Retail Channel Monthly $ Update – November Final & December Advance

Time for our monthly update on U.S. retail sales by channel. The current COVID-19 crisis has caused turmoil in the Retail Marketplace. Consumer spending behavior has changed and continues to evolve. In this report we will track the changes and migration between channels. We will do that with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – approximately 2 weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will look at the latest release of both reports. We will begin with the Final Retail Report from November and then move to the Advance Retail Report for December. We will track the consumers’ evolving behavior in terms of channel migration but importantly, in this report, we will get the initial comparison between yearend $ for 2020 vs 2019.

Both reports include the following:

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This will be more detailed in the “Final” reports and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2019
  • Current YTD change – % & $ vs 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

First, the November Final. U.S. Retail hit bottom in April then began to recover. November $ were down from October, but still growing vs 2019. Here are the major retail groups. (The Data in all graphs is Actual, Not Seasonally Adjusted)

The final total is $2.7B less than the Advance report projected a month ago. The groups were up and down but most of the reduction came from Relevant Retail: -$3.0B; Restaurants: +$0.4B; Auto: -$0.3B; Gas Stations: +$0.2B. All groups but Relevant Retail were down after the October Total Retail $ peak. However, YTD Total $ales grew more positive vs 2019 thanks to another strong month from Relevant Retail and an OK month by Auto. The Auto segment is almost equal to 2019 $, but Restaurants and Gas Stations are down -$210B. Relevant Retail remains the only positive group in YTD sales.

Now, let’s see how some Key Pet Relevant channels were doing in November.

  • Overall– $ in 6 of 11 groups were up vs October and 9 were up vs November 2019 and YTD. That’s pretty good.
  • Building Material Stores – Their “Spring” lift continued through Summer and now into Fall. While sales peaked in June, they’re still showing double digit % increases vs 2019. Sporting Goods stores are not included in this group, but they have a similar Spring lift pattern. Their sales took off in May, peaked in June but have continued to grow vs 2019. In June, their YTD $ vs 2019 turned positive and by November they were up 15.4%.
  • Food & Drug – Supermarket $ slowed in Aug/Sep turned up in October then flattened in November. They are +$71.6B YTD. Drug Stores $ dipped in August, grew in Sep/Oct, then fell again in November. They’re +$14B YTD.
  • General Merchandise Stores – $ in Clubs/SuperCtrs slowed in September then grew in Oct/Nov. They are now +$30.8B vs 2019. $ Stores sales slowed from June>Sept but grew in Oct/Nov and are now +12.4% vs 2019. Discount Dept. store sales were slowing before the pandemic. This trend continues despite their November lift.
  • Office, Gift & Souvenir Stores – A 28% drop after a 20% October lift . Recovery is long way off.
  • Internet/Mail Order – The pandemic has accelerated this channel’s growth vs 2019. Sales hit another new peak in November. Many consumers have discovered online shopping and the behavior is likely to become habitual.
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22 to 24% of total $). Pet Stores were usually essential, but most stores were not. The others began reopening in May and the number grew in June which produced an increase vs 2019. Sales peaked in July but have remained stable and strong vs 2019. In fact, YTD sales are up +10.2%.

The recovery began in May and accelerated in June>July as even more businesses began to re-open. The Relevant Retail Segment was positive in all measurements in May>July. In Aug>Sept $ slowed but were still strong vs 2019. In Oct>Nov $ turned up and reached a new peak. The key drivers in the positive numbers vs 2019 remain the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm.  How are things progressing? Here are the Advance numbers for December.

April & May were the 2 biggest spending drops in history. In June, sales increased and continued to grow in July. $ fell in Aug/Sept. but in October, all groups spent more, turning YTD Total Retail positive for the 1st time since February. Sales dipped in November but not vs 2019 . In December, all groups spent more so the YTD Total Retail increase vs 2019 grew.

Total Retail – Total Retail spending hit a record $620B in December, up $74B from November and $28.7B from 2019. In February YTD 2020 sales were up $60B, +6.6%. Then came COVID-19. We hit bottom at -$112B YTD in May and began moving in the right direction. We broke even in October and are now up $40.2B, but still down -$20B from February.

Restaurants – Spending grew +$0.9B from November but was -$13.7B (-21%) below December 2019. Sales hit bottom in April due to forced closures. Re-openings began in May but have been mixed due to a virus resurgence. YTD $ales have stayed about 20% behind last year. January and February, normally the 2 slowest months, are on top in 2020. In February YTD sales were up $9B. They finished 2020 -$149B, (-19.5%). Delivery/pickup couldn’t make up the difference.

Automobile & Gas Stations – When you are staying home your car becomes less of a focus in your life. Auto Dealers began combating this attitude with fantastic deals and a lot of advertising. Monthly $ turned positive versus 2019 in June and have stayed that way. Sales dipped in November but rose spectacularly in December. They are now +1.1% YTD vs 2019. Gas Station $ales hit bottom in April and have been up and down ever since. However, YTD sales have remained consistently about 16% below 2019. At yearend they are -$79.6B (-15.9%). People are still not driving as much.

