Paws And Prosperity: Exploring U.S. Pet Services Growth And The Anticipated Surge In Annual Pet Spending From $980 To $1,292 By 2025

Rhea-AI Summary

The pet services industry in the U.S. is experiencing significant growth, with a projected CAGR of 8% over 2022-2030, reaching a total of $277 billion. Average annual household spending per pet is expected to grow from $980 in 2020 to $1,292 by 2025 and further to $1,909 by 2030. This growth is attributed to factors such as the humanization of pets, increase in pet ownership, and technological advancements in pet care services.

Insights

Market Research Analyst

The growth of the U.S. pet services industry, as reported, is not merely a post-pandemic phenomenon but a reflection of broader social and economic trends. The reported 8% CAGR is significant, suggesting robust sector health and potential for continued expansion. This projection aligns with the increasing anthropomorphism of pets, where they are treated as family members, thus driving demand for premium services and products.

The data indicating a rise in household spending on pets substantiates the industry's potential for revenue growth. Companies operating within the pet services space may see increased revenue streams from pet food, veterinary care and ancillary services such as grooming and training. This could have implications for their stock performance and attractiveness to investors seeking growth opportunities in consumer discretionary sectors.

However, it's essential to note the elasticity of demand within this industry. While the Ally Consumer Research survey suggests a strong commitment of pet owners to maintain their pet budgets, economic downturns could still impact discretionary spending. Companies with a diversified portfolio and those investing in technological innovations to streamline services are likely to have a competitive edge.

Financial Analyst

The projected increase in average annual household spending per pet presents a positive outlook for the pet industry's revenue growth. For investors, the key takeaway is the industry's resilience and potential for outperformance, especially given the consumer's willingness to prioritize pet spending. This could lead to increased investor interest in pet-related stocks, potentially driving up their valuations.

It's also worth considering the impact on supply chains and operational costs for companies in this sector. As spending increases, companies may face pressure to maintain profit margins amidst potentially rising costs for raw materials and labor. Strategic investments in supply chain optimization and cost management will be critical for maintaining profitability.

Investors would do well to monitor the financial health of companies in this sector, looking at metrics such as revenue growth, profit margins and return on equity. Companies that demonstrate strong financials and innovative business models are likely to be the beneficiaries of the industry's growth.

Economist

The pet services industry's growth is a microcosm of the broader economic shift towards services and experiences. This sector's expansion contributes to job creation and stimulates economic activity across its supply chain. As spending per household on pet services increases, there will be a multiplier effect, benefiting not just the direct providers of these services but also manufacturers of related products and retailers.

While the industry is on an upward trajectory, it's crucial to consider the potential for market saturation and the role of economic cycles. In periods of economic contraction, the pet services industry may still face headwinds despite its current momentum. The ability of the industry to innovate and adapt to changing consumer preferences will be key to sustaining growth.

Additionally, the industry's growth can influence consumer price indices and spending patterns. As households allocate more budget to pet care, there may be a shift in other areas of consumer spending. Policymakers and economic planners should consider the industry's growth when assessing consumer confidence and discretionary spending trends.

VIRGINIA BEACH, VA / ACCESSWIRE / January 31, 2024 / The number of U.S. homes with pets has been trending upward for decades, with more than 5 million more pets in the U.S. than before the pandemic. Beyond the pandemic-driven boom, the trends continue, driven by changing social dynamics as well as technological advancements. According to Morgan Stanley, the pet services industry is set to grow at a compound annual growth rate (CAGR) of 8% over 2022-2030, reaching a projected total of $277 billion.

Average annual household spending per pet could grow from $980 in 2020 to $1,292 by 2025 and expand further to $1,909 by 2030, according to Morgan Stanley. This growth would be distributed across various categories, including pet food, veterinary care and a handful of other services. Additionally, there is a booming set of sub-sectors like dog walking, pet-sitting, grooming and training, underscoring the scale and scope of the industry's growth. Amidst this broad expansion, this upward trend in sales is estimated by some to be a full 50% higher in 2023 at $143.6 billion.

Market Factors Fueling The Boom

The growth of the U.S. pet services industry can be attributed to several key factors. These range from the evolving perception of pets in our households to technological innovations that are reshaping how pet care services are delivered:

• Humanization of Pets: Pets are increasingly seen as family members, leading to heightened demand for high-quality services. This shift is evident in the 2023 sales of pet food and treats ($62.7 billion), vet care and product sales ($37 billion) and supplies and over-the-counter medicine ($32.1 billion). Furthermore, nearly half of pet owners in a recent Ally Consumer Research survey said they would cut spending on themselves or take on debt before cutting their pet budget.
• Increase in Pet Ownership: The APPA National Pet Owners Survey revealed that 66% of U.S. households own a pet. This translates to about 86.9 million households with pets, including 65.1 million dog owners and 46.5 million cat owners. Millennials and Generation X are the largest demographic groups among pet owners.
• Impact of COVID-19: The pandemic accelerated the growth of the pet industry in a number of ways. With more people now working from home, there's been a notable increase in pet ownership, which naturally contributes to overall demand in the industry, but it has also fueled e-commerce sales.
• Technological Advancements: Technology has played a pivotal role in pet care, with over half of Americans turning to Amazon.com Inc. for pet products. Other online platforms like Target Corporation, Walmart Inc. and Costco Wholesale Corporation are also very popular among consumers. However, Chewy Inc. is still the frontrunner in the dedicated online pet shop segment. Overall, technology is providing greater variety and convenience to consumers who seek pet-related products.

