 9.3%.
  • Race/Ethnic; Another set of expected repeats. The gap between winner and loser narrowed by 5.9%
  • Education; Housing; Area – These all had an expected repeat winner & loser, but the performance gap grew for all. Education: +1.8%; Housing: +14.3%; Area: +16.2%.
  • Region –Midwest replaced Northeast at the top. The South has now finished last for 7 years in a row, but the win/lose gap decreased by 15.2%. Also, for the second consecutive year, 2 regions performed at 100+%.
  • CU Composition – Married, Oldest child <6 replaced Single Parents at the bottom. The gap narrowed 33.6%.
  • # in CU – The same winner & loser but the gap widened by 10.7%. Only 2,3 & 4 people CUs perform above 100%.
  • Generation – No change again and the performance gap widened, but only by 1.6%.

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

We saw little turmoil in performance. That’s not true here. There were 3 repeats and 14 segments flipped from 1st to last or vice versa. Last year there were 8 repeats and 3 flips. There were 5 surprise winners – Blue Collar, <HS Grads, African Americans, No Earner, Singles & Center City. There were only 3 losers that weren’t a surprise – Northeast, Unmarried, 2+ Adults & Renters. ln 3 categories all segments spent less. In 2021, there were 9 where all spent more. Plus, in 2021, 93% of 96 demographic segments spent more. That fell to 23% in 2022.

  • Region – Both winner and loser flipped. This is 5 consecutive years of flips for the Northeast.
    • Winner – Midwest – Veterinary Spending: $7.62B; Up $1.16B (+18.0%)                               2021: Northeast
    • Loser – Northeast – Veterinary Spending: $4.88B; Down $2.64B (-35.1%)                           2021: Midwest
    • Comment – Only the Midwest increased spending. In 2021, all had double digit % increases.
  • Age – 55>64 flipped from 1st to last. 45>54 is a new winner.
    • Winner – 45>54 yrs – Veterinary Spending: $6.90B; Up $0.80B (+13.2%)                                2021: 55>64 yrs
    • Loser – 55>64 yrs – Veterinary Spending: $6.14B; Down $1.51B (-19.7%)                                2021: <25 yrs
    • Comment: Only 45>54 and 75> spent more. In 2021 all segments increased Veterinary spending. While 55>64 had the biggest individual decrease, 25>44 spending fell -$2.25B. In 2021 they spent $3.34B more, 44% of the record increase. Despite a slightly younger winner, spending skewed a little older in 2022.
  • CU Composition – This was the only category with no repeats or flips. The winner & loser are both new.
    • Winner – Married, Oldest Child 6>17 – Veterinary: $4.51B; Up $0.67B (+17.4%)              2021: Married, Couple Only
    • Loser – Unmarried, 2+ Adults – Veterinary: $4.29B; Down $1.26B (-22.7%)                       2021: Single Parents
    • Comment – Single Parents were the only group to spend less in 2021. In 2022, they were 1 of only 2 segments to spend more and it was a big lift, +41.1%. Married, Oldest Child <6 had the biggest % drop, -62.6%.
  • Generation – Millennials flipped to the bottom as Gen X replaced them on top.
    • Winner – Gen X – Veterinary: $9.73B; Up $0.46B (+4.6%)                                                        2021: Millennials
    • Loser – Millennials – Veterinary: $7.13B; Down $2.10B (-22.7%)                                           2021: Born <1946
    • Comments – Only Gen X and Gen Z had increases. 2022 was the year that Gen Z “got on board” in every aspect of Pet Parenting. They more than doubled their spending on Food & Services, spent 73% more on Supplies and had a +$0.32B (+80.9%) increase in Veterinary. Millennials had the biggest drop, but they are still up $1.1B from 2020.
  • Income – $200K> held on to the top spot while $150>199K replaced the low income $30>39K group at the bottom.
    • Winner – $200K> – Veterinary Spending: $6.72B; Up $0.39B (+6.2%)                                    2021: $200K>
    • Loser – $150>199K – Veterinary Spending: $3.43B; Down $1.51B (-30.5%)                          2021: $30>39K
    • Comment – In 2021, only the $30>39K group spent less. In 2022, 3 groups spent more – $30>39K, $40>49K and $200K>. Their increases were small and when you factor in 8.8% inflation, all groups bought a smaller amount.
  • Occupation – The winner and loser both flipped, producing 2 surprises.
    • Winner – Blue Collar – Vet Spending: $1.92B; Up $0.35B (+22.4%)                                      2021: Mgrs & Profess.
    • Loser – Mgrs & Professionals – Vet Spending: $10.67B; Down $1.47B (-12.1%)                 2021: Construction Workers
    • Comment – Tech/Sls/Cler and All Other/Unemployed also spent a little more. Service workers had the 2nd biggest $ decrease, -$1.23B, but the highest % drop, -31.3%. They had a $1.55B lift in 2021.
  • Education – <HS Grads flipped to the top while Adv. College degree replaced them at the bottom.
    • Winner – <HS Grads – Veterinary Spending: $0.62B; Up $0.25B (+66.5%)                             2021: BA/BS Degree
    • Loser – Adv. College Degree – Veterinary Spending: $8.06B; Down $1.69B (-17.4%)          2021: <HS Grads
    • Comment – In 2021, all Education levels spent more but the lift was very much skewed towards higher Education. In 2022, the situation reversed. College grads spent -$3.27B less. <College Grads only spent +$0.31B more but all segments in the group but HS Grads w/some college increased their Veterinary spending.
  • Race/Ethnic – The winner and loser flipped.
    • Winner – African Americans – Veterinary: $1.18B; Up $0.18B (+18.0%)                                2021: White, Not Hispanic
    • Loser – White, Not Hispanic – Veterinary: $25.55B; Down $2.10B (-7.6%)                           2021: African Americans
    • Comment– Asian Americans also spent more. In 2020 & 2021 all groups spent more. The 2 groups with the highest level of Pet ownership drove most of the 2019>21 increase and all of the 2022 decrease. The two groups with the lowest level of pet ownership have now spent more for 3 straight years. That’s encouraging.
  • # Earners – 2 Earners flipped from 1st to last and we have another surprise winner. No Earner, Singles.
    • Winner – No Earner, Single – Veterinary Spending: $2.44B; Up $0.02B (+0.9%)                   2021: 2 Earners
    • Loser – 2 Earners – Veterinary Spending: $12.20B; Down $0.99B (-7.5%)                              2021: 1 Earner, Single
    • Comment – No Earner, Singles had the only increase, and it was minuscule. The drops were pretty balanced across the segments. Except for 2 Earners, all CUs with 1+ earners had a drop between -$0.55B and -$0.68B.
  • # in CU – The winner and loser flipped again.
    • Winner – 3 People – Veterinary Spending: $4.89B; Down $0.12B (-2.5%)                               2021: 2 People
    • Loser – 2 People – Veterinary Spending: $11.93B; Down $1.24B (-9.4%)                                 2021: 3 People
    • Comment: In 2020 and 2021, all groups spent more. In 2022, all groups spent less. The $ drop by 2 People CUs was twice as big as #2, Singles. Most drops were small. Only 5+ CUs, -21.4% was over -10%.
  • Area Type – Another dual flip.
    • Winner – Center City – Veterinary Spending: $8.62B; Down $0.21B (-2.3%)                          2021: Suburbs 2500>
    • Loser – Suburbs 2500> – Veterinary Spending: $14.04B; Down $1.93B (-12.1%)                  2021: Center City
    • Comment – In 2020 and 2021 all groups spent more. In 2022, all spent less. Center City has now flipped for 3 straight years. The Suburbs 2500> have the biggest share of Vet $ and had a $4.4B lift in 2021. With the 2022 drop, they are still +$2.47B (+21.3%) from 2020.
  • Housing – Both Homeowners w/Mtges and Renters held onto their “usual” spots at the top and the bottom.
    • Winner – Homeowner w/Mtge – Veterinary: $16.90B; Down $0.66B (-3.8%)                        2021: Homeowner w/Mtge
    • Loser – Renter – Veterinary: $4.79B; Down $1.40B (-22.6%)                                                      2021: Renter
    • Comment – In 2021, all spent more and had an increase of at least $2B. In 2022, all spent less but Renters had the only drop over -$1B. From 2020>2022: Homeowners w/Mtges are +$2.84B (+20.1%); Homeowners w/o Mtges are +$1.43B (+21.7%); Renters are +$0.60B (+14.3%).