Relevant Retail – Less Auto, Gas and Restaurants – Many non-essential businesses shuttered their doors in March but there was a rash of binge/panic buying for “necessities”, especially groceries, which drove spending up $19B. April brought a full month of closures and an end in binge buying, spending dropped $34B from March. In May, the overall market began to reopen so spending began to move in the right direction and growth continued through July. $ales fell in Aug/Sept but turned up again in Oct/Nov. We should note that the monthly June>November $ were larger than all months in 2019 but December. In December 2020, spending skyrocketed, up $57B from November and $33B from 2019. The Relevant Retail group now has posted positive numbers versus last year and YTD for 8 consecutive months and is up $255.1B YTD (+6.9%) vs 2019. In May when the streak began, it was up +2.7%. The primary drivers were Nonstore, Grocery, SuperCenters/Clubs & $ Stores plus an “extended” spring lift from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels across America. In December, consumer spending in the relevant retail market passed $400B for the first time. Let’s see where the $ came from. These groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

All 13 channels beat last months $. In November it was only 9. In September & October 10 channels beat the same month in 2019. This number dipped to 9 in November & December. In YTD $, 8 are showing an increase, the same as it’s been since September. The YTD decreases are coming from channels that are primarily nonessential businesses.

After April’s widespread closures there was a retail surge in May. Things truly opened up in June & July and sales continued to increase. In August/September, they slowed. Growth started again in October/November and took off in December. Relevant Retail is up $255.1B vs 2019. Essential channels are responsible for the YTD lift vs 2019, primarily:

  • Nonstore Retailers – Even more consumers are online shopping.
  • Food & Beverage, especially Grocery– Restaurant $ are still down so consumers continue to eat & drink at home.
  • Bldg Materials/Garden/Farm– Their “Spring” lift continues unabated as consumers focus on their home.
  • SuperCtrs/Club/Value/$ Strs – Sales slowed in April but came back in May and continue to grow vs 2019. This group turned the whole Gen Mdse channel positive. It clearly shows that value is still a consumer priority.

Regarding the Individual Large Channels

General Merchandise Stores – Sales grew vs November but not vs 2019 because Department Stores continue to fade, down -20% vs December 2019. Club/SuperCtr/$ stores are still the big positive force. In April consumers dialed back their panic buying and spending on discretionary items was also down significantly. Since May we have seen sales return to a more normal, strong pattern in these big and small value stores, including a 6% increase vs December 2019.

Food and Beverage, plus Health & Personal Care Stores – The Grocery segment is still strong and growing, +$76.4B YTD, due to the continuing big drop in restaurant sales. Monthly Sales increased in the Health, Personal Care group. Their $ have been up vs 2019 since June and YTD turned positive vs 2019 in August. Drug Store $ growth has been a key factor.

Clothing and Accessories; Electronic & Appliances; Home Furnishings – Except for September, monthly sales have grown every month since May. All groups increased sales vs November with Clothing & Accessories leading the way at +50.1%. All 3 channels are down significant percentages in YTD sales. Clothing Stores are the worst performers. In December they were down 12.1% vs December 2019 and 26.4% YTD. Together, these groups are down $91B vs 2019.

Building Material, Farm & Garden & Hardware – Sales peaked in late spring, as usual. However, this channel continues to benefit from consumers turning their focus to their home needs, including house and yard repair and improvements. This has extended their “Spring” lift indefinitely? $ were up 21.9% vs December 2019 and up +$53.7B (+14.0%) YTD.

Sporting Goods, Hobby and Book Stores – Book and Hobby stores are open and sales in Sporting Goods stores have taken off as Consumers are seeking more recreation. Sales exploded in December with the most monthly $ in 4 years, up 35.8% vs last month and 17.2% vs December 2019. In April, their YTD $ were -$3.4B. This deficit was wiped out in September and through December, YTD sales were +$5.7B (+4.5%). Their holiday lift far exceeded 2019.

All Miscellaneous Stores – This group is mostly small to medium specialty stores – both chains and independents. Pet Stores are essential but most other stores are not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound in May and grew through July when they finally beat the monthly sales for 2019. In Aug>Sept sales plateaued. They turned up in October, down in November, then up strong in December. In February, they were up $2.6B YTD. At yearend they are down -$1.6B, a difference of $4.2B. Recovery will have to come in 2021.

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. The COVID-19 crisis has only accelerated the ongoing movement to online retail. In February NonStore was up 8.6% YTD. In December monthly sales were the highest for any month in history and the 1st month to exceed $100B. They are now up 22.1%, +$176.0B YTD. Their increase is 69% of the total $ increase for Relevant Retail Channels. They are the clear leader, and their performance far exceeds their 12.9% annual increase in 2019. 2020 was a key waypoint for NonStore Retailers.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded along with their store sales in their regular channel. Whether they are up or down, their online sales are included in the totals.

Recap – April and May saw the 2 biggest year over year monthly sales declines in history. Restaurants, Auto and Gas Stations increased sales from May through July, but results have been mixed since then. All were down in September, up in October, down in November and finally up in December. The Auto segment passed 2019 YTD $ in December but Restaurants and Gas Stations are still struggling. The Relevant Retail segment has been the only true positive. Sales slowed in Aug>Sep. but then began grow again, hitting a record high in December. Their Monthly and YTD sales vs 2019 are now up for 8 consecutive months. Overall, they are +$255B YTD but for some segments in this group there is still a long way to go. Total Retail Sales peaked in December setting a new monthly $ record. In October Total Retail passed 2019 YTD $ and is now up +$40.2B (+0.6%) vs 2019. The growth has continued despite a surge in the virus. However, this will be a long battle. We will continue to monitor the data and provide you with regular updates.

