Just one month ago, the future looked bright for the pet care industry, with analysts pitting it to be worth over $200bn globally by 2025. Whether this projected growth will continue, it's now hard to tell.
The coronavirus outbreak has seen the best-laid plans of businesses around the world go up in smoke. Whole sectors (like travel) are being decimated, while others (namely food delivery upstarts) have positively bloomed.
Under lockdown within their four walls, people are spending more time with their furry friends than ever. In the UK last week, pet shops and veterinary practices let out sighs of relief after they were placed on the government's ‘essential’ list during the lockdown. However, ‘non-essential’ parts of the pet care industry like kennels, dog walkers and groomers are now struggling to make ends meet.
Amid all this, an opportunity has emerged for direct-to-consumer (DTC) pet brands to take a bigger slice of market share. Especially as dog, cat and even hen adoption soared in the early stages of the pandemic.
A multi-billion-dollar business?
With pet adoption on the rise along with a demand for premium dog care, prior to the coronavirus outbreak, the pet industry never looked so healthy. Insight from Grand View Research estimated that the global sector to reach $202bn by 2025.
As the world went into lockdown images of people filling their shopping trollies like they were readying for an apocalypse made headline news. Among the desperately grasped items that made it onto the lockdown list were pet care products. Figures from Neilsenshow that dog sales spiked 54% and cat food sales increased 52% for the week ending 21 March. Sales of pet supplies rose 24% during the same stretch.
“Just as a mother cares about making sure their child is fed properly and cared for, the same applies to how people think about their pets,” contends James Davidson, founder of DTC dog food retailer Tails.com on why pet owners have been stockpiling food and toys. “And because dogs tend to eat the same food every day, any changes in foods can cause some sort of digestive disruption. So that is something that dog owners are very conscious of.”
Like their human food delivery counterparts, pet mail-order supply firms and retailers have been ransacked by this high demand. Right now, the wait to get on Pets at Home’s website sits at 35 minutes.
Digital-first pet brands are now coming out in full force, as the demand for home-delivered dog and cat food get a boost. For online independent manufacturers like Tails.com and Ollie, that deliver tailor-made subscription dog food, there has been a surge in people signing up for their online service, as pet owners try to abide by social distancing rules.
“We have seen our existing customers pull forward sales,” admits Davidson, who founded Tails.com back in 2013. “We’ve also seen more people re-join Tails.com, and when the lockdown first began, our new customers doubled.”
Meanwhile, other parts of the pet care industry, that are not deemed ‘essential’ are being decimated by the coronavirus pandemic. This includes those providing day care, boarding centres, groomers, dog walkers and trainers who are finding their services are now redundant, now majority of people and pets are bound to their homes.
In 2018, according to the US. Bureau of Labor Statistics, more than 300,000 people were employed in the pet care field across the US. Of the $95.7bn industry, in 2019, $10.3bn was spent onboarding, grooming, training and walking. The knock-on effect of lockdown has caused a number of these services to close, with thousands getting laid off.
The San Francisco Bay area is particularly feeling the pressure of coronavirus, as dogs are so popular, they outnumber children, with 120,000 canines to 115,000 kids. As you can imagine, this comes hand in hand with a booming pet care industry that is now going through the works. In 2018, according to the US. Bureau of Labor Statistics, more than 300,000 people were employed in the pet care field across the US.
Of the $95.7bn industry, in 2019, $10.3bn was spent onboarding, grooming, training and walking. The knock-on effect of lockdown has caused a number of these services to close, with thousands getting laid off.
What the future holds
Right now, it’s hard to picture what retail as a whole will look like when the world finally pulls through the pandemic.
With more people turning to online to help them stay stocked during the lockdown, how many will return to their brick-and-mortar retailers, after getting used to the convenience of e-commerce is difficult to predict.
Prior to the outbreak, reports showed pet care was globally one of the largest and fastest-growing e-commerce categories, with overall e-commerce rising by double digits each year. Pet care e-commerce sales in the US alone during 2018 increased by 67%. Online pet food sales in the US accounted for 17% of the market, which was expected to rise by 23% by 2023.
“I would be curious to see where the loyalty erodes and if shoppers will just go to Amazon from now on,” asks Evan Bakker, a principle analyst at Gartner for Marketers, covering the retail effects of Covid-19.
“The companies I’m worried about are those who have had a fairly commoditized business, that wasn’t very convenient,” Bakker continues, pointing to PetCo, a pet specialty retailer that operates in more than 1,500 locations across the US ad Mexico, as a prime example of pet care retailers that has adapted well to the crisis.
While the shop has stayed open, it claims it is taking necessary precautions to keep its employees and customers safe. In response, it has launched a curbside pick-up at most stores, offering limited store hours, stopped shipment of non-essential items like toys and apparel to prioritise essential products.
A recent Gartner survey asking what actions marketing departments are taking in response to the Covid-19 pandemic found that 34% of marketers are altering their ad creatives and 19% are promoting e-commerce offerings.
Analyzing 162 retailers and DTC brands with a brick-and-mortar footprint, the share of overall emails mentioning either stores or fulfillment between 1 March to 23 saw an increase of 4% from January and 8% from February. Many of these March emails mention store closures, updated hours of operation, and commitments to viable fulfillment methods like delivery and curbside pickup.
“Early movers in terms of omnichannel technology are adapting the best right now,” Bakker continues. “And those retailers will come out way better than those that don’t have the infrastructure to adapt. After the crisis is over, they will need to play catch-up, but they have fallen even further behind because they’ve lost these vital months that other brands were able to blend that e-commerce in-store experience.”
While pet shops in the UK and US have been able to stay open, confusion over whether they should be deemed ‘essential’ is provoking a backlash.
One outlet that has had its brand image dented is UK brand Pets at Home, which came under fire after it sent a letter asserting that staff could qualify for the coronavirus key workers list, including those working for its Vets4Pets business.
After snippets of the letter made it onto social media, the brand found itself within a social media backlash, after people criticised it for what they saw as an attempt to get all its staff on the coronavirus key workers list.
However, Pets at Home claim this wasn't the case and the letter, in fact, asked colleagues to only apply for ‘key worker’ status if absolutely necessary.
How Pets at Home reacts to this criticism will be pivotal in preventing a real dent to its brand image like the case of Wetherspoons and Sports Direct, who came under fire after people claimed they put business before the health of their staff and customers.
While the pet care industry battles through this tumultuous time in its business history, DTC players look poised to emerge lucratively from the ashes. With their eyes set on the billion-dollar projection, one thing that's certain is the pet care industry will not look the same once the pandemic comes to an end.