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 12 Demographic Categories. 2021 had a record lift but 2022 brought a $2.95B drop. The decrease brought little turmoil in performance as 88% held their position. However, the change in $ was a different story. Only 3 were the same as 2021 and 14 of 24 flipped from 1st to last or vice versa. However, the biggest difference was that in 2021, 93% of demographics spent more including 9 categories where all segments had increases. In 2022, only 23% spent more and there were 3 categories where all spent less. This made the “hidden gems” harder to find, but we did. Here are some segments that didn’t win but helped slow the drop in Veterinary spending. These groups don’t win an award, but they certainly deserve…

                                                                                                         HONORABLE MENTIONWith huge lifts in all segments, Gen Z “got on board” with all aspects of Pet Parenting. Because of strong family and financial pressures, Single Parents are often at the bottom in Pet spending. In 2022, they spent 54.1% more with lifts in all segments but Supplies, including a 41% increase in Vet Services. Asians have the highest income but the lowest percentage of Pet Parents. In 2022, they focused on services, with lifts in both Non-Vet & Veterinary Services. The 75+ group is also under tremendous financial pressure. Inflation caused them to dial back Food spending, but they had lifts in all other segments. Tech/Sls/Clerical workers are low profile. In 2022, they stood out with lifts in all but Supplies. Associates Degree also usually gets little notice, but 2022 was different. They increased spending in all segments.

Summary

2016 & 2017 produced a combined increase of $3.6B in Veterinary Spending as inflation moved to record low levels. In 2018 & 2019 a Baby Boomer Spending “Bust” impacted Food & Veterinary. Fortunately, Gen X and Millennials stepped up to produce a 2.7% increase in both years. In 2020 the pandemic focused Pet Parents on the needed segments. This drove a $3B increase in Veterinary $. Boomers & Millennials led the way, but the lift was widespread as 85% of demographic segments spent more. In 2021 the lift grew to a record $7.82B with 93% of all segments spending more including 9 categories where all segments had increases. In 2022, the “binge” was not repeated. Inflation also increased radically to 8.8% and spending fell -$2.95B (-9.0%). There was little turmoil in the best and worst performing demographics as only 3 were different from 2021. However, there was considerable turmoil in the segments with the biggest changes. Only 3 of 24 winners & losers were the same as 2021 and 14 flipped from 1st to last or vice versa. 77% of all demographics spent less and in 3 categories, all segments decreased spending.

The performance of big spending groups is very important in all industry segments. In Veterinary we identified 5 demographic categories with high performing (120+%) large groups. That is 1 less than 2021. It is also 1 more than Pet Food, but 1 less than Services and 2 less than Supplies. The big groups with a high performance level in Veterinary are:

  • Income: $70K> (147.8%) Performance increases with income but doesn’t reach 100+% until income reaches $100K
  • CU Composition: Married Couples (130.8%) Only Married Couples perform at 100+%. (All but those w/oldest child <6)
  • Education: College Grads (130.3%) Performance increases with education. All with an Associate’s Degree> are 100+%
  • Housing: Homeowners (128.9%) Only Homeowners w/Mtge perform above 100%.
  • Race/Ethnic: White, Not Hispanic (128.0%). Hispanics, African Americans & Asians only perform between 31% and 53%

Consumers have no control over Race/Ethnicity but can make decisions in the other categories. Income is still the most important factor. The others are important but essentially equal in performance – 128>131%. Although spending fell, it became slightly more balanced with the drop from 6 to 5 big groups performing over 120%. Another indication of this is that the average spending disparity between the best and worst performing segments dropped from 94.4% to 88.8%.