 

 

 

 

2019 U.S. Pet Spending by Racial/Ethnic Groups

87.6% of the $77.44B that we spent on our companion animals in 2019 was done by 68.6% of the 132.2 million financially independent Consumer Units. These “majority” CU’s are White, Not Hispanic. That means that the 41.6 million CU’s – 31.4%, which are Racial or Ethnic minorities, generated only 12.4% of Total Pet Spending.

This disparity is evidence of yet another inequity in our society. In this report, we will drill deeper to get more specifics on the Pet Spending by Hispanics (All Races), African Americans and Asians. The U.S. is growing more ethnically diverse every day, so this is a situation and an opportunity which needs to be investigated.

Note: All the numbers are calculated from or taken directly from the Annual US BLS Consumer Expenditure Survey.

Let’s get started by looking at the Racial/Ethnic make-up of the U.S.

  • The White, Not Hispanic group also includes Native Americans and Pacific Islanders.
  • All the growth in number of CU’s came from minorities, +874K while White CU’s decreased by -73K.
  • In 2015 the White, Not Hispanic group fell below 70% of the total CU’s for the 1st time. It continues to decline.
  • Asians – smallest share, but the most growth, +2.4%.
  • African Americans, the second largest minority had the biggest increase in numbers.
  • The Hispanic growth slowed slightly but they are still the largest minority group.

Now let’s take a look at some of the characteristics that we have found to be important in pet spending behavior.

  • CU Size – Hispanics have by far the largest CU’s, 28% higher than average. However, in 2019, only 1 and 3 person CU’s spent more on their pets. 4+ people CU’s were down $1.1B
  • # Children under 18 – In 2019 Married couples with children spent less with 2 exceptions – oldest child, either under 6 or over 18. Note: With significantly more children per CU than Whites, the minority share of CU’s is sure to grow. This is especially true for Hispanics, even without immigration.
  • # Earners– It is more likely that all the adults work in Hispanic or Asian families. With over 40% more kids than Asians and a much lower income, this could be tough for Hispanics.
  • Homeownership – Homeowners account for 81.4% of all Pet Spending. The percentage of Hispanics and African Americans that own homes is 34>40% less than Whites. Both are also twice as likely to live in a Center City than in the suburbs. Asians are also likely to be Center City dwellers. The rate of pet ownership is lower in Center Cities.
  • Education is an important factor in Pet spending. it generally means higher income and helps in determining value in premium foods and Vet Services. Asians are the leaders. Hispanics have the lowest % of post High School education.

Next, we’ll compare each to the National Avg in Income, Spending, Pet Spending and Pet Share of Total $pending. CU National Averages: Income – $82,852; Total Spending – $62,949; Pet Spending – $593.51; Pet Share – 0.943%

  • Asian Americans make and spend the most money…but not on their pets. This may be due to cultural differences.
  • African Americans and Hispanics have lower incomes, but their overall spending is relatively in line. However, they spend significantly less on their pets. This is especially true of African Americans and indicates a significantly lower rate of pet ownership. A consumer survey from HUD on emergency disaster planning found this number to be 24%.
  • The spending of White Americans is very much tied to income, except where their pets are concerned, then…$$$.

It’s time to look at actual $ spent. We’ll begin with each industry segment which will put the Total Pet $ into better perspective. We will look at 2019 $ as well as a 6 year history. There is a huge disparity in $ between Whites and Minorities but there are also significant differences in key demographic characteristics among the minority groups that affect their spending. We will use multiple graphs to drill deeper into the data. First, Recent Pet Food History…

The graph shows the overall Pet Food Spending history from 2014 to 2019. You see that the White, Not Hispanic group mirrors the Super Premium spending waves, both up and down. On the other hand, Total Minority spending showed steady growth in the premium era until 2019. Their big drop in 2019 could be a late reaction to the 2018 FDA warning. From 2014>2019:

  • Pet Food $ were up $7.12B (+30.0%)
  • White, Not Hispanics were up $6.28B (+30.1%)
  • Minorities were up $0.84B (+26.2%) – Note: In 2018, at their peak, they were up $1.63B (+50.8%).

Until 2019, Minorities showed steady growth in Pet Food Spending during the Super Premium era. They may be slower to react to food trends. Their biggest lift came in 2018 which may parallel the overall lift in 2017 due to a deeper penetration of the upgrade. The 2019 drop may be a late reaction to the FDA warning. Let’s take a closer look at 2019 and the spending history of specific minorities.

In 2019 we saw an overall rebound in Pet Food spending after the drop in 2018 due to the reaction to the FDA warning on grain free dog food. However, this pattern was not true for minorities. All groups were down in 2019. For Hispanics and African Americans, Pet Food spending fell significantly – double digit %. This was probably due to a slower reaction to the 2018 FDA warning. Spending also decreased for the high income, highly educated Asian group. This minor decrease was likely a result of value shopping. The overall minority decrease drove the White CU share of spending up to 88.2%, second only to their share of Veterinary spending. Here are the specifics:

2019 National: Avg CU spent – $236.26 (+$16.34); 2019 Total Pet Food Spending: $31.19B, Up $2.35B (+8.1%)

  • White, Not Hispanic – Avg CU spent – $300.59 (+$32.22); 2019 Total Food Spending: $27.14B, Up +$3.13B (+13.0%)
    • There are large subsets in this group which react quickly and strongly to trends in Pet Food.
  • Total Minorities – Avg CU spent – $97.10 (-$18.88); 2019 Total Food Spending: $4.05B, Down -$0.79B (-16.3%)
    • Total minorities had consistent growth for 4 years. A delayed reaction to the FDA warning generated a big drop.
  • Hispanic – Avg CU spent – $121.06 (-$27.89); 2019 Total Food Spending: $2.30B, Down -$0.44B (-16.1%)
    • They had the biggest $ drop after a big lift in 2018. Both are delayed reactions to the 2017 lift and 2018 drop.
  • African Americans – Avg CU spent – $64.67 (-$17.86); 2019 Total Food Spending: $1.05B, Down -$0.32B (-23.4%)
    • Spending began to fall in 2018. Their higher education may have made some more aware of the FDA warning.
  • Asians – Avg CU spent – $108.45 (-$1.84); 2019 Total Food Spending: $0.70B, Down -$0.02B (-3.0%)
    • High Income but low pet ownership. Their spending is susceptible to trends but tends to be more stable.
  • 2019 Performance = Share of Spending/Share CU’s. Shows if groups are “earning their share”:
    • White, Not Hispanic – 126.9%; Minorities – 41.3%; Hispanics – 54.4%; Asians – 47.0%; African Americans – 25.8%.
    • Note: In 2018: Whites – 120.5%; Minorities – 48.0%; Hispanics – 71.0%; Asians – 53.3%; African Americans – 37.0%
  • Spending History – From 2014 to 2019, U.S. Pet Food Spending increased $7.12B (+ 29.6%). There were 2 big spending drops – 2016 & 2018, but 3 major Super Premium waves – 2015, 2017, 2019, that produced this increase:
    • White, Not Hispanic: + $6.28B (+30.1%) Their spending is reflected in the National Pattern.
    • Total Minorities: +$0.84 (+26.2%) Minorities “bought in” to the upgrade but each has a different story.
    • Hispanics: +$0.50B (+27.8%) Their spending basically lags 1 year behind the National pattern and peaked at +52.2% in 2018.
    • African Americans: +$0.13B (+14.1%) They are the only group with 3 consecutive years of increases. Their spending peaked at +65.2% in 2017 then began to fall through 2019, probably in reaction to the FDA warning.
    • Asians: +$0.21B (+42.9%) Had 2 consecutive declining years – 2016 & 2017. Generally small changes but had a big lift in 2018 which peaked their spending at +46.9%.

Although their distinctly different demographics produced different patterns, all minorities have made some level of commitment to upgrading their Pet Food. Now, let’s turn our attention to Pet Supplies. First, 2014>2019 Spending

The graph shows the overall Pet Supplies Spending history from 2014 to 2019. Pet Supplies spending is more discretionary than Food, so it reacts more to price changes. You see major spending dips in 2015 and 2019 due to inflation.  The White, Not Hispanic group mirrors the National pattern.  However, Total Minority spending dropped in both 2018 & 2019. This reflects their price sensitivity as inflation began at mid-year 2018. Overall, from 2014>2019:

  • Pet Supplies $ were down -$0.19B (-1.1%)
  • White, Not Hispanics were down -$0.57B (-3.9%)
  • Minorities were up $0.39B (+17.7%)

Minority Supplies spending reflects their focus on “essential” supplies. The more discretionary items are the most impacted by price swings. Note: White, Not Hispanic Spending peaked in 2018, +16.5%; Minorities, +33.2% in 2017.

Now, let’s take a closer look at 2019 and the spending history of specific minorities.

Prices started up in April of 2018. By the end of 2019 they had inflated 5.7%, the most since the great recession. This had a big impact as discretionary Supplies spending has become more price sensitive to today’s “value conscious” consumers of all income levels. All RacialEthnic groups spent less but the biggest % drops were in the higher income groups. The lower income groups, Hispanics and especially African Americans are more focused on “essential” supplies and less likely to indulge in more discretionary purchases. Minorities have their largest share of $ in Supplies. This is largely due to the lack of major product trends in the segment and their commitment to essential products. Here are the specifics:

2019 National: Avg CU spent – $127.15 (-$23.47); 2019 Total Pet Supplies Spending: $16.81B, Down $2.98B (-15.1%)

  • White, Not Hispanic – Avg CU spent – $156.87 (-$31.35); 2019 Supplies Spending: $14.23B, Down -$2.86B (-16.7%)
    • There are large subsets in this group which react quickly and strongly to inflation/deflation.
  • Total Minorities – Avg CU spent – $62.30 (-$4.45); 2019 Supplies Spending: $2.59B, Down -$0.13B (-4.8%)
    • Rising prices drove spending in all groups down.
  • Hispanic – Avg CU spent – $79.97 (-$5.91); 2019 Supplies Spending: $1.43B, Down -$0.08B (-5.0%)
    • They buy more discretionary supplies but are price sensitive. As prices began to rise in 2018, spending dropped.
  • African Americans – Avg CU spent – $45.80 (-$1.31); 2019 Supplies Spending: $0.79B, Down -$0.01B (-0.6%)
    • Their low income limits their discretionary purchases, so the rising prices had little impact on spending.
  • Asians – Avg CU spent – $57.44 (-$8.80); 2019 Supplies Spending: $0.36B, Down -$0.05B (-11.2%)
    • Low pet ownership, high income… but value conscious. Their $ also started to drop as prices started up in 2018.
  • 2019 Performance = Share of Spending/Share CU’s. Shows if groups are “earning their share”:
    • White, Not Hispanic – 123.4%; Minorities – 49.0%; Hispanics – 62.9%; Asians – 45.2%; African Americans – 36.0%.
    • Note: In 2018: Whites – 125.0%; Minorities – 48.0%; Hispanics – 57.0%; Asians – 44.0%; African Americans – 31.3% The lowest income groups spent less but gained share and improved performance because the Supplies spending drop was in the most discretionary categories, which they are less likely to buy.
  • Spending History – From 2014 to 2019, U.S. Supplies Spending fell $0.19B (-1.1%). Despite a deflationary spending increase wave from 2016>2018, two spending drops in 2015 and 2019, caused by inflation produced a net decrease.
    • White, Not Hispanic: -$0.57B (-3.9%) They reflect and drive the National Pattern. $ Peaked at +16.5% in 2018.
    • Total Minorities: +$0.39 (+17.7%) More focused on necessities, but price matters. $ peaked at +33.2% in 2017.
    • Hispanics: +$0.19B (+15.3%) With deflating prices, they expanded their discretionary Supplies purchases, peaking at +30.6% in 2017. However, when prices turned up in 2018, their spending turned down.
    • African Americans: +$0.13B (+19.7%) Surprisingly, the spending changes from 2014>2019 of this lowest income group exactly match the national pattern but are much less volatile because they are focused on essentials.
    • Asians: +$0.05B (+16.1%) Their spending also matched the national pattern until 2018. They have the highest income but are value conscious as $ began to drop when prices turned up in 2018. 2017 Peak was +90.3%

All minorities have a commitment to essential supplies. Discretionary spending increases with income, but all groups are sensitive to some degree to the ongoing deflation/inflation trends in this segment.

Now, let’s turn our attention to Non-Vet Services. First, an overview of 2014>2019 Spending

The graph shows the overall Pet Services Spending history from 2014 to 2019. Services spending is the most discretionary of any segment, so it is very dependent upon income. The two slight spending dips in 2017 and 2019 are the only decreases since the great recession. We should also note that spending increased every year for White, not Hispanics. Drops were caused by Minorities.

Overall, from 2014>2019:

  • Pet Services $ were up $2.95B (+52.0%)
  • White, Not Hispanics were up $2.53B (+50.6%)
  • Minorities were up $0.42B (+62.7%)

With a big expansion in outlets, Services became more accessible. This ultimately drove the huge lift in 2018. Minorities $ peaked at +89.6%. The 2017 dip was due to value shopping. In 2019, rising inflation was a factor for lower income CUs.

Now, let’s take a closer look at 2019 and the spending history of specific minorities.

An increased number of outlets boosted competition and made Services more accessible and convenient for all groups. After a period of low inflation, prices turned up in May of 2018. By the end of 2019 they had inflated 5.6%, double the “normal” rate. It had less of an impact on the higher income groups, whose primary focus is convenience. However, the lower income groups, Hispanics and African Americans, saw double digit drops in Services Spending in 2019.

Here are the specifics:

2019 National: Avg CU spent – $65.22 (-$1.14); 2019 Total Pet Services Spending: $8.62B, Down $0.10B (-1.1%)

  • White, Not Hispanic – Avg CU spent – $83.06 (+$0.91); 2019 Services Spending: $7.53B, Up +$0.08B (+1.0%)
    • They held their ground at the new high level even as prices inflated.
  • Total Minorities – Avg CU spent – $26.28 (-$4.85); 2019 Services Spending: $1.09B, Down -$0.18B (-14.2%)
    • Rising prices drove spending down in low income groups, which are 85% of all minorities.
  • Hispanic – Avg CU spent – $29.68 (-$7.06); 2019 Services Spending: $0.53B, Down -$0.12B (-17.6%)
    • They have higher discretionary spending but are price sensitive. Rising prices caused a sharp drop in spending.
  • African Americans – Avg CU spent – $18.08 (-$5.90); 2019 Services Spending: $0.31B, Down -$0.10B (-22.9%)
    • Their low income limits their discretionary purchases, so the rising prices had a big impact on spending.
  • Asians – Avg CU spent – $39.17 (+$4.36); 2019 Services Spending: $0.25B, Up +$0.04B (+15.3%)
    • Low pet ownership, but the highest income. They appreciate the convenience – a big increase in $ in 2019.
  • 2019 Performance = Share of Spending/Share CU’s. Shows if groups are “earning their share”:
    • White, Not Hispanic – 127.4%; Minorities – 40.3%; Asians – 60.1%; Hispanics – 45.5%; African Americans – 27.7%.
    • Note: In 2018: Whites – 123.8%; Minorities – 46.9%; Asians – 52.5%; Hispanics – 55.4%; African Americans – 36.1% Income truly matters in Services spending. Strong inflation caused a significate drop in share and performance for the lower income minorities while the higher income groups gained ground.
  • Spending History – From 2014 to 2019, U.S. Services Spending grew $2.95B (+52.0%). A radically increased number of outlets offering Services made them more accessible and drove sales up in all groups.
    • White, Not Hispanic: $2.53B (+50.6%) A huge share of $ and the only group to increase spending every year.
    • Total Minorities: +$0.42B (+62.7%) Strong growth but price matters. $ peaked at +89.6% in 2018.
    • Hispanics: +$0.25B (+89.3%) They radically expanded their Services purchases. Their spending exactly matched the national pattern, peaking at +132% in 2018 but when prices turned up in 2018, their spending fell sharply.
    • African Americans: +$0.05B (+19.2%) Their spending grew spectacularly from 2015 to 2018, +95.2%. Then prices turned up which had the biggest impact on this lowest income group. Services $ dropped -22.9%.
    • Asians: +$0.12B (+92.3%) They obviously appreciate the increased convenience of Services and they have the money to pay for it. Their Services $ increased +178% from 2017 to 2019.

