Archive for category: Pet Market

Now we will look at the last and smallest segment – Pet Services. We’ll see some similarities to other segments, especially Veterinary. However we’ll also see some big differences from the Product Segments and even from Veterinary. Each of these industry segments is unique. For one thing, Services spending is definitely more discretionary in nature than the other segments. This has resulted in CU income becoming the most dominant factor in spending behavior. We’ll see the impact of this in many demographic categories. We have seen some big spending swings in the other Industry Segments in the last 2 years. Services Prices have also been inflating at a rate that is below Veterinary, but much higher than the product segments. Thus far, at least on the surface, neither of these factors has affected the consistent annual growth in spending $ that Services has enjoyed since 2011. Let’s look a little deeper.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2016 and the $0.58B 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 pet products spending and their spending performance (Share of spending/share of CU’s). The differences from the other segments are immediately apparent. In order to better target the bulk of the spending we had to alter the groups in four categories – income, education, age and occupation. The performance level should also be noted as 7 of 10 groups have a performance level above 120%. This compares to 8 for Veterinary, 5 for Supplies and only 4 for Food. These big spenders are performing well but it also indicates that there is a large disparity between the best and worst performing segments. Income is absolutely the biggest factor in Services Spending. The categories are presented in the order that reflects their share of Total Pet Spending which highlights the differences of the 6 matching categories.

1. Race/Ethnic – White, not Hispanic (86.8%) This large group accounts for the vast majority of spending in every segment. With a 124.3% performance rating, this category ranks #7 in terms of importance in Services Spending demographic characteristics. While Hispanics, African Americans and Asian American account for over 30% of U.S. CU’s, they only spend 13.2% of Services $. This is similar to their share of Food and Supplies – about 1% lower, but is 5% higher than their share of Veterinary Spending.
2. Housing – Homeowners (85.7%) Homeownership is a major factor in pet ownership and spending in all industry segments. The Homeowners’ share of Pet Services spending is 85.7% which is the highest of any industry segment. However, even with 137.3% performance, homeownership is only in 4th place in terms of importance for increased Pet Services spending.
3. # in CU – 2+ people (79.0%) The share of market for 2+ CU’s is very close for all segments. Their overall Pet Services performance of 112.4% is next to last. Spending is highest in 2>4 people CUs but drops off sharply for 5+ and singles.
4. Education – College Grads (69.8%) Income generally increases with education. Services spending moves up strongly with each increasing level of education. This is what led us to shift the group up to College Grads. A performance of 171.7% makes a college education the 2nd most important factor in generating greater Services
5. Occupation – “I’m the Boss” (69.2%) – The “ I’m the Boss” group consists of Mgrs & Professionals, Self-employed and retired CU’s. They have a slightly higher market share and a 30% higher performance than Total Wage & Salary earners. In fact their performance is 138.0% which puts them in 3^rd This “bossy” group combines the 2 highest income groups with the strong performing retired group.
6. Age – 45>74 (69.0%) Services Spending usually correlates with the 35>64 year olds, which includes the 3 highest income groups. However, this changed in 2016. The 35>44 group markedly increased their Veterinary spending and cut back on services. At the same time the 65>74 year olds decided to spend their money on needed services. The result was that the biggest spenders became the 45> 74 group. Their performance is 133.7% and ranks 6^th of all the groups. The number is so high because the performances of all groups under 44 and the over 75 group are very low.
7. # Earners – “Everyone Works” (67.4%) In this group, all adults in the CU are employed. Income is important so the relatively high market share is to be expected. However, their performance is 117.1%, which ranks only 8^th in importance. This comes as a result of the strong year by retirees. It also shows that retirees and 1 earner CU’s with 2+ people spend a lot of money on Services – 32.6% of Total $. This similar to the pattern in Supplies.
8. Income – Over $70K (66.7%) If we went down to the $50K income level, the market share would be 75.5%. However the $50>$69K income group only performs at 67.7%. Performance of CU’s in the $70>99K range goes up to 95.2% but it truly explodes over $100K – 232.2%. To get to the 60% market share goal we chose to group CU’s over $70K in income. This group has a performance rating of 180.2% and absolutely shows that CU income is the single most important factor in increased Pet Services Spending. However, we still have the spending anomalies of the overperforming, retired group and the underperforming, high income Asian Americans.
9. CU Composition – Married Couples (66.0%) Married couples are a big share of $ and have 120+% performance in all segments. Their performance of 135.8% puts them in 5th place in terms of importance to Services spending.
10. Area – Suburban (58.7%) Suburban CU’s spend the most $ but spending is balanced across all urban areas, including Central Cities. This is reflected by the low performance of 107.0% Rural areas are the only underperformers.

We changed 4 of the spending groups for Services to better target the biggest spenders. Higher income appears to be even more important to Services spending than it is to Veterinary, where we changed 2 groups. Services has 7 groups with performance over 120%. Veterinary has 8, but the performance levels in Services spending are markedly higher. This indicates an even  bigger spending disparity between the segments in Services than exists in Veterinary.

Now, we’ll look at 2016’s best and worst performing Pet Services spending segments in each category.

Most of the best and worst performers are not a surprise. In Pet Services spending, there are 7 that are different from 2015, the most of any segment. 4 of them are in the worst category. This is similar to the Veterinary Segment which is also very dependent on higher income for increased spending. As we drill deeper into the data, we will see some similarities with other Industry segments but each Segment is unique. Changes from 2015 are “boxed”. We should note:

• Income is even more important to Pet Services. The 425.8% Performance by the $200K> group is 30.9% better than their performance in Veterinary and 126.1% higher than what they rang up in Food.
• # Earners – 3+ Earners – Last year they spent money on a food upgrade. This year they saved money on Food and spent more on everything else. They edged out 2 Earner CUs for the top spot. These highest income groups were the only segments with 100+% Services performance in the category.
• Age – 55>64 – These Baby Boomers made a big turnaround in 2016. They were up 54% in spending and made a major commitment to Pet Services. It makes sense. They are getting older so their need for services is growing but they still have the third highest CU income in this category so they have the money to pay for it.
• Education – <HS Grad – In the Services segment, this is the expected loser. In 2016, HS Grads occupied this spot.
• CU Composition – Single Parents finished last. In 2016 it was singles. These groups are invariably at the bottom. Married, Oldest Child <6 had a 54.7% increase and replaced Married Couples Only who had a 146.9% performance.
• # in CU –Singles – In 2016 all 2>4 People CUs improved their performance. The 5+ people and Single segments both had a significant decrease. Singles edged out last year’s loser, 5+ people, for the worst performance.
• Region – In 2015 the Midwest finished second with 122%. In 2016, they were the only Region with a decrease in Services spending, down $0.56B (-34% ) This left the West as the only region with 100+% performance.

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

Pet Services was up $0.58B for the 2nd year in a row. Despite this consistency, there was turmoil. There were only 2 repeat losers and 1 repeat winner from 2015. Also, 8 of the winners in 2015 were losers in 2016, while only 3 losers became winners. In 3 categories they just switched positions. This seems somewhat unusual for a segment with steady growth. Also, like Supplies, there was 1 category where all segments spent more. Here are the specifics:

• Housing – In 2015, spending increased for all segments. In 2016 only Homeowners without a mortgage spent more.
  • Winner – Homeowner w/o Mtge – Services $: $2.25B; Up $0.78B (+53.5%)
    • 2015: Homeowner w/Mtge
  • Loser – Renter – Services $: $0.98B; Down $0.17B (-14.6%)
    • 2015: Renter
  • Comment – We see the impact of increased spending by the older groups and the decrease by the younger ones.
• Education – Education above HS does matter as the increase was driven by Associates’ and Advanced Degrees.
  • Winner – Adv. College Degree – Services $: $2.73B; Up $0.68B (+33.1%)
    • 2015: BA/BS Degree
  • Loser – BA/BS Degree – Services $: $2.04B; Down $0.25B (-10.9%)
    • 2015: HS Grad only
  • Comment – In 2015 College Grads, led by BA/BS holders fueled the increase. In 2016 the BA/BS group cut back on $ but the Advanced Degree segment more than made up the difference so College Grads are on top again.
• Age – In 2015, the 25>54 group drove spending up. In 2016 the increase came from 55>74 year olds.
  • Winner – 55>64 yrs – Services Spending: $1.89B; Up $0.66B (+54.0%)
    • 2015: 35>44yrs
  • Loser – 35>44 yrs – Services Spending: $0.9B; Down $0.29B (-24.6%)
    • 2015: 55>64 yrs
  • Comment: We see the impact of other categories and $. The big winners in 2015, the 25>44 group, changed their focus in 2016. The 25>34 yr olds spent more on Food and Veterinary. The 34>45 group turned to Veterinary and Supplies. Both now have more balanced pet spending. The 55>74 group began value shopping for Food in 2016 and spent a lot of the saved money on Services. Only the high income 45>54 group had an increase in both years.
• Area Type – Central Cities has two consecutive years of increases totaling $0.99B
  • Winner – Central City – Services Spending: $2.54B; Up $0.66B (+34.8%)
    • 2015: Suburbs 2500>
  • Loser – Suburbs 2500> – Services $: $3.28B; Down $0.16B (-4.5%)
    • 2015: Rural
  • Comment – The Suburbs 2500> didn’t have a good year. They spent less in Services and in fact, all pet segments.
• Region – All regions but the Midwest showed increases in 2016. In 2015 all regions showed growth.
  • Winner – West – Pet Services Spending: $2.36B; Up $0.55B (+30.5%)
    • 2015: Midwest
  • Loser – Midwest – Services Spending: $1.09B; Down $0.56B (-34.0%)
    • 2015: Northeast
  • Comment – The West is up $0.76B since 2014. Only the Midwest has a decrease from 2014, down $0.25B.
• Occupation – In 2015 the higher income jobs led the way. In 2016 it was the lower income jobs, plus self-employed.
  • Winner – Retired– Services Spending: $1.39B; Up $0.5B (+56.8%)
    • 2015: Mgrs. & Professionals
  • Loser – Mgrs. & Professionals – Services: $2.39B; Down $0.26B (-9.9%)
    • 2015: Retired
  • Comment – The Retired and Service worker groups had a huge turnaround from down $0.35B in 2015 to up $0.76B in 2016. The Mgrs and Tech worker groups went the other direction from up $0.82B to down $0.37B. All 4 groups are up from 2014. The Self-employed group is the only segment with increases in both 2015 and 2016.
• Race/Ethnic – The White, Non-Hispanics share of Supplies spending is 86.8% so even a 7.5% increase is a winner.
  • Winner – White, Not Hispanic – Services $: $5.93B; Up $0.41B (+7.5%)
    • 2015: White, Not Hispanic
  • Loser – African American – Services $: $0.24B; Up $0.02B (+11.3%)
    • 2015: African American
  • Comment – In 2016 all racial/ethnic groups spent more on Services. This is somewhat of a surprise in a segment which is so driven by income. The Asians had the biggest percentage increase at 29.1%. The African Americans finished last 2 years in a row but at least in 2016 it was for the lowest increase, not the biggest decrease.
• Income – 2016 was a year of mixed messages as the $30 to $49K group won – largely driven by the retirees.
  • Winner – $30 to $49K – Services Spending: $0.92B; Up $0.40B (+78.6%)
    • 2015: $150K>
  • Loser – $70 to $99K – Services $: $0.91B; Down $0.08B (-8.0%)
    • 2015: $70 to $99K
  • Comment – The 2 year drop from $70>99K reflects the changing spending behavior of the various demographic category segments which fall into this upper middle income group.
• # in CU – A big turnaround for the winner which reflects the spending of all Married Couples with children.
  • Winner – 4 People – Services Spending: $1.04B; Up $0.34B (+48.2%)
    • 2015: 1 Person
  • Loser – 1 Person – Services Spending: $1.43B; Down $0.21B (-12.8%)
    • 2015: 4 People
  • Comment: In 2016 2>4 people CU’s spent more. All others spent less. In 2015 the increase came from the 1>3 people CU’s as singles “stepped up”. Only the 5+ group spent less for 2 consecutive years. Financial pressures?
• # Earners – In 2016 every segment but 1 earner, singles spent more.
  • Winner – 2 Earners – Services Spending: $2.86B; Up $0.34B (+13.6%)
    • 2015: 1 Earner, Single
  • Loser – 1 Earner, Single – Services $: $0.93B; Down $0.29B (-23.9%)
    • 2015: 2+ in CU with 1 Earner
• Comment – In 2015 only CU’s where all adults worked spent more. In 2016, the retired folks and 2+ CU’s with only 1 earner also got on board the increase “Train”. Only the single workers were left at the station with a decrease.
• CU Composition – Every CU with 2 or more adults, with or without children spent more on Services in 2016.
  • Winner – Married Couple Only – Services: $2.17B; Up $0.17B (+8.4%)
    • 2015: Single
  • Loser – Single – Services $: $1.43B; Down $0.21B (-12.8%)
    • 2015: Unmarried, 2+ Adults
  • Comment – Increased Pet Services spending was very widespread across this demographic category. Only CU’s with single adults or single parents spent less.

We’ve now seen the winners and losers in terms of increase/decrease in Pet Services Spending $ for 11 Demographic Categories. Overall, 2016 was a year with much stronger and more widespread gains than losses. The winning increase in each category averaged +56% while the biggest decreases averaged -16%. We saw strong contributions from the 55 to 74 age group, the Central City and the West. The $0.58B increase matched 2015 and was the 5th consecutive increase, totaling $2.5B (+56.5%). Like the other Pet Segments, not every good performer can be “the” winner and some of these hidden segments should be recognized for their outstanding performance. They don’t win an award but they deserve…

Honorable Mention

Pet Services spending was up $0.58B in 2016. The increase was in tune with the segment’s performance since 2011. It was relatively demographically widespread as 49 of 82 segments (59.8%) spent more on Services. These “almost” winners reinforce the contributions of the older folks, families and Central Cities. We also see that you don’t have to have a big income or a Master’s Degree to buy Pet Services. These 5 segments aren’t award winners but their combined Services spending increase was significant at $1.31B.

Summary

In 2015 and 2016, significant changes in spending behavior for Pet Food first negatively affected, then positively affected spending in the Supplies and Veterinary segments. Through this turmoil, Services spending seemed unfazed, quietly registering a $0.58B increase in both years. The increase was relatively widespread with 60% of all demographic segments registering an increase. Also, all segments in the Racial/Ethnic category increased spending on Services

Pet Services are definitely needed by some groups. However, for most demographics, Services are a convenience and spending is very discretionary in nature. The result of this is that CU income is of paramount importance to increased Services spending. This impacts many demographic categories and we adjusted the big spender groups in 3 categories specifically to accommodate this difference in behavior and to better target where most of the $ are coming from. Just how important is income? 37% of CU’s have an income over $70K and account for 66.7% of Services Spending. This is a performance rating of 180.7% – the highest rating earned by any group in any category in any industry segment.

Performance is an important measurement. Let’s drill deeper into the performance of the big spenders in Pet Services. We identified 5 demographic categories with high performing large groups. (There were 6 for Veterinary and 3 for Food)

• Income
• Occupation
• Higher Education
• Homeownership
• CU Composition

The biggest producers in these groups all generate increased Services $ and all are categories in which the consumer can exercise some degree of control. The Racial/Ethnic and Age Categories also have high performance numbers but the consumer has no control over their inclusion in these groups. All 5 of these groups have a performance above 133%. This is incredibly high and indicates a huge disparity between the best and worst performing segments in the category. This disparity is greater in Services than in any other Industry segment. On the one hand this is good news as it makes it easier for industry participants to more effectively target their best customers. It also allows them to identify those demographic segments most in need of improvement. Unfortunately, these lowest performing groups may need considerable assistance.

There was definite turmoil in this income driven segment. There were 7 changes in the best and worst performing individual segments but the biggest changes showed up in $. 19 of 22 winners and losers in spending $ were different from 2015. In fact 8 2015 winners became losers in 2016, while 3 losers became winners. There were also some surprising winners, like the Retirees, Central City and the $30>49K income group. There were 2 major trends of note:

1. The “older” movement – The biggest increases came from the 55>74 age groups.
2. The Urbanization of the U.S. is reflected in Services with strong spending growth by Central City.

Finally – The “Ultimate” Pet Services Spending Consumer Unit consists of 2 people – a married couple, living alone now that their last child finally moved out. They are in the 55 to 64 age range. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. Both of them work, running their own business. They’re doing well with an income over $200K. They still live in a larger suburb, near a big city in the Western U.S. and are still paying off the mortgage on their home.

 

 

 

 

Next we’ll turn our attention to Pets and Supplies. We’ll see some differences from Pet Food as the spending in the Supplies segment is much more discretionary in nature. There are other factors too. Many product categories have become commoditized so pricing changes (CPI) can strongly impact Consumers’ buying behavior in this segment. Supplies’ Spending is also affected by the spending behavior in other segments. In 2015 Consumers spent $5.4B more on Pet Food. They helped pay for this by spending $2.1B less on supplies, primarily by purchasing 10% less frequently. In 2016, things turned around as Consumers value shopped for premium foods but spent $0.94B more on Supplies. This “lift” didn’t get the segment back to the $17B spent in 2014 but it was a good start in getting Supplies back on track.

Let’s see which groups were most responsible for the bulk of Pet Supplies spending in 2016 and the $0.94B lift. The first chart details the biggest pet supplies spenders for each of 10 demographic categories. It shows their share of CU’s, share of pet products spending and their spending performance (Share of spending/share of CU’s). Although their share of the Pet Supplies $ may be different from their share of the Total Pet $ or Food, all of the big spending groups are the same. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. In Pet Supplies spending, Homeowners have the lowest market share for any industry segment. However, the share of spending for Suburbanites is larger than for Food. All Pet Parents need supplies, regardless of their housing arrangement. However, if you have more space you have room for more supplies. Income is still the highest performing demographic characteristic and we’re back to 5 groups performing above 120%. Pet Food had only 4 as Education dropped out. Increased Education correlates with increased income and income is more important in supplies spending.

1. Race/Ethnic – White, not Hispanic (85.5%) This large group accounts for the vast majority of spending in every segment. With a 122.9% performance rating, this category ranks #3 in terms of importance in Pet Food Spending demographic characteristics. While Hispanics, African Americans and Asian American account for over 30% of U.S. CU’s, they only spend 14% of Pet Supplies $. Pet ownership is relatively high in Hispanic American households. However, it is significantly lower for African Americans and Asian Americans which is reflected in Supplies spending.
2. # in CU – 2+ people (81.2%) The share of market for 2+ CU’s is very close for all segments. Their overall Supplies performance of 114.6.1% is relatively high because singles perform so poorly. Although performance peaks in 3 People CU’s, it still remains relatively high in larger CU’s. It only falls below 100% in 5+ people CU’s and even then, it is 97.4%. In Supplies’ Spending, it definitely “just takes two.”
3. Housing – Homeowners (74.9%) Homeownership is a major factor in pet ownership and spending in all industry segments. However, with 120.0% performance, homeownership is in 5th place in terms of importance for increased pet Supplies spending. The Homeowners’ share of market fell only slightly from 75.4% in 2015. Although all segments in this category registered spending gains in Supplies in 2016, Renters gained a little ground as they had a slightly bigger percentage increase than all Homeowners.
4. Income – Over $50K (69.3%) With a performance rating of 138.6%, CU income is the single most important factor in increased Pet Supplies Spending. The increased discretionary nature of much of Supplies spending pushes the performance level slightly higher than that of Pet Food. However, it is still significantly below the Service Segments. Although they are not as pronounced as in the Food segment, we still have the same anomalies of retired Americans spending more on their pets than their income would suggest and the higher income, Asian Americans spending much less. However, Higher Income still generally generates Higher Pet Supplies Spending.
5. # Earners – “Everyone Works” (67.0%) In this group, all adults in the CU are employed. This group’s high share of Pet Supplies $ reinforces the importance of income in Supplies spending. Their performance is 116.4%, which is higher than Food but doesn’t reach the 120% level. In this case, it shows that CU’s with 2+ people and only one earner, along with retired people, still spend a lot of money on Supplies – 33% of Total $.
6. Age – 35>64 (64.2%) Traditionally Supplies Spending skews more towards the younger groups. The 35>64 group repeated their dominance from last year with a slightly higher market share, up from 62.3% in 2015. Their 118.5% performance level also improved from 114.6% and is approaching the 120% level. There was some turmoil in the category as the 25>34 age group cut back on Supplies to help “pay” for increased spending on Pet Food. However, the 65+ year olds stepped up their Supplies spending, which more than made up the difference.
7. Occupation – All Wage & Salary Earners (63.8%) – The market share and performance of this group, 104.6%, are very similar to those for food. The spending is definitely skewed towards the higher income, white collar workers. Also, the low performance shows that a lot of spending is being done by the Self-employed and retired groups.
8. Education – Associates Degree or Higher (63.1%) Income generally increases with education. We see the effect of this with a larger market share for this group than in Food and a radically improved performance level of 122.0%. This makes higher education the 4^th most important factor in generating greater Supplies
9. Area – Suburban (62.0%) Suburban CU’s are the biggest spenders in every segment. The fairly high performance of 113.0% reflects the lower share of Supplies $ in Central Cities and the truly Rural areas.
10. CU Composition – Married Couples (59.9%) Married couples are a big share of $ and have 120+% performance in all segments. Their performance of 123.2% puts them in 2nd place in terms of importance to Supplies spending.