Another big concern is high inflation. In 2021 spending grew 31.5% in the pandemic surge. Inflation was high at 4.2% but 84% of the growth was real. In 2022 spending fell -9.0%. Inflation was 8.8% so the amount sold was really down -16.4%. Also 77% of 96 demographic segments spent less $ but if we factor inflation into the numbers, 91% actually bought less Veterinary Services. If high inflation continues it could have a major impact on Veterinary Spending.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of 4 people – a married couple with an oldest child over 18. They are 45>54 years old. They are White, but not of Hispanic origin. At least one of them has an Adv. College Degree and works as a Mgr/Professional. Their oldest child also works. Their total income is $200K>. They live in a small suburb, adjacent to a big city in the Midwest and are still paying off the mortgage on their home.

2022 Pet Services Spending was $12.36B – Where did it come from…?

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Next, we will look at Pet Services. It is still by far the smallest Segment, but like Supplies and Veterinary, it had a record increase in 2021. However, unlike them, there was no $ drop in 2022. The lift grew stronger, up $3.26 (+35.8%). After the great recession, Services’ annual spending slowly but steadily increased. During this time, the number of outlets offering Services strongly grew as brick ‘n mortar retailers looked for a way to combat the growing influence of online outlets. After all, you can buy products, but you can’t get your dog groomed on the Internet. This created a highly price competitive market for Pet Services. In 2017 there was a slight increase in visit frequency, but Pet Parents just paid less. This resulted in a 1.0% decrease in Services spending. In 2018 consumer behavior changed as a significant number decided to take advantage of the increased availability and convenience of Pet Services and spending literally took off, +$1.95B (+28.9%), the biggest increase in history. In 2019 Pet Parents, especially the younger ones, value shopped, and spending turned down $0.10B. In the 2020 pandemic Services outlets were often deemed nonessential and were subject to restrictions and closures which drove a huge drop in $. In 2021 things opened up again and Pet Parents came back to Services generating the biggest $ increase ever. The trend didn’t end in 2022. It accelerated with a new record increase.

Services spending is the most discretionary, but its reach is expanding. Let’s look deeper into the demographics.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2022 and the $3.26B increase. The first chart details the biggest Pet Services spenders for each of 10 demographic categories. It shows their share of CU’s, share of Services spending and their spending performance (Share of spending/share of CU’s). In order to better target the bulk of the spending we had to alter the groups in 3 categories – income, area & education. The performance level should also be noted as 6 of 10 groups have a performance level above 120%. This is 1 less than 2021 but the 2nd most for any segment only behind Supplies with 7. Veterinary and Total Pet have 5 and Food has only 4. This indicates that the disparity between the best and worst performing segments shrank a little in 2022, but it is still the highest of any segment. Income is still the biggest factor in Services Spending. The categories are presented in the order that reflects their share of Total Pet $ which highlights the differences of the 7 matching groups. For Services, the share ranking differences from Total Pet are small. The # of Earners and Occupation are more important in Services.

  1. Race/Ethnic – White, not Hispanic (84.9%) up from 84.6%. This big group accounts for most of the spending in all segments. Their performance grew from 125.9% to 126.3% and they moved up from 5th to 4th place in importance. All groups spent more. The Hispanics’ increase was below average which produced the gains in share & performance
  2. Housing – Homeowners (80.8%) up from 80.5%. Homeownership is a big factor in spending in all industry segments. Their performance fell from 124.5% to 124.1% but they moved up from #6 to #5 in importance. All segments spent more. Homeowners gained share because of more CUs. This and a big % lift by Renters made Performance drop.
  3. # in CU – 2+ people (80.0%) down from 82.2% Their performance also decreased from 118.3% to 116.0% but they moved up from #8 to #7 in importance. All sizes spent more. The drop in share and performance is due to a spectacular 52.5% increase by Singles while spending for 5+ CUs grew only +0.1%.
  4. Area – City/Suburbs >2500 (77.8%) down from 80.0% in share, and performance fell from 98.1% to 96.2%. Again they are the only group not earning its share of $pending. Services is an Urban Segment. All Areas spent more but Suburbs had the biggest lift, +$1.48B. Center City “lost” with a $0.83B, 27.1% increase. Areas <2500 were +53.1%.
  5. Education – College Grads (69.8%) down from 71.7%. Income generally increases with education so Services spending grows with increasing education. Performance fell from 151.5% to 149.3% but education stayed #2 in importance. Only HS Grads spent less but the <College group was +45.3% while College Grads were only +32.1%.
  6. Income – $100K> (64.2%) up from 63.3% This group’s performance rating is 193.6%, down from 211.4%. CU income is still by far the most important factor in increased Pet Services Spending. Only the $30>39K and $50> 69K income groups spent less, They gained in share but their performance fell. The biggest factor in this situation was a change in CU count. The number of CUs <$100K fell -4.2% while those $100K> increased by 11.1%.
  7. # Earners – “Everyone Works” (72.2%) down from 72.8%. All adults in the CU are employed. Income is important so a high market share is expected. Their performance dropped to 123.7% from 128.3% and they fell from #4 to #6 in importance. All CUs, with or without Earners spent more. Spending became slightly more balanced but again the big change was in # of CUs. The Everyone Works group grew by 2.5 million CUs causing the big performance drop.
  8. Occupation– All Wage & Salaried (70.3%) up from 67.6% and their performance rating increased from 114.0% to 116.5%. – #9 to #8. Only All Other/Unemployed spent less on Services in 2022. Managers & Professionals had the biggest increase, +$1.75B (+46.0%). Tech/Sls/Cler were up 25.7% but all other segments were up at least 38.9%. Spending within the group became a little more balanced. The Wage and Salary group had a 1.6 million increase in CUs which increased share but slowed the performance lift.
  9. CU Composition – Married Couples (63.6%) up from 63.3%. Married couples are a big share of $ and have 127+% performance in all segments. Their performance fell slightly to 133.1% from 133.6% but they stayed #3 in importance in Services spending. All CU types spent more. The biggest $ increase came from Married Couple Only, +$1.18B. The performance of the Married group fell because of a $0.85B, 52.5% increase by Singles.
  10. Age – 35>64 (60.0%) down from 63.9%. Their performance fell from 122.0% to 115.0%. They dropped out of the 120+% club and fell to 9th in importance. Only <25 spent less. 35>64 was up $1.60B, +27.5%. The other age groups spent $1.66B more, +50.6%. This produced the drop in share and the big decrease in performance.