All Pet Parents appreciate and want the convenience of Pet Services. However, it is the most discretionary of all the industry segments, so income is a definite factor in spending behavior patterns.

Now, let’s look at Veterinary Services. Here is an overview of 2014>2019 Veterinary Spending.

The graph shows the Veterinary Services Spending history from 2014 to 2019. Veterinary spending is a necessary expenditure, but a high inflation rate has made it more dependent upon income. Spending has only fallen once since 2014 and that was driven by minorities. In fact, Minority spending fell in 3 of the last five years but increased every year for White, not Hispanics.

Overall, from 2014>2019:

  • Veterinary $ were up $4.22B (+24.0%)
  • White, Not Hispanics were up $4.55B (+29.8%)
  • Minorities were down -$0.32B (-13.9%)

The growth in this segment has slowed since 2017. You can see the impact of rising prices on Minority spending. There was an inflation spike in 2015 which caused the only overall decrease and the biggest $ drop for minorities.

Now, let’s take a closer look at 2019 and the spending history of specific minorities.

Strong inflation has resulted in a reduction in the frequency of Veterinary visits since the great recession. Much of the segment’s growth has just come from higher prices. In 2019 inflation reached 4.14% so the amount of Veterinary Services actually declined from 2018. The strongly rising prices especially impacted the lowest income group, African Americans. Even though spending in 2019 increased +2.7% for White, Not Hispanics they also had a net decrease in the amount of Veterinary Services. The only “true” gains came from Hispanics and Asians.

Here are the specifics:

2019 National: Avg CU spent – $164.88 (+$3.37); 2019 Veterinary Services Spending: $21.80B, Up $0.58B (+2.7%)

  • White, Not Hispanic – Avg CU spent – $218.65 (+$5.93); 2019 Veterinary Spending: $19.83B, Up +$0.52B (+2.7%)
    • Another small gain in dollars, keeping their string of annual increases intact.
  • Total Minorities – Avg CU spent – $26.28 (-$4.85); 2019 Veterinary Spending: $1.98B, Up +$0.06B (+3.1%)
    • A small gain due to increased spending by Hispanics and Asians. Minorities also had 0.9M more CUs.
  • Hispanic – Avg CU spent – $65.75 (+$13.06); 2019 Veterinary Spending: $1.18B, Up +$0.12B (+27.3%)
    • Inflation and delayed frequency has caused a spending roller coaster. 2019 was an “up” year.
  • African Americans – Avg CU spent – $32.97 (-$15.92); 2019 Veterinary Spending: $0.57B, Down -$0.26B (-31.1%)
    • Their low income contributes to even bigger swings in spending. The strong inflation caused a big decrease.
  • Asians – Avg CU spent – $35.91 (+$8.61); 2019 Veterinary Spending: $0.23B, Up +$0.06B (+34.7%)
    • They have high income but rising prices have produced a perfect annual up/down spending pattern.
  • 2019 Performance = Share of Spending/Share CU’s. Shows if groups are “earning their share”:
    • White, Not Hispanic – 132.6%; Minorities – 28.8%; Hispanics – 39.9%; Asians – 21.8%; African Americans – 20.0%.
    • Note: In 2018: Whites – 131.7%; Minorities – 29.3%; Hispanics – 32.6%; Asians – 16.9%; African Americans – 30.3% Once again the change in frequency made the biggest difference. 2019 brought a big $ drop by African Americans which couldn’t be overcome by significant gains from other minorities. It is somewhat surprising that in a “need” category like Veterinary, White, Not Hispanics have their biggest share of the $. Veterinary care is needed by Pet Parents, but the frequency has become more discretionary.
  • Spending History – From 2014 to 2019, Veterinary Spending rose $4.22B (+24.0%). White, not Hispanics have shown consistent growth. Minorities have been on an up & down spending rollercoaster ride which even produced an overall small decrease in spending for the whole Veterinary segment in 2015.
    • White, Not Hispanic: +$4.55B (+29.8%) Over 90% of the business and annual growth since 2014.
    • Total Minorities:-$0.32B (-13.9%) 2 ups and 3 downs since 2014. After 2014, $ peaked at -12.2% in 2017.
    • Hispanics: +$0.62B (+110.7%) They have an up and down pattern but their spending more than doubled. This is great but somewhat deceptive. The frequency variation has caused some extremely high peaks and big drops with lower income groups. Hispanics Veterinary $ fell -$1.23B, -68.7% from 2013>2014, likely from a big drop in frequency.
    • African Americans: -$0.97B (-63.0%) Also up and down spending changes but they have yet to recover from the 55% spending drop in 2015. A spike in Veterinary prices along with frequency issues likely caused that decrease.
    • Asians: +$0.02B (+9.5%) Their spending turned sharply down in 2018. Inflation and reduced visit frequency even affected this highest income group. 2017 Peak was +95.2%

Income matters but inflation affects all income levels. In this necessary segment, Pet Parents don’t stop spending they just cut back on the frequency. White, Not Hispanics have a higher income and the highest level of Pet ownership. The result is that they dominate this segment with over 90% of the spending.