The biggest spending groups for Pet Supplies are the same as those for Total Pet and Pet Food. However, the discretionary nature of Supplies causes spending to be more impacted by income than Food. Groups associated with higher income, like Education and # Earners, have higher performance than in Food. The numbers are actually close to those of Total Pet. Supplies also has 5 groups performing above 120%, which shows greater disparity between segments.

Now, we’ll look at 2016’s best and worst performing Pet Supplies spending segments in each category.

As usual, most of the best and worst performers are those that we would expect. In Pet Supplies spending, there are only 4 that are different from 2015. That is less change than the 6 in Pet Food but it is still 1 more than for Total Pet. As we move deeper into the data, we will start to see even more differences between the Industry Segments. Changes from 2015 are “boxed”. We should note:

• Income matters and is growing even more important. The 233.3% Performance by the $200K> group is 23.9% better than their performance in Food and 8.9% higher than last year.
  • Of Note: 8 of the 11 winners for best performance had the highest income of any segment in the category and the other 3 – White, not Hispanics, Suburbs <2500 population and 3 people Cu’s, were all second in income.
• CU Composition – This year’s winner is Married Couples with the oldest child between 6 and 17. This reflects the strong performance by the 45>54 age group as well as the improved performance of the 35>44 group. Both are almost all Gen Xers. This year’s lowest performer was singles. Last year it was single parents. Quite frankly, every year these two groups are invariably at or near the bottom in performance.
• # in CU –In 2015 there was a virtual tie in performance for all CU’s of 2 or more people. 2016 was different in that only 2 or 3 people CU’s had performance over 100% and the 3 people group finished on top. Singles are perennially the worst performers.
• Region – In 2015 the Midwest finished second with 103.6%. In 2016, they were the only Region with a decrease in $.

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

2016 was up $0.94B after a $2.1B drop in 2015 so there were a lot of changes. There are 2 repeat winners and 3 repeat losers. In 3 categories, last year’s loser was this year’s winner. In 1 category the winner and loser from 2015 switched positions. Retired persons were a surprise winner but the big news came from the Housing category where all segments had an increase. This occurred only one other time in 2016 – in Services: Racial/Ethnic Ctgy . Here are the specifics:

• Area Type – Central Cities has two consecutive years of increases totaling $1.36B
  • Winner – Central City – Supplies Spending: $4.84B; Up $0.92B (+23.4%)
    • 2015: Central City
  • Loser – Suburbs >2500 – Supplies Spending: $7.07B; Down $0.4B (-5.3%)
    • 2015: Rural
  • Comment – The larger Suburbs have the largest share of Supplies $, but they are now down $1.18B since 2014.
• Race/Ethnic – The White, Non-Hispanics share of Supplies spending is 85.8%. In 2015 they were down $2B.
  • Winner – White, Not Hispanic – Supplies: $13.58B; Up $0.81B (+6.3%)
    • 2015: Hispanic
  • Loser – Hispanic – Supplies: $1.34B; Down $0.003B (-0.2%)
    • 2015: White, Not Hispanic
  • Comment – Only Hispanics had increased Supplies spending in 2015. In 2016, they were the only group that spent less but it was a very small decrease – only $3M. The biggest concern is that the White, Non-Hispanic group is still down $1.2B from 2014.
• Age – In 2015, all age groups spent less on Supplies. In 2016 only 2 groups spent less – 25>34 and 55>64.
  • Winner – 35>44 yrs – Supplies Spending: $3.13B; Up $0.69B (+28.1%)
    • 2015: <25 yrs
  • Loser – 25>34 yrs – Supplies Spending: $2.11B; Down $0.56B (-21.0%)
    • 2015: 45>54 yrs
  • Comment: The 35>44 Gen Xers had the biggest increase while the 25>34 Millennials registered the only significant decrease. They spent a lot more on food so they cut back on supplies. Perhaps the biggest surprise was the $0.59B increase from the over 65 group.
• Occupation – In 2015, all but 1 group – Mgrs/Prof., spent less. In 2016, all but 1 group – self-employed, spent more.
  • Winner – Retired– Supplies Spending: $2.57B; Up $0.63B (+32.1%)
    • 2015: Mgrs. & Professionals
  • Loser – Self-employed– Supplies Spending: $1.50B; Down $0.22B (-12.7%)
    • 2015: Retired
  • Comment – The Retired group had a huge turnaround from down $0.35B in 2015 to up $0.63B in 2016. Unfortunately, they “paid” for it with a $1.35B decrease in Food spending. Perhaps, the best news was that every wage or salary earning occupation had an increase. This showed that the increase was very widespread.
• Income – In 2016, three income groups spent less on Supplies but that is better than 2015 when every group was down.
  • Winner – $200K> – Supplies Spending: $2.08B; Up $0.59B (+39.6%)
    • 2015: $100 to $149K
  • Loser – $150 to $199K – Supplies Spending: $1.25B; Down $0.31B (-20.1%)
    • 2015: $70 to $99K
  • Comment – The winner is no surprise. The surprise is that the combined $100>199K group was down $0.61B
• Region – The Northeast is a bit of a surprise. Their strong showing was driven by the Central Cities.
  • Winner – Northeast – Supplies Spending: $2.97B; Up $0.59B (+24.7%)
    • 2015: West
  • Loser – Midwest – Supplies Spending: $3.03B; Down $0.3B (-8.9%)
    • 2015: Midwest
  • Comment – The Midwest is down $1.7B (-36%) since 2014. They have fallen from best to worst in performance.
• # in CU – It’s simple. 2 and 3 people CU’s had the biggest increases with 3 people winning by only $0.02B.
  • Winner – 3 People – Supplies Spending: $3.12B; Up $0.55B (+21.4%)
    • 2015: 1 Person
  • Loser – 5+ People – Supplies Spending: $1.47B; Down $0.15B (-9.5%)
    • 2015: 5+ People
  • Comment: In 2015, singles were flat in spending while all other sizes spent less. In 2016, CU sizes from 1 to 3 people all posted increased Supplies spending while the CU’s with 4 or more people spent less.
• CU Composition – The winner correlates with the lift in spending from the 35>44 age group.
  • Winner – Married, Oldest child 6>17 – Supplies: $2.58B; Up $0.55B (+27.2%)
    • 2015: Unmarried, 2+ Adults
  • Loser – Married, Child >18 – Supplies: $1.48B; Down $0.13B (-8.2%)
    • 2015: Married, oldest child >18
  • Comment – Only Married Couples with an oldest child under 6 or over 18 and single parents spent less on supplies in 2016. All other CU composition segments spent more.
• Housing – All Housing segments spent more on Supplies in 2016.
  • Winner – Homeowner w/o Mtge – Supplies: $3.96B; Up $0.53B (+15.5%)
    • 2015: Renter
  • Loser – Homeowner w/Mtge – Supplies: $7.9B; Up $0.1B (+1.3%)
    • 2015: Homeowner w/o Mtge
  • Comment – With the Homeowners without a mortgage, we have another last to first position switch. Much of this segment’s spending was driven by the retired group.
• Education – A big change from last year when all education levels had reduced spending.
  • Winner – Adv. College Degree – Supplies Spending: $3.71B; Up $0.52B (+16.4%)
    • 2015: All College Grads
  • Loser – <High School Grad – Supplies Spending: $0.66B; Down $0.17B (-20.6%)
    • 2015: HS Grad or less
  • Comment – The Advanced Degree group spends the most per CU and had the biggest increase. Only those without a High School diploma and strangely, those with a BA/BS, spent less on Supplies.
• # Earners – In 2016 the “unlucky” number was 1. Only 1 earner CU’s, regardless of size, spent less on Supplies.
  • Winner – 2 Earners – Supplies Spending: $6.72B; Up $0.51B (+8.2%)
    • 2015: 2 Earners
  • Loser – 1 Earner, Single – Supplies Spending: $1.91B; Down $0.16B (-7.7%)
    • 2015: 2+ in CU with 1 Earner
  • Comment – Income is a factor, especially when discretionary spending produces financial pressures. 2 and 3 Earner CU’s spent substantially more as did the retired, No Earner CU’s. A 1 Earner CU has had the biggest decrease for 2 consecutive years.