We changed 3 of the groups for Services – Income, Area & Education, to better target the biggest spenders. We should also note that Income is still more important to spending in Services than in any other segment. Only Race/Ethnic and Occupation gained in both share and performance. Also, Services now has 6 groups performing at 120+%, down from 7 in 2021. Overall, in 2022 Services spending became slightly more demographically balanced.

Now, we’ll look at 2022’s best and worst performing Pet Services spending segments in each category.

Except for Area, the best & worst performers are not a surprise. There are 3 that are different from 2021, all in the best group, 7 less than last year. Area shows the continued move away from high population. Income is a big factor for almost all categories. Gen X is still on top, but spending shifted towards their older members, 45>54. The average difference between Best & Worst is 100.3%, the highest of any segment. However, it is better than 108.5% in 2021. Pet Services spending became slightly more balanced in 2022. Changes from 2021 are “boxed”. We should note:

  • Income is even more important to Pet Services. The $200K> group has its best performance in this segment.
  • # Earners – 3+ Earners replaced 2 Earners on top but No Earner, Singles stayed on the bottom. No Surprises.
  • Age – 45>54 is all Gen X and the highest income group. All groups from 35>74 performed at 100+%. 25>34 was close at 94.6%. The lowest performers were at both ends of the age spectrum.
  • Area – Services $ are still skewed towards population density. However, the performance of Rural areas has tripled from 2019 and Center City has been below 100% for 3 straight years.
  • CU Composition – Married, Couple Only barely edged out last year’s winner Married, Oldest child 6>17 – 142.8% to 142.5%. This was basically a tie. Single Parents remain firmly entrenched at the bottom.
  • Generation – Gen X retained the Top Spot and Gen Z stayed at the bottom. Both Boomers and Millennials earned their share with 103.6% performance. Born <1946 was next to last with 54.5%.

In Pet Services spending performance, income is still the major factor. Spending began skewing younger in 2018. They slipped a little in 2019 but they basically held their ground during the 2020 pandemic. In 2021, Boomers, Millennials and the younger Gen Xers got on board. In 2022, spending skewed a little towards the older Gen Xers – 45>54.

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

In this chart you immediately see the difference from last year. In 2022 you first notice stability. There were 13 repeats. In 2021 there were none. Also, no segments flipped from 1st to last or vice versa. In 2021 there were 13 flips. While 2021 brought a record increase, the lift in 2022 was even stronger and more widespread. In 9 categories all segments spent more compared to 5 in 2021. Also 93% of 96 demographic segments spent more, up from 90% In 2021. One thing is slightly worse. The biggest drop was -$0.12B. In 2021 it was only -$0.07B. 😊

Here are the specifics:

  • Race/Ethnic – Both the winner and loser are the same as 2021.
    • Winner – White, Not Hispanic – Services: $10.50B; Up $2.80B (+36.3%)                       2021: White, Not Hispanic
    • Loser – Asian – Services: $0.31B; Up $0.09B (+43.8%)                                                        2021: Asian
    • Comment– All segments spent more. Minorities were up $0.46B, +32.8%.
  • Housing – Both winner and loser are the same as 2021. All segments spent more.
    • Winner – Homeowner w/Mtge – Services: $7.01B; Up $1.82B (+35.2%)                          2021: Homeowner w/Mtge
    • Loser – Renter – Services: $2.37B; Up $0.60B (+34.1%)                                                       2021: Renter
    • Comment – Homeowners w/o Mtges had the biggest percentage increase, +39.0%.
  • Occupation – For the 3rd and last time, no change in winner and loser.
    • Winner–– Mgrs & Professionals – Pet Services Spending: $5.56B; Up $1.75B (+46.0%)         2021: Mgrs & Profess.
    • Loser – Blue Collar – Pet Services Spending: $0.44B; Up $0.14B (+48.9%)                                2021: Operators/Laborers
    • Comment – Self-Employed had the 2nd biggest $ lift and the highest % increase, +$0.47B (+60.1%)..
  • Area Type – Suburbs 2500> stayed on top while Center City replaced Rural at the bottom.
    • Winner – Suburbs 2500> – Pet Services Spending: $5.72B; Up $1.48B (+34.9%)                 2021: Suburbs 2500>
    • Loser – Center City – Pet Services Spending: $3.90B; Up $0.83B (+27.1%)                          2021: Areas <2500
    • Comment – Center City “lost” with an $0.83B increase. This shows how well the Services segment is doing.
  • # in CU – 2 People won again but 5+ People is a new loser.
    • Winner – 2 People – Pet Services Spending: $5.15B; Up $1.40B (+37.3%)                         2021: 2 People
    • Loser – 5+ People – Pet Services Spending: $1.01B; Up $0.001B (+0.1%)                          2021: 3 People
    • Comment: All segments spent more. The 2 People lift was primarily driven by the Married Couple Only segment.
  • Education – College Degree returned as #1. HS Grads replaced those with no HS Diploma at the bottom.
    • Winner – Adv. College Degree – Pet Services Spending: $4.77B; Up $1.32B (+38.1%)              2021: Adv. College Degree
    • Loser – HS Grads – Services Spending: $0.47B; Down $0.12B (-20.5%)                                       2021: <HS Grads
    • Comment – Only HS Grads spent less. College Grads have 46.7% of CUs but generated 64.3% of the increase. However, those with an Associate’s degree more than doubled their spending, +$0.81B (+116.3%).
  • # Earners– 2 Earners held their spot at the top while No Earner, 2+ CUs replaced No Earner, Singles at the bottom.
    • Winner – 2 Earners – Pet Services Spending: $5.49B; Up $1.22B (+28.7%)                                  2021: 2 Earners
    • Loser – No Earner, 2+ CU – Pet Services Spending: $0.82B; Up $0.15B (+21.9%)                      2021: No Earner, Single
    • Comment – All segments spent more. The biggest % lifts were in Singles – 1 Earner: +52.9%; No Earner: +51.6%
  • CU Composition – Married, Couple Only stayed on top. Single Parents were a new loser.
    • Winner – Married, Couple Only – Services: $3.80B; Up $1.19B (+45.5%)                       2021: Married, Couple Only
    • Loser – Single Parents – Services: $0.27B; Up $0.02B (+6.0%)                                           2021: Married, Oldest Child <6
    • Comment – All groups spent more. Last year only Married, Oldest Child <6 spent less. This year they spent 33.9% more. Single Parents don’t spend much on Services. They spent 6% more, slightly less than the 6.3% inflation rate
  • Region – Both the winner, Midwest, and loser, Northeast, are new.
    • Winner – Midwest – Pet Services Spending: $2.82B; Up $1.17B (+71.5%)                            2021: West
    • Loser – Northeast – Pet Services Spending: $1.90B; Up $0.14B (+7.8%)                              2021: South
    • Comment – In 2020 all Regions spent less. In 2021 & 2022, all spent more. The South finished a close 2nd, +$1.15B
  • Generation – Boomers won again but the youngsters, Gen Z, replaced the oldsters, Born <1946, at the bottom.
    • Winner – Baby Boomers – Services: $4.15B; Up $1.10B (+35.9%)                                        2021: Baby Boomers
    • Loser – Gen Z – Services: $0.27B; Up $0.16B (+143.5%)                                                          2021: Born <1946
    • Comment – In 2021, only Gen Z and those Born <1946 spent less. In 2022, all generations spent more, but the strongest lifts again came from Boomers (+$1.10B), Millennials (+$1.00B) and Gen X (+$0.74B).
  • Income – $200K> won again but $30>39K replaced $40>49K at the bottom.
    • Winner – $200K> – Pet Services Spending: $3.66B; Up $1.07B (+41.6%)                           2021: $200K>
    • Loser – $30 to $39K – Pet Services Spending: $0.37B; Down $0.04B (-9.4%)                   2021: $40 to $49K
    • Comment – The $50>69K group also spent-$0.02B less but <$30K spent 30% more and $40>49K doubled their spending. All income groups over $70K had 31+% increases, led by $70>99K at +60.9%.
  • Age – Both winner and loser are new.
    • Winner – 65>74 yrs – Pet Services Spending: $2.20B; Up $0.83B (+61.1%)                        2021: 35>44 yrs
    • Loser – <25 yrs – Pet Services Spending: $0.17B; Down $0.02B (-8.4%)                            2021: 45>54 yrs
    • Comment: In 2021, only the high-income 45>54 yr-olds spent less. In 2022 only the low income <25 group had a drop in spending. The lift skewed a little older, but it was actually pretty balanced among big age ranges. 25>44 was up +$0.90B; 45>64 was +$1.24B; 65> was +$1.13B.