Emerging Trends Within The Industry

As the pet services industry continues to grow, several emerging trends are shaping its future. These trends reflect the changing needs and preferences of pet owners, as well as broader societal shifts toward sustainability and holistic care:

• Premiumization of Services: The pet care industry is experiencing a significant shift toward premiumization, evidenced by the rising popularity of luxury pet resorts and advanced personalized nutrition options. Companies like Freshpet are at the forefront of this movement, with a focus on high-quality, specialized pet food products.
• Focus on Pet Wellness: There's a growing emphasis on holistic care in the pet industry, extending beyond physical health to include mental well-being. This is reflected in the increasing provision of mental health resources for veterinary professionals and the integration of alternative pet therapies such as massage, acupuncture and chiropractic care in treatment plans.
• Subscription-based Services: The pet industry is witnessing a surge in convenience-driven subscription-based models. This is particularly evident in the success of subscription services for pet foods and ongoing service memberships. Companies like Chewy and Amazon are leading this trend, with Chewy reporting a significant 18% increase in its auto-ship sales, highlighting the growing consumer preference for regular, hassle-free deliveries of pet products and services.​
• Sustainability: The pet industry is increasingly focusing on producing more socially and environmentally sustainable products, from organically grown pet food to ecologically friendly chew toys. The Pet Sustainability Coalition, in collaboration with the World Pet Association, found that 91% of industry professionals in 2021 expected the demand for such products to increase rapidly. This trend aligns with the broader consumer shift towards sustainability, with over 50% of pet owners willing to pay more for eco-friendly pet care products.

Innovative Trends In The Pet Industry

Aside from these broader trends, there are also specific innovations in the pet industry worth spotlighting. Companies like Wag! Group and Inspire Veterinary Partners Inc. (NASDAQ:IVP) are adopting new strategies. Wag! has partnered with Bright Horizons Back-Up Care Services to offer pet care as an employee benefit, aiming to align with the changing needs of the modern workforce and potentially improve work-life balance. Inspire Veterinary Partners, on the other hand, is moving away from conventional veterinary business models, focusing instead on employee and pet welfare while introducing different business structures and equity options for veterinary professionals - the company prides itself on being "employee-owned" due to its innovative equity model.

This approach seems to be a response to the current industry trend, where large consolidators own approximately 50% of all veterinary hospital revenue in the U.S. The acquisition of independent clinics is often driven by a desire for increased efficiency and the need for greater technology investment, and by integrating into larger networks, these clinics may be able to enhance their workflows, boost productivity and potentially improve the client experience, which is increasingly valued by younger pet owners, such as millennials and Generation Z. These steps taken by Wag! and Inspire Veterinary Partners could be seen as aligning with evolving consumer expectations and a shift toward more client-focused and employee-friendly practices in the pet care industry.

Industry Evolution And Future Outlook

The U.S. pet services industry's expansion in recent years is a testament to the deepening bond between humans and their pets. Driven by humanization, increased ownership, technological advances and a focus on wellness and sustainability, the industry is adapting to changing pet and owner needs. Meanwhile, innovators like Wag! and Inspire Veterinary Partners Inc. are redefining standards in unexpected ways, emphasizing ethical and well-being-focused practices for this steadily growing industry. While this robust growth has the potential to boost the economy, it also stands to enrich the human-pet relationship, symbolizing the sector's enduring significance and potential.

Other companies innovating in the space include PetIQ, Trupanion, and Zoetis.

Featured photo by Andrew S on Unsplash.

Contact:

Kevin McGrath
kevin@tradigitalir.com

SOURCE: Inspire Veterinary Partners, Inc.

View the original press release on accesswire.com

FAQ

What is the projected CAGR for the pet services industry in the U.S. from 2022-2030?

The projected CAGR for the pet services industry in the U.S. from 2022-2030 is 8%.

What is the estimated total value of the pet services industry by 2030?

The estimated total value of the pet services industry by 2030 is $277 billion.

How much is the average annual household spending per pet expected to grow by 2025?

The average annual household spending per pet is expected to grow from $980 in 2020 to $1,292 by 2025.

What are some factors contributing to the growth of the pet services industry?

Factors contributing to the growth of the pet services industry include the humanization of pets, increase in pet ownership, and technological advancements in pet care services.