We’ve now seen the winners and losers in terms of increase/decrease in Pet Supplies Spending $ for 11 Demographic Categories. Overall, 2016 was a year of moderate changes. The winning increase in each category was generally around $0.5B while the biggest decrease was usually in the $0.2 to $0.3B range. We saw strong contributions both from the Gen Xers and the over 65 age group. While the $0.94B increase did not gain back the $2.1B spending drop in 2015, it’s a good start. As we have noted before, not every good performer can be “the” winner and some of these “hidden” segments should be recognized for their outstanding performance. They don’t win an award but they deserve…

Honorable Mention

Pet Supplies spending was up $0.94B in 2016. While the increase was not huge, it was relatively demographically widespread as 53 of 82 segments (64.6%) spent more on Supplies. The “almost” winners in the chart reinforce the performance of both the older, retired Americans and the middle income group. We also see that you don’t have to have a College degree to buy Pet Supplies. These 5 segments didn’t win any awards but their combined Supplies spending increase totaled $2.57B. They made a difference.

Summary

In 2015 and 2016 we saw how significant changes in spending behavior in one Industry segment can impact the other segments. In 2015 a large group of consumers upgraded their Pet Food to Super Premium and spending took off – up $5.4B. However, in order to help pay for the upgrade, they cut their spending on Supplies (-$2.1B) and Veterinary ($0.5B). The $2.1B decrease resulted in a spending drop in Supplies in 74 of 82 Demographic segments (90%). It was pervasive. However, 2016 brought another change. Consumers began seriously price shopping for their high end Food, at retail and on the internet. They managed to save $2.99B and they used some of this savings to spend $0.94B more on Supplies and $1B more on Veterinary Services. Supplies didn’t come all the way back but it was a good start as almost 2/3 of the demographic segments increased spending in 2016.

Pet Supplies spending is more discretionary than Food but there are still many categories which are real needs for Pet Parents – dog collars and leads, cat litter, feeding bowls and even dog toys and chews, to name a few. Other categories like carriers, clothing and flea & tick items also become real needs under certain circumstances. The big difference between the Supply needs and Food needs is frequency of purchase. Overall, Pet Supplies are purchased less often than Pet Food and Treats but much more often than either of the Service Segments.

Although it is not an absolute necessity like Food, the spending behavior on Pet Supplies can also be a reflection of the percentage of pet ownership across a demographic category. The performance of the bulk of the spenders is also very important. We identified four demographic categories with high performing large groups. (There were 3 for Pet Food)

• Income
• Higher Education
• Homeownership
• CU Composition

Increased income, higher education, homeownership and being married all generate increased pet supplies spending and all are categories in which the consumer can exercise some degree of control. The disparity in performance of segments within these categories allows industry participants to more effectively target both their best customers as well as those most in need of improvement.

The Value shopping for Food caused considerable turmoil in that segment. The bounce back in Supplies was a little calmer and more evenly dispersed. There were only 4 changes in the best and worst performing individual segments. As usual the biggest changes showed up in $. There were some surprising winners, like the Northeast, Central Cities and Retirees. There were also 2 major trends of note:

1. The Age “split” – The biggest increases came from the 35>44 and the over 65 age groups.
2. The U.S. continues to Urbanize and our Pets are coming with us. Rent…Own… All Housing options work for pets.

Finally – The “Ultimate” Pet Supplies Spending Consumer Unit consists of 3 people – a married couple, with their 17 year old child. They are in the 45 to 54 age range. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. Both of them work, running their own business and their child just started a part time, after school job. They’re doing well with an income over $200K. They still live in a small suburb, adjacent to a big city in the Western U.S. and are still paying off the mortgage.

 

 

 

 

We looked at the Total Pet Spending for 2016 and its key demographic sources. Now it’s time to start drilling down into the data. We will ultimately look at each individual segment but the first stop in our journey of discovery will be Pet Products – Pet Food and Supplies. Taken as a total, this classification accounted for $42.34B (63%) of the $67.29 in Total Pet spending in 2016. This was down $2.05B (-4.5%) from the $44.39B that was spent in 2015. We have seen that this drop in spending came largely as a result of intense value shopping for premium foods. It’s also important to remember that although the products’ share of spending fell slightly from (65%) in 2015, Food and Supplies are the industry segments that are most familiar to consumers. They are stocked in over 200,000 U.S. retail outlets, including over 17,000 Vet Clinics, plus the internet. Every week over 20,000,000 U.S. households buy food and/or treats for their pet children.

Pet Food spending dropped by $2.99B in 2016 but at the same time spending on Pet Supplies spending increased by $0.94B. We’ll bundle them together and see where the bulk of Pet Products spending comes from?

We will proceed with the same methodology that we used in our Total Pet Analysis. First, we will look at Pet Products Spending in terms of 10 demographic categories to determine what groups are responsible for 60+% of the spending. Then we will look for the best and worst performing segments in each category and finally, the segments that generated the biggest dollar gains or losses in 2016.

The first chart details the biggest pet product spenders for each demographic category. It shows their share of CU’s, share of pet products spending and their spending performance (Share of spending/share of CU’s). Although their share of the total products $ may be different from their share of the Total Pet $, all of the big spending groups are the same. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. In Pet Products spending, higher education is less important while the wage and salary earners have a slightly higher share of the business. We should also note that, like Total Pet Spending, Income is the highest performing demographic characteristic. However, for Pet Products there are only 4 groups with a performance rating of over 120%. Total Pet had 5. This indicates that Pet Products spending is spread a little bit more evenly across the category segments.

1. Race/Ethnic – White, not Hispanic (85.5%) This is the largest group and accounts for the vast majority of spending in every segment. With a 122.5% performance rating, this category ranks #4 in terms of importance in Pet Products Spending demographic characteristics. While Hispanics, African Americans and Asian American account for over 30% of U.S. CU’s, they spend less than 15% of Pet Products $. Although pet ownership is relatively high in Hispanic American households, it is significantly lower for African Americans and Asian Americans.
2. # in CU – 2+ people (81.2%) The spending numbers for Pet Products are very close to those for Total Pet. If you put 2 people together pets very likely will follow. If you have a pet, you must spend money on food and supplies. Their overall performance of 115.5% is lower because performance decreases as the number of people in the CU increases. However, it is still relatively high at 85.5% for CU’s with 5 or more people. The key is “It just takes two.”
3. Housing – Homeowners (78.0%) Controlling your “own space” has long been the key to pet ownership, larger pet families and more pet spending. At 125.0% performance, homeownership ranks 3rd in terms of importance for increased pet products spending. Since Homeownership relates directly to pet ownership and spending, the lower homeownership rate for Millennials should be a concern for the future of the industry.
4. Income – Over $50K (68.1%) Pet Parenting is common in all income groups but money (income) does matter in spending behavior for all industry segments. With a performance rating of 136.2%, CU income is also the single most important factor in increased Pet Products Spending. We have the same anomalies of behavior as we had with Total Pet. Older Americans spend more on their pets than their income would suggest and the higher income, Asian Americans spend much less. However, as a general rule,  Higher Income = Higher Pet Products Spending.
5. # Earners – “Everyone Works” (65.0%) In this group, all adults in the CU are employed. This group’s high share of pet products spending is more evidence of the growing importance of income in pet products spending. However, the performance of 112.8% is slightly lower than Total Pet. It is also much lower than that of the income category. Remember, retired folks and CU’s with 2+ people and only one earner have a lot of pets and spend a lot of money.
6. Occupation – All Wage & Salary Earners (64.4%) – Pet ownership is widespread across all segments in this group. The low performance, 105.7% demonstates this and also reflects the substantial contributions being made by the Self-employed and retired groups.
7. Age – 35>64 (63.5%) In recent years the 45>74 year age group dominated the spending. With the Baby Boomers value shopping for premium Pet Food and the Gen Xers buying significantly more supplies, the bulk of Pet Products spending shifted slightly. The 65>74 group was edged out in Pet Products spending by the 35>44 group. The overall 35>64 age group includes the 3 highest income levels so this change isn’t a total surprise. The 117.2% performance level indicates that pet parenting is common among all ages.
8. CU Composition – Married Couples (61.1%) Pet parenting and marriage both represent strong commitments. With a performance of 125.8% marriage moves up to second place in terms of importance to Pet Products spending.
9. Education – Associates Degree or Higher (60.3%) Pet Products Spending generally increases with education.  However, much of Pet Products spending is about buying the things that are absolutely required in order to be a good Pet Parent. With a performance level of 116.5%, higher education dropped out of the top 5 and fell below the “magic” 120% level. This truly indicates how widespread pets are across all education levels in America.
10. Area – Suburban (59.6%) Suburban households are still the biggest pet spenders, but the relatively low market share and low performance of 108.6% indicate that more and more pets are finding homes in Central Cities.

The biggest spending groups are the same for Pet Products as for Total Pet. However, there are subtle differences in market share and in performance. Money still matters most but there are only 4 groups performing above the 120% level in Pet Products spending, one less than in Total Pet. In general, the Pet Product spending analysis better represents the demographic diversity of Pet ownership in the U.S.

Now, let’s drill deeper and look at 2016’s best and worst performing Products spending segments in each category.

Most of the best and worst performers are the ones that we would expect. There are only 5 that are different from 2015 but that is 2 more than for Total Pet. Changes from 2015 are “boxed”. We should note:

• Income is growing more important as the 205% performance is up 9.6% from last year. This increase is magnified as it comes in a year in which the performance of the average winner fell 14% and that of the average loser rose 4%. Except for income, spending is becoming more diverse across the segments in demographic categories.
• CU Composition – Last year the winner was married couples with a child over 18. This year it is the married couple only. The exceptionally high performance reflects the influence of Millennials just getting started added to that of the aging Baby Boomers. Single Parents replaced Singles as the lowest performing segment in this category. This is understandable as they are generally under intense financial pressure.
• Region – The South had a great year and they wrested the top spot from the perennial winner, the West. Although the Northeast finished last again, their performance radically improved from 79.7% in 2015. Spending on Pet Products seems to be becoming more balanced across the regions.
• # Earners – Money matters and 2+ earners generally means higher income. This year 2 Earner CU’s just edged out the 3 Earner CU’s for the top spot.
• Age – The Under 25 group improved their performance slightly (+1%) in 2016 but they fell into the bottom spot because the performance of the Over 75 group jumped from 39% to 54% – an amazing improvement!