We’ve seen the winners and losers in terms of change in Services Spending $ for 12 Demographic Categories. The lift set another new record and was even more widespread than 2021. Here’s some data which shows the evolution from 2018 to 2022. Services were hit hard by the pandemic but recovered stronger than ever with 2 record lifts. They were the only segment to do this which reflects an attitudinal change by Pet Parents. You see the differences in the big swings.

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

HONORABLE MENTION

As usual this group is an eclectic mix. The Associate’s degree group immediately stands out as they more than doubled their Services’ spending. While spending skewed a little older, it also became a little more balanced among age groups which is shown by the strong performances of 25>34 yr-olds and those Born <1946. The Self-Employed group is often a winner, so they are no surprise. Their big lift didn’t happen until 2022 but their Services spending has generally grown every year, including aa 24% increase in 2020. Singles are often at the bottom in spending. They too had a small, 8% increase in spending in 2021 and followed it up with a 52% lift in 2022. Finally, the $70>99K group. Their income is below average and they have big CUs. However, they still managed to have a huge 60.9% lift in spending. In 2022, 93% of all segments increased Services spending. That means that we could have added many more to this honored group.

Summary

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

In 2020, pandemic Services outlets were often deemed nonessential, so they were subject to restrictions and closures. Services are definitely needed by some groups. However, for most demographics, Services are a convenience and spending is very discretionary in nature. The reduced availability and the pandemic driven focus on the “needed” segments – Food and Veterinary caused a 20% drop in Services $.

In 2021 the Retail Marketplace opened up again and many Pet Parents strongly returned to their previous Services mantra, “I need help with my Pet “children” and I have the money to pay for it!”. This behavior was widespread as 90% of all demographics spent more on Services, producing a record increase. In 2022 Services showed that it was different from other segments. All had record lifts related to the Pandemic followed by drops, except for Services. 2022 spending didn’t decrease, it grew even stronger, +$3.26B and more widespread as 93% of demographics increased spending. However, Services is the segment where spending is the most driven by income, so it has always had a big disparity between segments. This improved slightly in 2022. Performance differences are a key measurement of disparity. Let’s consider the performance of the big groups. There were 6 categories with a 120+% performing big group, down 1 from 2021, and now 1 less than Supplies (7) but more than Veterinary (5) and Food (4). There is an even better measure of the improvement. In 2021, the average difference between best & worst performers was 108.5%. In 2022 it was 100.3%.

Another key trend in 2022 was that Gen X & Boomers are still the top 2 spenders, but their older members drove the lift.

Services were hit the hardest by the pandemic in 2020 but they had a record, widespread recovery in 2021. They are the segment most driven by high income so the 6.3%  inflation in 2022 had less of an impact. It affected the spending of some specific, financially challenged groups, but the 2022 lift was even bigger and more widespread than 2021.

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 2 people – a married couple with no kids at home. They are 45>54 yrs-old and White, but not of Hispanic origin. They both work and at least one of them has an Advanced College Degree and is a Manager or Professional. They have an income of over $200K. They live in a small suburb of a metropolitan area of 2.5>5 MM in the Western U.S. and are still paying off their home mortgage.

 

2022 Pet Supplies Spending was $21.94B – Where did it come from…?

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Next, we’ll turn our attention to Pets and Supplies. We’ll see definite differences from Pet Food as the spending in the Supplies segment is more discretionary. There are other factors too. Spending can be affected by the spending behavior in other segments as consumers often trade $ between segments. However, the biggest factor is price. Many categories have become commoditized so pricing changes can strongly impact Consumers’ buying behavior. In the 2nd half of 2016, deflation began, and Supplies started a 24 month spending lift, totaling $5B. Prices turned up in mid-2018 due to new tariffs and Supplies $ fell a record -$3B in 2019. In the 2020 pandemic, Supplies weren’t a necessity, so sales continued to drop, -$1.7B. In 2021, Pet Parents caught up with their children’s needs and Supplies spending exploded, +$8.65B. In 2022, the “binge buy” was not repeated and inflation was high. Spending fell -$1.86B, -7.8% to $21.94B.