Now, let’s look at Total Pet. Here is an overview of 2014>2019 Spending.

The graph shows the Total Pet Spending history from 2014 to 2019. Each Segment has a different story. The two drops in Total Pet Spending are tied to Food Value Shopping in 2016 and Supplies inflation in 2019. The White, Not Hispanic group mirrored the National pattern until 2019. Total Minority spending dropped in both 2015 & 2019. Their 2019 decrease was large enough that it drove the whole industry down. Overall, from 2014>2019:

  • Total Pet $ were up $14.12B (+22.0%)
  • White, Not Hispanics were up $12.79B (+22.9%)
  • Minorities were up $1.33B (+15.9%)

The Total Pet spending pattern for Whites and Minorities only matched in 2017 & 2018 when both spent more. In the other years they were opposites. Spending peaked for Minorities in 2018 at 28.2%.

Now, let’s take a closer look at 2019 and the spending history of specific minorities.

There were a lot of things going on in 2019. The two biggest factors were the rebound in Pet Food spending after the FDA warning and the high inflation in Supplies prices. The reaction to these and other trends in the industry varied among Racial Ethnic groups. However, income may be the most important demographic difference. The two highest income groups, Whites and Asians spent more on their pets in 2019. However, it wasn’t enough to overcome spending decreases by the lower income groups, Hispanics and African Americans. Here are the specifics:

2019 National: Avg CU spent – $593.51 (-$4.90); 2019 Total Pet Spending: $78.44B, Down $0.16B (-0.2%)

  • White, Not Hispanic – Avg CU spent – $759.17 (+$7.72); 2019 Total Pet Spending: $68.73B, Up +$0.87B (+1.3%)
    • They had a huge drop in Supplies but increased $ in other segments, especially Food, with a +$3.1B spending rebound from the 2018 FDA warning.
  • Total Minorities – Avg CU spent – $232.65 (-$31.38); 2019 Total Pet Spending: $9.71B, Down -$1.03B (-9.6%)
    • Spending drops by the lower income groups, African Americans and Hispanics, especially in Food and Services, produced a small decrease in Total Pet Industry spending.
  • Hispanic – Avg CU spent – $296.46 (-$27.80); 2019 Supplies Spending: $5.44B, Down -$0.38B (-6.5%)
    • Their decrease was primarily driven by a big drop in Food, a delayed reaction to the 2018 FDA warning.
  • African Americans – Avg CU spent – $161.52 (-$40.49); 2019 Total Pet Spending: $2.73B, Down -$0.68B (-19.9%)
    • Spending was down in all segments, with the biggest drops in Food and Veterinary.
  • Asians – Avg CU spent – $240.97 (+$2.33); 2019 Supplies Spending: $1.54B, Up +$0.03B (+2.0%)
    • Lifts in Services and Veterinary Services overcame drops in Food and Supplies.
  • 2019 Performance = Share of Spending/Share CU’s. Shows if groups are “earning their share”:
    • White, Not Hispanic – 127.8%; Minorities – 39.4%; Hispanics – 51.2%; Asians – 41.0%; African Americans – 26.6%.
    • Note: In 2018: Whites – 125.0%; Minorities – 44.2%; Hispanics – 55.4%; Asians – 41.0%; African Americans – 33.6% The lowest income groups, especially African Americans, loss considerable ground in 2019.
  • Spending History – From 2014 to 2019, Total Pet Spending grew $14.12B (+22.0%). This period saw a series of up and down spending waves in Food, Supplies and Services. The annual growth was +4.1%, which is considerably below the 7.7% industry average since 1960.
    • White, Not Hispanic:+$12.79B (+22.9%) They drive Pet Spending with only 1 small drop in 2016.
    • Total Minorities: +$1.33 (+15.9%) Different patterns. $ peaked at +28.2% in 2018. Exceeding the rate of Whites.
    • Hispanics: +$1.57B (+40.6%) They have the highest % growth and are the only group that spent more every year from 2015 to 2018. Spending fell in 2019 in all segments but Veterinary. They peaked at +50.4% in 2018.
    • African Americans: -$0.65B (-19.2%) They are the only group with a decrease. This is primarily due to the big drop in Veterinary in 2015. However, they have the lowest income – the biggest factor in Pet Spending. Their spending peaked at +0.9% in 2018, but spending was up 39.2% from 2015.
    • Asians: +$0.41B (+36.3%) They have the highest income, but their spending has been in an up then down pattern every year since 2014. This shows that there are other factors besides income affecting Pet spending.

In 2019 income truly mattered in Pet Spending. However, from 2014>2019 all groups but African Americans increased Pet Spending. Now, we’re going to look a little closer at the most accurate comparison, Spending Performance.

Spending performance is determined by dividing a group’s share of Total $ spent by their share of total U.S. CUs. This factors in both changes in $ spent and in the number of CU so it accurately accounts for the ongoing evolution of both the Pet Industry and U.S. Society.