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

In this section we will see just how tumultuous 2016 was. There are no repeats from 2015. In 2 categories the 2015 winners and losers switched positions. In 3 other categories, last year’s winner is this year’s loser. However, there are also other surprises, like the performance of the 75+ age group and the good and bad performance of no earner CU’s.

• Area Type – The Central City had the single biggest increase of any demographic segment.
  • Winner – Central City – Products: $12.19B; Up $2.28B (+23.0%)
    • 2015: All Urban
  • Loser – Suburbs >2500 – Products: $18.43B; Down $1.82B (-9.0%)
    • 2015: Rural
  • Comment – The largest Suburbs, the area with the biggest share of the business, had the biggest decrease.
• Occupation – The traditionally big spending self-employed group value shopped their way to a big decrease.
  • Winner – Tech, Sales & Clerical – Products: $7.14B; Up $1.32B (+22.6%)
    • 2015: Mgrs. & Professionals
  • Loser – Self-employed – Products: $3.66B; Down $1.32B (-26.5%)
    • 2015: Operators & Laborers
  • Comment – The Tech, sales & clerical group’s increase is even more impressive, considering the fact that they have 4% fewer CU’s. For the first time, their Pet Products’ spending exceeds the national CU average.
• CU Composition – The big spending changes usually come from some sub-segment of married couples. However…
  • Winner – Unmarried, 2+ Adults – Products: $7.25B; Up $0.92B (+14.5%)
    • 2015: Married Couple Only
  • Loser – Married, oldest child >18 – Products: $3.73B; Down $1.21B (-24.5%)
    • 2015: Married All Children <18
  • Comment – Unmarried, 2+ adults and married couples with their oldest child under 6 were the only segments in this category to have an increase. This is corroborating evidence of the positive impact of the younger groups.
• Income – Last year’s winner and loser just swapped places in 2016. Value shopping for Food created turmoil.
  • Winner – $70 to $99K – Products: $7.77B; Up $0.83B (+12.0%)
    • 2015: $100 to $149K
  • Loser – $100 to $149K – Products: $7.18B; Down $1.38B (-16.1%)
    • 2015: $70 to $99K
  • Comment – The loser wasn’t the biggest loser in either Food or Supplies but spending fell significantly in both.
• Region – Last year’s winner is this year’s biggest loser. Out West, it was all about Value shopping for Food.
  • Winner – Northeast – Products: $7.20B; Up $0.74B (+11.5%)
    • 2015: West
  • Loser – West – Products: $9.70B; Down $2.21B (-18.6%)
    • 2015: Midwest
  • Comment – The success of the Northeast is directly related to the great increase in Central City spending.
• Housing – In 2015 all segments had an increase in Pet Products spending. In 2016, there is only one.
  • Winner – Renters – Products: $9.31B; Up $0.63B (+7.2%)
    • 2015: Homeowner w/o Mtge
  • Loser – Homeowner w/o Mtge – Products: $10.24B; Down $2.26B (-18.1%)
    • 2015: Renter
  • Comment – Another big position switch which reflects the “youth spending lift” and the Boomer decline.
• Age – Ready for a really big surprise? The Silent generation spoke up in 2016.
  • Winner – 75+ yrs – Products: $2.27B; Up $0.57B (+33.4%)
    • 2015: 55>64 yrs
  • Loser – 55>64 yrs – Products: $10.76B; Down $2.61B (-19.5%)
    • 2015: 25>34 yrs
  • Comment: All the groups under 45 increased Products’ spending but they were all up and down between food and supplies. The over 75 group was the only age group with increased spending on both food and supplies.
• Education – Apparently College prepares you for a lot of things, including value shopping for Food…down $2.66B
  • Winner – Associates Degree – Products: $5.25B; Up $0.56B (+11.9%)
    • 2015: All College Grads
  • Loser – BA/BS Degree – Products: $11.08B; Down $1.42B (-11.4%)
    • 2015: HS Grad or less
  • Comment – CU’s with an Associates’ Degree or a HS diploma and some college credits were the only segments with increased spending on Pet Products. BA/BS wasn’t the worst in Supplies or Food but spending fell in both.
• Race/Ethnic – 85.5% of Pet Products’ Spending comes from White, Non-Hispanics so even a small change = Big $.
  • Winner – Hispanic – Products: $3.51B; Up $0.28B (+8.8%)
    • 2015: White. Not Hispanic
  • Loser – White, Not Hispanic – Products: $36.18B; Down $2.6B (-6.7%)
    • 2015: African American
  • Comment – In addition to Hispanics, both African Americans and Asian Americans increased their Pet Products spending in 2016. African Americans came in 2^nd with a $0.21B increase and they were also the only group in this demographic category to spend more on both food and supplies.
• # Earners – More earners generally means a higher income and more Spending, so no Earners means….
  • Winner – No Earner, Single – Products: $2.73B; Up $0.19B (+7.3%)
    • 2015: 2 Earners
  • Loser – No Earner, 2+ in CU – Products: $3.36B; Down $1.05B (-23.8%)
    • 2015: 2+ in CU with 1 Earner
  • Comment – The loser is understandable. There were only 2 segments with increased spending in this category – 2 earners and no earner, singles. The no earner, single CU wasn’t a winner in either Food or Supplies. They won Products by being 75+, living alone in a rental property in a Central City with a retirement income of $30>40K.
• # in CU – In 2016 only CU’s with 4 people showed increased Pet Products spending.
  • Winner – 4 People – Products: $5.70B; Up $0.11B (+2.1%)
    • 2015: 2 People
  • Loser – 5+ People – Products: $3.44B; Down $0.79B (-18.7%)
    • 2015: 4+ People
  • Comment: 4 person CU’s had increased spending on Food but bought slightly less Supplies. There are 3 other segments in different categories that match that pattern – married couples with the oldest child under 6, the 25>34 year age group and of course, Millennials.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Products Spending $ for 11 Demographic Categories. It has truly been an eye opener. In 5 cases last year’s winner was this year’s loser. We have seen evidence of the significant contributions made by the younger groups in 2016 and we have had some truly surprising winners like the over 75 age group, no earner – singles and renters. Of course, not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding performance. They don’t win an award but they deserve….

Honorable Mention

Pet Products spending was down over $2B in 2016 so any increase is significant. These 5 groups were not the best performers or groups with the biggest $ increase. However, together they generated an increase of $1.6B in Pet Products spending. The HS Grads with some college and the 35>44 age group together produced an extra $1B. African Americans and Construction Workers &  Mechanics had a big percentage increase. The $30>39K group had the only spending increase by a group making under $70K.

Summary

In both 2015 and 2016 we saw significant changes in spending behavior which strongly impacted the Pet Products sector of the industry. In 2015 a large number of households opted to upgrade to Super Premium foods. This resulted in a huge increase in Food spending but also reduced spending in other segments, especially Supplies. In 2016, consumers began a concerted effort to find the best price on their premium pet foods. They were successful and they saved a lot of money – $2.99B. This freed up funds for increased spending in the other segments, including $0.94B on Supplies.

On the surface, this seems like a very simple explanation – spent much less on Food and somewhat more on Supplies. Just do the addition and subtraction and our analysis should be done.  However, as we have learned, “simple” rarely applies in the Pet Industry. This is especially true of the Pet Products sector. Food and Supplies represent roughly 2/3 of all Pet Spending but it is more than just $.

Spending money on Food and Supplies is an absolute necessity in Pet Parenting. Obviously, your pet needs food every day so you must buy it regularly and often. Although Supply items are somewhat more discretionary in nature there are plenty of supplies that are also necessities for good pet parenting. Depending on the pet, you need things like a collar and lead, a feeding bowl and cat litter. Even durable dog toys are a “must have” in some situations. The big difference between Food and Supplies is the frequency of purchase. On average, Food is bought about every 3 weeks. Consumers buy dog toys every month or two. Collars are purchased annually at best and feeding bowls are bought about every 5-6 years. Cat litter is purchased on a regular routine because it is definitely a “must have” item for cat owners.

Because of the necessity, the spending behavior on Pet Products can be a more important reflection of the percentage of pet ownership in a demographic category than the data for Total Pet. The performance of a group is also very important. We identified three demographic categories with high performing large groups. (There were 4 for Total Pet)

• Income
• Homeownership
• CU Composition

Increased income, homeownership and being married all generate increased pet products spending. These are all demographic characteristics in which the consumer has some control. The demographic segments in these categories allow industry participants to more effectively target their best customers and… those most in need of improvement.

Regarding big spenders, the age group skewed a little younger this year but there was very little change in the best and worst performing individual segments. The big changes occurred in $. There were some surprising winners – Central City, 75+ yrs & No Earner Singles, to name a few. Next up: We will drill even deeper into the Food & Supplies Segments.

Finally…The “Ultimate” Pet Products Spending Consumer Unit is down to 2 – a married couple, alone – their last child finally moved out. They are still in the 55 to 64 age range. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. They both still work in their own business and they’re earning over $200K. They still have a mortgage on their house located in a small suburb adjacent to a big city in the South. (Total Pet was West)

 

 

 

U.S. Consumers spent $7.4 Trillion dollars in 2016, up 235B (+3.3%) from 2015. Of this huge sum, $67.29B (0.91%) was spent on our companion animals. Despite increases in three industry segments, overall Pet Spending fell $0.46B (-0.7%) in 2016. Our initial analysis indicated that much of the decrease can be attributed to Pet Parents value shopping for Premium Pet Food. This shopping behavior which is so heavily driven by price has implications for all industry segments and retail channels. We will continue to monitor the situation and dig deeper into the pet spending demographics.

In this report we will look at Pet Spending for perhaps today’s most “in demand” demographic measurement – by Generation. Are the Baby Boomers starting to fade? Are Millennials stepping up? What about Generation X? These are very valid questions. Using data from the US BLS Consumer Expenditure Survey we will look for the answers.