Let’s see which groups were most responsible for the bulk of Pet Supplies spending in 2022 and the $1.86B decrease. The first chart details the biggest pet supplies spenders for each of 10 demographic categories. It shows their share of CU’s, share of Supplies spending and their spending performance (Share of spending/share of CU’s). All groups are the same as Total Pet and are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. The biggest difference is in performance. There are 7 groups with performance of 120% or more, the most of any segment. That’s 2 more than Total Pet and 3 more than Pet Food. It’s also 1 more than 2021 which indicates that Supplies spending became less balanced in terms of the big groups in 2022.

  1. Race/Ethnic – White, not Hispanic (81.5%) down from 83.2%. This large group accounts for the vast majority of spending in every segment. Their share decreased and their performance fell from 123.9% to 121.2% but they moved up from #6 to #4 in importance in Supplies Spending. Minority groups account for 32.8% of all CUs but spend only 18.5% of Supplies $. This is actually their biggest share of any segment. Only African Americans spent more.
  2. Housing – Homeowners (78.8%) up from 76.9%. Homeownership is a big factor in pet ownership and spending in all segments. Their performance grew to 121.0%, from 118.9% and they joined the 120% club at #5 in importance in Supplies spending, up from #8 in 2021. Only Homeowners w/o a Mortgage spent more on Supplies in 2022.
  3. # in CU – 2+ people (83.3%) the same as 2021 but their performance increased to 120.8%, from 119.8%. Only 3 People CUs spent more, +$0.44B and $4+ People CUs were down -$1.93B. Performance was aided by a drop in CUs.
  4. Area – Suburban & Rural (70.3%) down from 76.0%. A big drop in share and their performance fell to 107.3%, from 117.8% in 2021. They’re now last in importance. The big Suburbs, over 2500 population were the only segment to spend less, but the decrease was substantial, -$2.74B. The Areas <2500 Population spent a little more, +$0.08B (+1.5%) but Center City had double digit percentage growth, +$0.80B (+14.0%).
  5. Education – Associate’s Degree> (72.0%) down from 76.1%. This expanded group lost market share in 2022 and their performance level also decreased from 131.9% to 124.8%. Higher Education fell from 2nd to 3rd in importance. The drop was driven by College Grads, especially those with Advanced Degrees, who spent -$2.99B less. There was a clear spending divide. College Grads spent less while all groups with less than a BA/BS spent more. Those with an Associate’s Degree had the biggest lift, +$1.18 (+63.6%).
  6. Income Over $70K (71.0%) up from (68.4%) A gain in share but their performance fell from 152.7% to 150.2%. Income remains the most important factor in increased Pet Supplies Spending. Both <$70K and $70K> spent less. However, all segments from $70K to $199K spent more while $200K> spent -$2.68B less. The <$70K group had a different pattern. The $40>49K group spent $0.23B more but all other groups spent less. Of Note: All incomes over $70K perform above 100% with an average of 150.2%. Those <$70K have a performance average of 55.0%.
  7. # Earners – “Everyone Works” (69.7%) down from 73.4%. Their performance fell from 129.5% to 119.5% and they dropped from #4 to #7 in importance. In this group, all adults in the CU work. The # Earners is more important than in Food but it is income that truly matters. The results were mixed. No Earner, Singles, 1 Earner, 2+ CUs & 3+ Earners spent more. All other segments spent less, especially 2 Earners. Only CUs with 2+ earners perform above 100%.
  8. Occupation – All Wage & Salary Earners (68.7%) up from 60.9%. Their performance was 114.0%, up from 102.6%. Tech/Sls/Cler had the only decrease in the group. Mgrs/Prof were +$0.58B. The gain in share and performance was largely due to a small spending lift by the group, while All Other/Unemployed & Self-Employed spent a lot less.
  9. CU Composition – Married Couples (60.7%) down from 62.0%. Their performance also decreased from 130.8% to 127.1% but they moved up from 3rd to 2nd in importance. Married, Oldest Child 18> had the biggest lift, +$1.17B but Married, Couples Only & those with additional Adults also spent more. Married, Oldest Child 6>17 had the biggest drop , down -$2.77B but all other CU types with or without kids spent less..
  10. Age – 35>64 (61.8%) down from 66.3%. Their performance level decreased to 118.6% from 126.6%. They fell from #5 to #8 in importance and dropped out of the 120% club. Only the 25>44 yr-old groups spent less. All others spent more. A -$2.81B decrease in spending by 35>44 yr-olds caused the big drop in share and performance. The biggest lift was only +$0.42B by 45>54 yr-olds. Supplies spending skewed a little older in 2022.

Pet Supplies spending still skews more towards younger and higher income CUs than Food. However, the biggest difference may be in the spending disparity in segments within the big groups. Supplies now has 7 big groups with perfomance of at least 120%. That’s up from 6 in 2021 and 5 in 2020. It’s also almost twice as many as the 4 in Pet Food.

Now, we’ll look at 2022’s best and worst performing Pet Supplies spending segments in each category.

Almost all of the best and worst performers are those that we would expect. There are truly no big surprises. In Pet Supplies spending, there are only 5 that are different from 2021, up from 4 last year. That is 2 more than Veterinary & Services but 2 less than Total Pet and 6 less than Pet Food. They are also tied with Total Pet & Food for the most new winners – 4. In 2021, Supplies had the fewest changes and new winners. In terms of disparity, the difference between the avg winner & loser was 87.5%, down radically from 123.6% in 21. Changes from 2021 are “boxed”. We should note:

  • Income matters in Supplies spending.
    • Like Pet Food, the $150>199K> group was the top performer. They replaced $200K> which is the top performer in both Service Segments and Total Pet. BTW: It is #2 in Food & Supplies so $150K> is #1 for all.
  • # Earners – 3+ Earners replaced 2 Earners at the top but again, only these 2 groups performed above 100%.
  • Age – 45>54 traded places with 35>44 for the win. However, 35>44, 116.7% barely edged out 55>64, 116.1% for 2nd place. The 35>54 groups are mostly Gen Xers. Gen X “rules” in Supplies spending.
  • Region – The West won again but the Midwest also performed over 100%. The Northeast replaced the South at the bottom. However, the performance disparity from 1st to last fell from 103% in 2021 to 41% in 2022.
  • CU Composition – Married, Oldest Child 18> replaced Oldest Child 6>17 at the top while Singles held their spot at the bottom. In 2022, all Married CUs – with or without children, performed over 100%.