We’ll start by defining the generations and looking at their share of all U.S Consumer Units (CUs are basically Households)

GENERATIONS DEFINED

• Millennials: Born 1981 to 1999; In 2016, age 17 to 35
• Gen X: Born 1965 to 1980; In 2016; age 36 to 51
• Baby Boomers: Born 1946 to 1964; In 2016, age 52 to 70
• Silent Generation: Born 1928 to 1945; In 2016, age 71 to 88
• Greatest Generation: Born before 1928; In 2016, age 89+

• Baby Boomers are still the largest number of CU’s at 45+M and 34.8% of the total. Two factors in the Boomer CU increase are an “over 50” divorce rate that is double that of the previous generation and the fact that 1/6 of all legal U.S. immigrants are Boomers.
• Although Millennials have the largest number of individuals, they rank only third in the number of CU’s. However, this number is growing as they gain financial independence. On the other hand, more Gen Xers are coming together.
• The 2 Oldest Generations will continue to lose CUs primarily due to death or movement to permanent care facilities.

Now let’s look at some key CU Characteristics.

The only changes from 2015 are that the homeownership for the Silent Generation and The Greatest Generation both fell 1 percentage point as more of the older Americans moved to rental properties and alternative living facilities.

• CU Size – CU’s with 2+ people account for 70.5% of all U.S. CU’s and 80.5% of total pet spending. Millennials are already at the National Average. However, CU size, with the resulting family responsibilities and financial pressures, peaks with the Gen Xers and then starts dropping. The Baby Boomers are last to average over 2 people per CU.
• # Children < 18 – Children are obviously a big factor in increased CU size. 28.3% of U.S. CU’s have children and they generate 29.8% of Pet Spending. However, the story is more complex. Single parents only spend about half of the national average on their pets. Married couples with children spend 16% more than the average CU. Plus, spending increases significantly as the children get older, which often correlates with the increasing income of the parents.
• # Earners – Pet spending is also tied to the number of earners in a CU. 2 Earner CUs annually spend 51.7% more on their pets than 1 Earner CUs. As you can see in the chart, the “earning” is being done in America by Gen Xers, Millennials and Boomers, with Gen Xers on top.
• Homeownership – Owning and controlling your own space has always been a major factor in increased Pet Ownership and spending. Currently, Homeowners account for 79.8% of Total Pet Spending. However, 2016 was a bit different in that pet spending fell for Homeowners while increasing by $1.8B for Renters.
  • Millennials are the most common renters in society as their level of Homeownership is basically half of the national average and only 2/3 of the rate of Gen Xers and Boomers when they were the same age.
  • Gen Xers have reached the national average and the rate of Homeownership continues to grow until we reach the 89+ year old Greatest Generation who have begun to move to rental properties and other alternative living facilities which have fewer or no upkeep requirements.

Next we’ll compare the Generations to the National Avg.: In Income, Spending, Total Pet Spending and Total Pet Share of Total $pending

CU National Avg: Income – $74,664; Total Spending – $57,247; Total Pet Spending – $519.57; Pet Share – 0.91%

• Income – The 36>51 year old Gen Xers are the leaders and will soon occupy all the slots in the peak earning years – 45 to 54. The Boomers earn about 16% less and this difference will increase as they age. The income of the Silent Generation is almost exactly half of the Boomers as retirement becomes almost universal in this 71+ year old group. The Millennials’ income is growing but it is still 18% less than the Boomers and only 70% of the Gen Xers.
• Total Spending – The Gen Xers make the most and spend the most but it’s not out of line with their income. Boomers also spend more than the average but currently their income can support it. Spending doesn’t fall as fast as income with the older generations. In fact, they are actually deficit spending in relation to their after tax income. The Millennials’ spending is also in line with income. Their income is rising but this also reflects the trend for more Millennials to remain a part of their parents’ household until they are financially secure enough to start their own.
• Pet Spending – The Boomers are still by far the Pet Spending leaders, but the Gen Xers also exceed the National average per CU. Millennials’ Pet Spending is increasing but they are still in 4th place.
• Pet Spending Share of Total Spending – The chart shows that the Pet Spending share of total spending fell for the 3 oldest generations while it increased for Millennials and Gen Xers. The Boomers are now the only generation spending more than 1% of their total expenditures on their pets. The percentage increase by the younger groups is more impressive because their total expenditures also increased by over 2% – Pet took a larger piece of a bigger pie.

It’s time to look at actual Total Pet Spending by Generation in terms of market share as well as the actual annual $ spent for 2014 through 2016. The 2016 spending numbers are highlighted in this and following charts:

• If outlined in green, spending up from 2015
• If outlined in red, spending down from 2015
• If highlighted in green, spending up from 2014
• If highlighted in pink, spending down from 2014

• Boomers continue to dominate Pet Spending but their share has fallen from 47.5% in 2015 to 44.0% in 2016.
• The 3 oldest generations lost 4.4% in market share that was picked up by the Millennials, +2.6% and Gen Xers, +1.8%
• In terms of 2016 Performance, it was all about the younger crowd. Millennials and Gen Xers were up $2.79B. The older groups spent $3.25B less. Also, although Boomer spending is up minimally, $0.14B since 2014, it was the $3.32B increase by Millennials and Gen Xers that has fueled the Industry’s growth over that period.
• Boomers – Ave CU spent $667.12 (-$65.96); 2016 Total Pet spending = $29.61B, Down $2.54B (-7.9%)
  • 2014>2016: Up $0.14B; Tremendous lift in Food in 2015. Then the big drop in 2016. Now, basically equal to 2014.
• Gen X – Ave CU spent $541.95 (+$29.63); 2016 Total Pet Spending = $19.34B, Up $1.08B (+5.9%)
  • 2014>2016: Up $1.68B; Their annual Pet spending growth since 2014 has been consistent and significant.
• Millennials – Ave CU spent $376.60 (+$39.30); 2016 Total Pet Spending = $11.44B, Up $1.71B (+17.6%)
  • 2014>2016: Up $1.75B; The Millennials had a big lift in spending in 2014. Spending was flat in 2015. 2016 brought another big spending lift. In certain segments they have spending patterns similar to the Boomers, but occurring a year earlier. It’s possible that Millennial spending trends, could predict the Boomers’ future spending.
• Silent Gen. – Ave CU spent $397.07 (-$36.53); 2016 Total Pet Spending = $6.67B, Down $0.70B (-9.5%)
  • 2014>2016: Down $0.2B; A lift in 2015, then a substantial drop in 2016. A similar pattern to the Boomers.
• Greatest Gen.– Ave CU spent $105.64 (-$1.40); 2016 Total Pet Spending= $0.23B, Down $0.01B (-3.8%)
  • 2014>2016: Down $0.3B; They are fading as Pet Parents but you will see evidence of their lifelong commitment.

The youngest generations saved the industry from a big decrease. Let’s look at individual segments. First, Pet Food..

• After their 2015 Upgrade, Boomers and to certain extent Gen Xers, began value shopping for premium Food/Treats.
• The Millennials had a big lift in 2014, then spending fell in 2015. Now it’s significantly up again in 2016. Could Millennials be pioneering food trends that are later embraced by the Boomers and other generations?
• Boomers – Ave CU spent $274.66 (-$81.32); 2016 Pet Food spending = $11.92B, Down $3.65B (-23.4%)
  • 2014>2016: Up $2.18B – Even after value shopping, they have a substantial increase in spending since 2014.
• Gen X – Ave CU spent $191.35 (-13.09); 2016 Pet Food spending = $6.86B, Down $0.40B (-5.5%)
  • 2014>2016: Down $0.13B A little savings in 2016, but CU food spending has stayed at or near $200 since 2014.
• Millennials – Ave CU spent $153.01 (+$26.44); 2016 Pet Food Spending $4.81B, Up $1.17B (+32.2%)
  • 2014>2016: Up $0.53B Age 25>34 upgraded Food in late 2014, then value shopped in 2015. Now they’re into the next trend, with a 32% increase. They are growing in CU’s & commitment to their pets. Quality food is a big issue.
• Silent Generation – Ave CU spent $167.01 (-$4.56); 2016 Pet Food spending = $2.78B, Down $0.124B (-4.3%)
  • 2014>2016: Down $0.10B; The pattern is very similar to Gen Xers. Less fluctuation, essentially stable since 2014.
• Greatest Gen. – Ave CU spent $61.26 (+$6.90); 2016 Pet Food spending= $0.13B, Up $0.01B (+6.0%)
  • 2014>2016: Down $0.05; A lift in 2016 Food spending? These oldest Americans are still committed to their Pets.

We have seen the trendy nature of Food Spending over the years. It is possible that the young, connected Millennials are now the first to react and “buy into” each new “advance” in Pet Food.  Let’s look at the Supplies Segment.

• Boomers still have the largest share but unlike all other segments, the Younger Groups – Gen Xers and Millennials account for over half of the spending – 50.9%.
• Baby Boomers – Ave CU spent $141.35 (+$6.79); 2016 Pet Supplies spending = $6.37B, Up $0.43B (+7.2%)
  • 2014>2016: Down $0.3B; Spending bounced back but not all the way – only regained 60% of the 2015 loss.
• Gen X – Ave CU spent $147.64 (+$20.17); 2016 Pet Supplies spending = $5.25B, Up $0.68B (+14.9%)
  • 2014>2016: Down $0.23B; Supplies are important to Gen X. They had the biggest gain – got back 3/4 of the loss.
• Millennials – Ave CU spent $94.67 (-$16.52); 2016 Pet Supplies spending = $2.81B, Down $0.42B (-12.9%)
  • 2014>2016: Down $0.22B; Supplies are Millennials’ #2 Pet spending priority but they cut back a little in 2016 to help “pay for” increased spending in Food and Veterinary.
• Silent Generation – Ave CU spent $80.35 (+17.65); 2016 Pet Supplies spending = $1.36B, Up $0.283B (+26.4%)
  • 2014>2016: Down $0.34B; Pattern similar to Boomers but as a rule, Supplies are their lowest Pet Spending priority.
• Greatest Gen. – Ave CU spent $19.91 (-$16.05); 2016 Pet Supplies spending = $0.05B, Down $0.036B (-43.4%)
  • 2014>2016: Down $0.07B; A significant drop, but Supplies have a lower priority for these oldest Pet Parents.

Most groups cut back on Supplies spending in 2015. This was due to a combination of rising prices and an attempt to compensate for the cost of upgrading their pet food. Although prices moved slightly higher in late 2016, they were down for most of the year. Consumers strongly value shopped for food and spent some of the “saved” money on Supplies.

Next, we’ll turn our attention to the Service Segments. First, Non-Veterinary Pet Services

• Boomers have the largest share – 46.9%, up significantly from 39.5% in 2015.
• Baby Boomers – Ave CU spent $71.17 (+$15.19); 2016 Pet Services spending = $3.21B, Up $0.74B (+29.8%)
  • 2014>2016: Up $0.53B; As they age, pet services become more appealing and they still have high income.
• Gen X – Ave CU spent $48.52 (-$10.71); 2016 Pet Services spending = $1.73B, Down $0.40B (-18.7%)
  • 2014>2016: Up $0.14B; Significantly cut back spending. They have the money. Maybe they found a better price?
• Millennials – Ave CU spent $37.96 (+$2.94); 2016 Pet Services spending = $1.13B, Up $0.11B (+10.9%)
  • 2014>2016: Up $0.42B; As their income increases, the convenience of Pet Services becomes more accessible.
• Silent Generation – Ave CU spent $44.41 (+$8.48); 2016 Pet Services spending = $0.75B, Up $0.13B (+21.9%)
  • 2014>2016: Up $0.09B; They definitely have a growing need. In 2016 they allocated the money.
• Greatest Gen. – Ave CU spent $10.64 (-$1.51); 2016 Pet Services spending = $0.02B, Down $0.003B (-10.5%)
  • 2014>2016: Down $0.02B; Like Supplies, their spending in this discretionary segment is falling.

This segment finds a way to grow every year. In 2015, the older groups dialed back their services’ spending while they were upgrading their food. The younger groups more than made up the difference by spending $0.84B more. In 2016, Gen Xers cut back to help pay for their Vet Bills. Everyone else, especially Boomers, stepped up with a $0.97 increase.

Now, Veterinary Services

• Boomers are still the dominant group in this industry segment – their share is 50% more than the #2, Gen Xers.
• The big news is that the younger groups have committed more strongly to this Pet Parenting responsibility. The combined veterinary spending of Millennials and Gen Xers increased $2B in 2016 and is up $2.8B since 2014.
• Boomers – Ave CU spent $179.94 (-$6.62); 2016 Veterinary spending= $8.11B, Down $0.053B (-0.6%)
  • 2014>2016: Down $2.27B; Their spending has essentially stabilized after the big cut back in 2015.
• Gen X – Ave CU spent $154.44 (+$33.25); 2016 Veterinary spending= $5.49B, Up $1.19B (+27.6%)
  • 2014>2016: Up $1.79B; In 2016, Veterinary exceeded the CU spending average and they moved up to the #2 spot.
• Millennials – Ave CU spent $90.96 (+$26.45); 2016 Veterinary Spending $2.70B, Up $0.84B (+45.6%)
  • 2014>2016: Up $1.03B; With a 40+% increase in CU spending, Veterinary became a much bigger priority.
• Silent Generation – Ave CU spent $105.30 (-$58.10); 2016 Veterinary spending $1.78B, Down $0.99B (-35.9%)
  • 2014>2016: Up $0.15B; Money and price are always factors. They cut back in 2016 after the huge lift in 2015.
• Greatest Generation– Ave CU spent $13.83 (+$9.26); 2016 Veterinary spending= $0.03B, Up $0.02B (+202%)
  • 2014>2016: Down $0.17B; Food and Veterinary are the two biggest priorities to these oldest Pet Parents.

Gen Xers and Millennials have markedly increased their commitment to Veterinary Services. In 2014, their share of Veterinary Spending was 30%. In 2016, it reached 45% – a 50% increase. This is a big, fundamental change in behavior.

One last chart to compare the share of spending to the share of total CU’s for the 4 largest generations.

• Silent Generation Performance – Total: 76.0%; Food: 80.6%; Supplies: 65.7%; Services: 84.2%; Veterinary: 75.3%
  • This group ranges in age from 71 to 88. Pet ownership is more challenging after age 75. However, the desire and the commitment are still there. This is evident in the 80% performance on Pet Food and the fact that 0.95% of their total CU spending is on Pets. They don’t “earn their share” but they perform better than the Millennials.
• Baby Boomers Performance–Total: 126.4%; Food: 129.2%; Supplies: 115.6 %; Services: 134.9%; Veterinary: 128.7%
  • Boomers led the way in building the industry and are still the “top dogs”. They earn their share and in fact, are the spending leader in every segment. Ultimately, this will begin to fade with age. However, they will continue to lead for many years to come. Their big lift in Services Spending indicates that they will do whatever is necessary.
• Gen X Performance – Total: 104.6%; Food: 94.3%; Supplies: 120.8%; Services: 91.9%; Veterinary: 110.4%
  • The Gen Xers are next in line to Boomers in age and performance. In 2016, they “earned their share” as their Pet Spending performance exceeded 100%. They have always spent a lot on Supplies, but in 2016 they radically increased their Veterinary spending. With their performance now exceeding 90% in every industry segment, it is evident that they are committed to all aspects of Pet Parenting. They now range in age from 36 to 51 so they are just entering the peak earning years. Expect their commitment and their pet spending to continue to grow.
• Millennials Performance – Total: 74.2%; Food: 79.2%; Supplies: 77.4%; Services: 71.9%; Veterinary: 65.0%
  • Millennials are inevitably the future of the industry, but the future is still a ways off. They have pets, a lot of them, but also growing responsibilities. Money is tight and they are twenty years away from their peak earning years. Although their spending performance is low at 74%, it is radically up from 2015 – 64%. They are the industry leaders in some ways. In 2014, they led the way in the super premium food upgrade. They also led the value shopping trend which followed, especially on the internet. The other groups, especially Boomers, followed in their footsteps. In 2016 they showed that they can also learn from the older folks as they ramped up their Veterinary spending. They now have more balanced spending across all segments and are poised for growth.

 

 

 

 

 

 

 

 

 

In 2016 Total Pet Spending in the U.S. was $67.29B, a $0.46B (0.7%) decrease from 2015. This was a marked contrast from the Total “Relevant” Retail Market (+3.6%) and the Top 100 U.S. retailers (+4.2%). However, the story gets a bit complex. In 2015, a $5.4B increase in Pet Food Spending, which came from a significant share of H/H’s upgrading to more premium products, drove a 5.3% total industry increase. However, to help pay for the increase, consumers cut back on Pet Supplies and Veterinary spending, -$2.6B. In 2016, consumers began value shopping for their expensive food and reduced Food spending by $2.99B. They spent most, but not all, of this “saved” money in other Industry segments.

• A big $2.99B (-10.1%) cut back on Food
• A 0.94B (+6.3%) comeback in Supplies
• A $1.01B (+5.9%) turnaround in Veterinary
• A business as usual $0.58 (+9.3%) gain in Services

Let’s see how these numbers blend together starting at the household level. In any given week, 27.1 Million U.S. Households (1/5) spend money on their Pets – food, supplies, services, veterinary or any combination.

In 2016, the average U.S. Household (pet & non-pet) spent a total of $519.57 on their Pets. This was a 1.6% decrease from the $528.17 spent in 2015. However, this doesn’t “add up” to a 0.7% decrease in Total Pet Spending. With additional data provided from the US BLS, here is what happened.

• 0.9% more H/H’s
• Spent 5.6% less $
• 3.6% more often

If 65% of U.S. H/H’s are pet parents, then their annual H/H Total Pet Spending is $799.34. Let’s look at the recent history of Total Pet Spending. The rolling chart below provides a good overview. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys – The 2016 Total includes Veterinary Numbers from the Interview survey, rather than the Diary survey due to high variation)

• In 2015, the Food upgrade began early and continued all year. The cut backs on Vet & Supplies spending happened immediately and were most noticeable in the first half while Food Spending was still building.
• In 2016, we have almost the opposite scenario. The consumers began value shopping for food and this behavior became widespread by yearend. Veterinary spending saw the biggest spending lift in the first half while the more discretionary Supplies Segment didn’t “catch on” until later in the Year.
  • 2016: 1^st Half ↑$0.55B;
  • 2016: 2^nd Half ↓$1.01B

Let’s look at some Demographics. First, 2016 Total Pet Spending by Income Group. The chart has these highlights:

• If outlined in green, sales were up in 2016
• If outlined in red, sales were down in 2016
• If highlighted in green, sales were up from 2014
• If highlighted in pink, sales were down from 2014