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

In 2019, Tarifflation caused a record $2.98B drop in Supplies spending. 2020 brought the pandemic and pet parents focused on “needs” so the more discretionary Supplies segment fell another $1.65B. In 2021 Pet Parents caught up on  the Supplies needed by their “children” and spent a record $8.65B more. In 2022, the binge wasn’t repeated so the $ fell -$1.86B. In the chart, there is only 1 repeat from 2021, but 5 segments switched from last to 1st  and 10 flipped from 1st to last. This is a lot of turmoil. 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 but no category was all positive. Here are the specifics:

  • Income – $150>199K took the top spot as $200K> flipped from 1st to last.
    • Winner – $150>199K – Pet Supplies Spending: $3.64B; Up +$1.30B (+55.3%)                            2021: $200K>
    • Loser – $200K> – Pet Supplies Spending: $3.73B; Down -$2.68B (-41.9%)                                   2021: $40>49K
    • Comment – In the <$70K group, only the 2021 loser, $40>49K spent more. In the $70K> group, only the 2021 winner, $200K> spent less, but it was substantial , -$2.68B. Overall, in both the under/over $70K and the under/over $100K groups both higher & lower spent less but the lower incomes had the biggest drop.
  • Education – Associate’s Degree won while Advanced College Degrees flipped to the bottom.
    • Winner – Associate’s Degree – Supp. Spending: $3.03B; Up +$1.18B (+63.6%)                         2021: Adv College Degree
    • Loser – Adv. College Degree – Supplies Spending: $5.84B; Down $2.99B (-33.9%)                   2021: <HS Grad
    • Comment – The spending pattern was the opposite of what we expected. All College Grads spent less while all groups without a BA/BS spent more. The lift did increase with education, but peaked at an Associate’s degree.
  • CU Composition – Married, Oldest Child 18> finished on top while Married, Oldest Child 6>17 flipped from 1st to last.
    • Winner – Married, Oldest Child 18> – Supplies: $2.92B; Up $1.17B (+66.9%)                        2021: Married, Oldest Child 6>17
    • Loser – Married, Oldest Child 6>17 – Supplies: $3.13B; Down $2.77B (-46.9%)                     2021: Married, + Other Adults
    • Comment – Only Married, Couples Only, Married, plus Adults, but no Kids & those with a Child 18> spent more. Overall, CUs w/kids spent -$1.79B less while those w/o kids were only down -$0.07B.
  • Region – The South won while the West flipped from 1st to last.
    • Winner – South – Pet Supplies Spending: $7.65B; Up $1.12B (+17.2%)                                  2021: West
    • Loser – West – Pet Supplies Spending: $5.98B; Down -$3.41B (-36.3%)                                 2021: Northeast
    • Comment – In 2018, all regions spent more on Supplies. In 2019 and 2020 all Regions spent less. In 2021, like 2018 all regions spent more. In 2022 spending was divided. The South and Midwest each spent over $1B more while the West (-$3.41B) and the Northeast (-$0.63B) spent less.
  • Area Type– Center City and the Big Suburbs swapped places.
    • Winner – Center City – Pet Supplies Spending: $6.51B; Up +$0.80B (+14.0%)                           2021: Suburbs 2500>
    • Loser – Suburbs 2500> – Pet Supplies Spending: $9.84B; Down -$2.74B (-21.8%)                    2021: Center City
    • Comment– The Areas <2500 Population also spent a little more, +$0.08B. The Big Suburbs had the only decrease.
  • Housing – The winner and loser flipped positions.
    • Winner – Homeowner w/o Mtge – Supplies: $5.58B; Up +$0.58B (+11.7%)                               2021: Homeowner w/Mtge
    • Loser – Homeowner w/Mtge – Supplies: $11.71B; Down -$1.61B (-12.1%)                                2021: Homeowner w/o Mtge
    • Comment – Last year’s loser “lost” with a 45.7% increase. In 2022 they won with a lift of 11.7%. Homeowners w/Mtges had the biggest decrease, but Renters also spent less, -$0.83B (-15.2%).
  • Occupation – Managers & Professionals held their spot at the top and Tech/Sls/Clerical finished last.
    • Winner – Managers & Professionals – Supplies Spending: $8.37B; Up +$0.58B (+7.4%)            2021: Mgrs/Profess.
    • Loser – Tech/Sls/Cler – Supplies Spending: $2.82B; Down -$0.67B (-19.2%)                                  2021: Operators & Laborers
    • Comment – Managers & Professionals are the only segment that spent more in 2020, 2021 & 2022. In 2021 all Occupations, including Retirees, spent more on Supplies. In 2022, only Tech/Sls/Clerical, Self-Employed and All Other/Unemployed spent less.
  • # Earners – 2 Earners flipped to the bottom.
    • Winner – 1 Earner, 2+ CU – Pet Supplies Spending: $4.02B; Up +$0.57B (+16.5%)                     2021: 2 Earners
    • Loser – 2 Earners – Pet Supplies Spending: $9.62B; Down -$2.15B (-18.3%)                                2021: No Earner, Single
    • Comment – Income is a big factor, but the # of Earners became a little less important in Supplies Spending. The ups & downs were mixed with no clear pattern. No Earner, Singles, 1 Earner, 2+ CU and 3+ Earners spent more. 1 Earner, Singles, No Earner, 2+ CU and 2 Earners spent less. The big drop by 2 Earners drove Supplies $ down.
  • Race/Ethnic – White, Not Hispanic and African Americans swapped positions at the top and bottom.
    • Winner – African Americans – Supplies: $1.28B; Up +$0.53B (+70.2%)                                    2021: White, Not Hispanic
    • Loser – White, Not Hispanic – Supplies: $17.87B; Down -$1.94B (-9.8%)                                 2021: African Americans
    • Comment – Although their share of Pet Supplies $ has fallen from 86.3% in 2018 to 81.1% in 2022, White, Not Hispanics still drive this discretionary segment. They have the highest % of pet ownership and the second highest income. The interaction of these two factors is very apparent in this category. Whites had the biggest gain in 21 so they had the most to lose in 22 and they did. Only African Americans spent more but their lift was +70.2%.
  • # in CU – 3 People flipped from last to 1st but 5+ People was a new loser.
    • Winner – 3 People – Pet Supplies Spending: $3.71B; Up $0.44B (+13.5%)                              2021: 2 People
    • Loser – 5+ People – Pet Supplies Spending: $2.94B; Down -$1.45B (-33.1%)                         2021: 3 People
    • Comment: 5+ CUs more than doubled their spending in 2021 so a big drop was not unexpected. 3 People CUs were the only size to spend more in 2022. In 2021 all segments increased spending.
  • Age – 45>54 is a new winner but 35>44 flipped from 1st to last.
    • Winner – 45>54 yrs – Pet Supplies Spending: $4.57B; Up $0.42B (+10.0%)                                2021: 35>44 yrs
    • Loser – 35>44 yrs – Pet Supplies Spending: $4.35B; Down -$2.81B (-39.2%)                              2021: <25 yrs
    • Comment: Only the groups from 25>44 spent less and the drop by 25>34 was only -$0.06B. The lifts were widespread but small. The <25 & 75> groups were both up over 20% but their combined lift was only +$0.32B.
  • Generation – Our 4th dual flip as the youngsters stepped up.
    • Winner – Gen Z – Supplies: $0.87B; Up $0.37B (+73.4%)                                   2021: Gen X
    • Loser – Gen X – Supplies: $7.04B; Down -$2.36B (-25.1%)                                 2021: Gen Z
    • Comment – Gen X had the biggest drop but they’re still up $1.5B from 2020. Gen Z had the biggest increase, especially in percentage. Millennials, Boomers and Born <1946 all spent more but the biggest lift was only +2.3%.