• < $70K – (63.0% of U.S. H/Hs); H/H Pet Spending: $346.68, (-3.7%);
  • Total Pet $ : $28.39B, ↓$1.45B (-4.8%) from…
    • Food ↓$2.05B
    • Supplies ↑$0.49B
    • Services ↑$0.40B
    • Veterinary ↓$0.29B 
  • A significant portion of this price sensitive group chose to upgrade their Pet Food in 2015. In 2016 they value shopped for food and some may even have backed away from the upgrade. Strong inflation is always an issue in their Veterinary spending. However, they did use a  portion of their food savings on Supplies & Services.
• >$70K – (37.0% of U.S. H/Hs); H/H Pet Spending: $816.00, (–2.3%);
  • Total Pet $: $38.9B, ↑$0.99B (+2.6%) from…
    • Food ↓$0.94B
    • Supplies ↑$0.46B
    • Services ↑$0.18B
    • Veterinary ↑$1.29B
  • This group is growing, up 4.8% in 2016. This is significant because although they spent less per H/H, their total Pet Spending $ went up. They do have higher incomes, but they still value shopped for Pet Food. They also spent the savings and more on other industry products and services. This group is obviously very important as it represents 37% of U.S. H/H’s but accounts for 57.8% of the Pet Industry’s total revenue.
• < $30K – (31.1% of U.S. H/Hs); H/H Pet Spending: $260.12, (-5.5%);
  • Total Pet $: $10.3B, ↓$1.02B (-9.0%) from…
    • Food ↓$0.45B
    • Supplies ↑$0.18B
    • Services ↓$0.01B
    • Veterinary ↓$0.73B
  • Two significant subsets in this group are H/Hs just getting started along with retirees. They saved money on food and spent it on Supplies. Service spending was unchanged. However, there was a huge drop in Veterinary Spending, largely from the older group. The strong inflation in this category affects lower incomes.
• $30>$70K – (31.9% of U.S. H/Hs); H/H Pet Spending: $427.85, (-3.4%);
  • Total Pet $: $18.1B, ↓$0.43B (-2.3%) from…
    • Food ↓$1.60B
    • Supplies ↑$0.31B
    • Services ↑$0.41B
    • Veterinary ↑$0.44B
  • This low to middle income group is by necessity price sensitive but is also committed to their pets. They saved a lot of $ on Food but spent most of this money in the other segments.
• $70>$99K – (14.0% of U.S. H/Hs); H/H Pet Spending: $617.43, (+3.0%);
  • Total Pet $: $11.5B, ↑$0.73B (+6.7%) from…
    • Food ↑$0.35B
    • Supplies ↑$0.48B
    • Services ↓$0.08B
    • Veterinary ↓$0.03B
  • This upper middle income group upgraded their Food and spent even more on Supplies. Spending in both of the Service Segments was basically unchanged. Their focus in 2016 was Pet Products.
• $100K>$149K– (12.5% of U.S. H/Hs); H/H Pet Spend: $736.62, (-14.4%);
  • Total Pet $: $11.7B, ↓$1.46B (-11.1%) from…
    • Food ↓$1.08B
    • Supplies ↓$0.30B
    • Services ↓$0.08B
    • Veterinary ↓$0.01B
  • In 2015, this group was the Star of the income groups. In 2016, they had the worst performance with decreased spending in every segment. It is another indication that price/value matters to virtually everyone.
• $150K> – (10.5% of U.S. H/Hs); H/H Pet Spending: $1184.71, (+2.4%);
  • Total Pet $: $15.7B, ↑$1.72B (+12.3%) from…
    • Food ↓$0.22B
    • Supplies ↑$0.28B
    • Services ↑$0.34B
    • Veterinary ↑$1.33B
  • Even these wealthiest Americans saved money on Food but they spent significantly more in all the other segments. Without the spending increase in 2016 from this group…
    • Veterinary spending would have been down -$0.32B, not up $1.01B
    • Total Pet Industry spending would have been down -$2.18B (-3.2%), not just -$0.46B (-0.7%)

Income Recap – There is a growing price sensitivity across America. In 2016, this was demonstrated by consumers across almost all income groups value shopping for Pet Food. This had a huge impact on Total Pet Spending.

Only 2 income groups increased their Pet Spending in 2016. The $70>99K group upgraded their Pet Food and increased their spending on Supplies. No other income group did that – a strong commitment. The Over $150K group saved money on Food but had a huge increase in the other segments – especially Veterinary!

Since 2014, the $30>99K income group – middle America, spent less, especially on Vet Services. The <$30K group, often the youngest and oldest H/Hs, increased their spending in all but Supplies. The $100K> group also had increases in all segments but Supplies. However, the big “heroes” are the $150K> group. In fact, without the $3.1B increase in spending by this highest income group, the Total Spending for the whole Pet Industry would have been down -$0.13B from 2014.

Next let’s look at the 2016 Total Pet Spending by Age Group

• <25 – (5.6% of U.S. H/Hs); H/H Pet Spending: $237.28, (+13.7%);
  • Total Pet $: $1.86B, ↑$0.18B (+10.5%) from…
    • Food ↓$0.005B
    • Supplies ↑$0.04B
    • Services ↑$0.02B
    • Veterinary ↑$0.13B
  • These young Millennials upgraded their Food in 2015. Now they are expanding their commitment.
• 25-34 – (16.1% of U.S. H/Hs); H/H Pet Spending: $420.02, (+9.5%);
  • Total Pet $: $8.89B, ↑$0.66B (+8.0%) from…
    • Food ↑$0.71B
    • Supplies ↓$0.56B
    • Services ↓$0.03B
    • Veterinary ↑$0.55B
  • These oldest Millennials are back on board with upgraded Food. Spending on Supplies suffered. However, they also demonstrated their commitment to their pets’ health with a big increase in Veterinary spending.
• 35-44 – (16.6% of U.S. H/Hs); H/H Pet Spending: $512.67, (+9.7%);
  • Total Pet $: $10.95B, ↑$1.03B (+10.4%) from…
    • Food ↓$0.22B
    • Supplies ↑$0.69B
    • Services ↓$0.29B
    • Veterinary ↑$0.86B
  • This group has the largest families and is in the middle of building their careers. This makes them very sensitive to value. Pet spending had been declining. In 2016, they value shopped for food but markedly increased their spending on Veterinary and Supplies. This lifted them to the biggest increase of any group.
• 45-54 – (18.6% of U.S. H/Hs); H/H Pet Spending: $620.10, (-3.9%);
  • Total Pet $: $14.88B, ↓$0.43B (-2.8%) from…
    • Food ↓$0.41B
    • Supplies ↑$0.19B
    • Services ↑$0.03B
    • Veterinary ↓$0.24
  • This age group has the highest income and a $1B spending increase in 2015.  In 2016, they value shopped for food and cut back on Vet spending. They spent more on Supplies but not enough to make up the difference.
• 55-64 – (19.0% of U.S. H/Hs); H/H Pet Spending: $714.51, (-6.4%);
  • Total Pet $: $17.37B, ↓$1.23B (-6.6%) from…
    • Food ↓$2.61B
    • Supplies ↓$0.01B
    • Services ↑$0.66B
    • Veterinary ↑$0.72B
  • These Baby Boomers spent an extra $5B to upgrade their Food in 2015. Spending in the other segments paid a big part of the price – down $2.5B. In 2016, they looked for and got the best price on Food and that Spending fell by 26%. They then used about half of this saved Food money to get back on track with Veterinary Services and to radically increase their use of Pet Services.
• 65-74 – (14.0% of U.S. H/Hs); H/H Pet Spending: $552.89, (-9.7%);
  • Total Pet $: $9.88B, ↓$0.41B (-3.9%) from…
    • Food ↓$0.80B
    • Supplies ↑$0.36B
    • Services ↑$0.29B
    • Veterinary ↓$0.25B
  • Many in this group are retired and about half are Baby Boomers. Like many other groups, they upgraded their Pet Food in 2015 but radically reduced this spending in 2016. They spent most of this saved money on Supplies and needed Pet Services. However, they are very price sensitive so they cut back on the rapidly inflating Veterinary Services.
• 75> – (10.0% of U.S. H/Hs); H/H Pet Spending: $266.61, (-10.4%);
  • Total Pet $: $3.46B, ↓$0.27B (-7.2%) from…
    • Food ↑$0.34B
    • Supplies ↑$0.23B
    • Services ↓$0.09B
    • Veterinary ↓$0.75B
  • These committed oldest Pet Parents upgraded their Food and increased their Supplies spending. They paid for this by radically reducing their Veterinary spending. There was little change in frequency. They just spent less.

Age Group Recap: In 2016, the <45 groups increased their spending by $1.87B. Most of this lift came from a $1.54B increase in Vet Spending. These younger H/H’s got onboard with the healthcare aspect of Pet Parenting. The 45> H/H’s spent $2.33B less overall. There were ups and downs by segment for each older age subgroup. However, the totals for 45> were: Food, Down -$3.51B; Veterinary, Down -$0.52B; Services had a big lift +$0.89B and Supplies went Up +$0.57B.

Since 2014, only the Service Segment had an increase in all groups. Veterinary spending fell in the older groups while it gained in importance with the younger Households. In terms of products – Food and Supplies, value shopping came to the forefront. Consumers looked for higher quality at the best price. The 25>34 year olds were the only group with decreased spending from 2014. Their drop came only in Food & Supplies. They are the best “connected” of any group. It’s possible that the decrease came because they were ahead of the curve in value shopping, especially on the internet.

Take a look at some Key Demographic “Movers” for 2016. It should give you a better picture of the situation.

Summary: In building my research database, I gathered Pet Spending information for 12 demographic categories with over 80 specific segments. Nothing, including the Pet Industry, is simple anymore. Total Pet Spending was down -$0.46B (-0.7%), but only one of the 80+ individual demographic segments had a decrease in all Industry segments – the $100>149K income group. (last year’s best performer) There were 3 segments that had across the board spending increases: H/H’s that lived in Central Cities, H/H’s with 2 or more unmarried adults and no children and H/H’s where the highest education level was an Associates’ Degree. These are certainly not the demographic stereotypes of the “ideal” U.S. Pet H/H’s. However, their increases along with the increased spending by Renters, 4 people H/H’s, 2 earner H/H’s and in fact, the whole Under 45 group, reinforced the “youthful” nature of the best pet spending performances in 2016.

On the downside, the biggest decreases came from groups that are the usual Pet Spending Winners – suburban & rural H/H’s, College Grads, Married couples only or those with a child over 18 and even the 55>64 year old “Boomers”.

2016 was definitely “different” in Pet Spending Behavior. The Key factor was the huge drop in Pet Food Spending – a $2.99B decrease after a record shattering $5.4B increase in 2015. The 2015 increase came from a big share of H/H’s opting to upgrade the quality of their Pet Food. However, the 2016 spending drop didn’t primarily come from these consumers reneging on this commitment. It came from them seriously shopping for the best price – in a store or on the internet. This value shopping phenomenon appears to have caught on across virtually all income groups and will undoubtedly affect the future spending behavior across all industry segments, not just products. The Service Segments, especially Veterinary, have been strongly inflating. Price matters and it can and will affect which services are purchased and/or the frequency.

There is also no doubt that strong spending trends, up or down, in one segment affect the spending in others. Whether or not this is a conscious decision by Pet Parents is not known. However, the correlation is there – time after time.

I will wrap this up by saying that there appears to be only one “sure” demographic bet in Total Pet spending. The households with incomes over $200K (5.6%) will continue to increase their spending on their Pet Children.