We’ve now seen the winners and losers in Pet Supplies Spending $ for 12 Demographic Categories. In 2020, only 18 of 96 segments spent more and 1 category had no segments with an increase. In 2021, 93 segments spent more, and 9 categories had no segments that spent less. In 2022, despite the -$1.86B decrease, 52% of demographic segments spent more but there was no category where all segments were positive. In performance, there were no surprise winners and 8 of 12 were the same as 2021. All of the winners were either 1st or 2nd in CU income in their category, which reflects the importance of income in Supplies spending. However, not every good performer can be “the” winner and some of these “hidden” segments should be recognized for their performance. They don’t win an award, but they deserve…

HONORABLE MENTION

Supplies spending is driven by income, but Pet Parenting is widespread. This is very apparent in the strong performance of these segments. All have below average incomes, with many at or near the bottom in their category. Their spending increases were even more impressive because 2022 was a year of strong inflation. The <HS Grad group spends the least on Supplies in the Education category, The Midwest finished 2nd to the South but they only “lost” by $0.06B and had the biggest % increase. The $40>49K group had the only spending increase by any income segment below $70K. The 75> group obviously has many financial and health concerns, but they are still committed Pet Parents. This is very evident by their 21.8% spending increase in this more discretionary segment. Married couples with children spend the most on Supplies but kids are not “required”. Married couples with additional adults, but no kids had the 2nd biggest $ and %  increases of any CU composition segment. Finally, Service Workers. These low income “pink” collar workers make up 12.5% of all CUs. In 2022, they increased Supplies spending by 21.3% and had the 2nd highest lift in $ in Occupations.

Summary

While Pet Food spending has shown a definite pattern, Pet Supplies have been on a roller coaster ride since 2009. Many Supplies categories have become commoditized and react strongly to changes in the CPI. Prices go up and spending goes down…and vice versa. Supplies spending has also been reactive to big spending changes in Food. Consumers spend more to upgrade their Food, so they spend less on Supplies – trading dollars. We saw this in 2015. In 2016 the situation reversed. Consumers value shopped for Food and spent some of the “saved” money on Supplies.

That brought us to 2017. Both Supplies and Food prices deflated while the inflation rate in both of the Services segments dropped to lows not seen in recent years. Value was the “word” and it was available across the market. Perhaps the biggest impact was that the upgrade to super premium Food significantly penetrated the market. This could have negatively impacted Supplies Spending, but it didn’t. Supplies’ spending increased in 93% of all demographic segments.

2018 started out as expected with a $1B increase in Supplies and a small lift in Food. Then the government got involved. In July the FDA issued a warning on grain free dog food and spending dropped over $2B. New tariffs were implemented on Supplies and spending flattened out then turned down -$0.01B in the 2nd half. The full retail impact of Tariffs hit home in 2019 when Supplies spending fell -$2.98B, affecting 97% of all demographic segments.

In 2020 The pandemic caused consumers to focus on needs. That resulted in big spending lifts for Food and Veterinary and big drops in Supplies and Services. Some good news was that Supplies spending became more balanced. The performance gap between best and worst narrowed by 10.25%.

In 2021 the overall Retail Market had strongly recovered but with no replication of the 2020 buying binge, Pet Food $ dropped. In Supplies, the pent-up buying desires of Pet Parents were unleashed. They bought all the Supplies items that had been on purchase “hold” for the last 2 years. The result was the biggest spending increase in history.  In 2022, the buying binge was also not repeated, and inflation took off, so spending fell -$1.86B. However, 52% of 96 demographic segments still spent more on Supplies. The results were mixed. The biggest drop came from the $200K> group followed by the lowest income groups. Supplies spending is still strongly driven by income as the $70>199K segments spent more. This meant that <$70K generated 58% of the decrease. In terms of income, Supplies spending is still far from balanced.

Finally – The “Ultimate” Pet Supplies Spending CU consists of 5 people – a married couple, with an oldest child over 18. They are 45>54 yrs old. They are White, but not of Hispanic origin. They both work and at least one has an Advanced College Degree and is a Manager or Professional. Their oldest child also works, and their household income is $150>199K. They live in a small suburb in the Western U.S. and are still paying off the mortgage on their home.