The graph below shows the annual Total Pet Spending performance of all Racial/Ethnic groups from 2015 to 2019. Total Pet $ grew 15.8% during this time but Minority Pet $ grew 22.3% as they climbed up from their 2015 low point. They were aided by a +7.6% increase in CUs compared to only +1% for whites. It was a tumultuous time in the industry with two down years and big spending swings in many segments. Some of the key industry trends behind those swings were:

  • Food: 2015 – the first wave of Super Premium; 2016 – Value Shopping; 2017 – Deeper market penetration of Super Premium; 2018 – FDA warning on grain free dog food; 2019 – Rebound from FDA warning.
  • Supplies: 2015 – Cut back on Supplies to pay for upgraded Food; 2016>2018 Prices deflated so spending grew; 2019 – Tariffs cause strong inflation and spending dropped like a rock.
  • Services – 2015>2017 rapid expansion of outlets increases availability and competitive pressure, so spending fell in 2017; 2018 – Availability “hits home” and spending explodes. 2019 brings value shopping and spending falls slightly.
  • Veterinary – Inflation continues, which reduces visit frequency. Consumers just pay more so Spending goes up.

CU # Change 2015>2019

Whites: +0.9M (+1.0%); Share: 69.9% > 68.6%

All Minorities: +2.9M (+7.6%); Share: 30.1% > 31.4%

Hispanics: +1.2M (+7.1%); Share: 13.0% > 13.6%

African Americans: +1.0M (+6.3%); Share: 12.7% > 13.1%

Asians: +0.7M (+12.7%); Share: 4.4% > 4.8%

  • White, Not Hispanic – This group is slowly growing in numbers but losing ground in share of CUs. They are the overwhelming, dominant force in the Pet Industry with 87.6% of Total Pet $ and at least 84.6% of each segment. They have large subgroups, so they are impacted by trends. However, their performance is still up vs 2015.
  • Total Minorities – 2019 was a bad year for lower income minorities. Minorities performance had been improving but now it is essentially at the same level as 2015.
  • Hispanics – They are the largest minority, with the biggest increase in numbers. Like Whites, they have an up and down performance pattern, but it is the exact opposite. They have lower income and the lowest level of education. It appears likely that they have a slower reaction to industry trends. 2019 was bad for them but they are the only minority group with improved performance over 2015.
  • African Americans – The second biggest group with the second largest increase in numbers. They have by far the worst performance. Almost all the cards are demographically stacked against them in pet spending. They have the lowest income and rate of homeownership. They are the most likely to live in a center city, 50+%. In their family life, they are the least likely to be married and most likely to live alone. Also, 32% of all single parent households are African Americans. There is one anomaly, education. Education is usually tied to income. Their lowest income level does not match their level of education – income discrimination? In 2019 their performance fell below 2015.
  • Asians – Their CUs are growing, but their performance is down the most from 2015. They have high income and all the key demographics for pet spending. However, they have low pet ownership primarily due to cultural differences.

Our takeaway from this analysis is that Hispanics are likely to continue to make progress. Asians will need to become more Americanized in their pet ownership to drive spending. African Americans may need some assistance or at least an equal opportunity. While their demographic issues are not caused by the Pet Industry, we certainly see their impact. The situation of African Americans is a big problem and a big opportunity – both for our society and the Pet Industry.

 

 

 

 

 

 

 

 

 

 

2019 Total Pet Spending was $78.44B – Where did it come from…?

Total Pet Spending in the U.S. was $78.44B in 2019, a -$0.16B (-0.02%) decrease from 2018. These figures and others in this report are calculated from data in the annual Consumer Expenditure Survey conducted by the US BLS. 2019 was essentially a “flat” year for the industry, on the surface. However, when you look at each segment there was a certain amount of turmoil. Pet Food spending rebounded after the 2018 FDA warning on grain free dog food but the new tariffs on Supplies really hit home across almost all demographics and the $ plummeted. Services spending dipped slightly after the record lift in 2018. Veterinary spending had another small increase, but it was all due to inflation. 2019 Pet Spending certainly deserves a closer look.

The first question is, “Who is spending most of the $78+ billion dollars?” There are of course multiple answers. We will look at Total Pet Spending in terms of 10 demographic categories. In each category we will identify the group that is responsible for most of the overall spending. Our target number was to find demographic segments in each category that account for 60% or more of the total. To get the finalists, we started with the biggest spending segment then bundled related groups until we reached at least 60%.

Knowing the specific group within each demographic category that was responsible for generating the bulk of Total Pet $ is the first step in our analysis. Next, we will drill even deeper to show the best and worst performing demographic segments and finally, the segments that generated the biggest dollar gains or losses in 2019.

In the chart that follows, the demographic categories are ranked by Total Pet market share from highest to lowest. We also included their share of total CU’s (Financially Independent Consumer Units) and their performance rating. Performance is their share of market vs their share of CU’s. This is an  important number, not just for measuring the impact of a particular demographic group, but also in measuring the importance of the whole demographic category in Spending. All are large groups with a high market share. A performance score of 120+% means that this demographic is extremely important in generating increased Pet Spending. I have highlighted the 6 groups with 120+% performance.

The only group change from 2018 is that $70K> replaced $50K> as spending skewed towards higher incomes in 2019. However, there were changes in the numbers and rankings. Everyone Works, Homeowners and Suburban gained in share, ranking and performance. Married Couples and 2+ CUs fell in ranking and in all measurements. Education’s rank didn’t change but they lost share and decreased performance while 35>64 yr olds, Whites and Wage Earners gained in these 2 areas.

  1. Race/Ethnic – White, not Hispanic (87.6%) This is the 2nd largest group and accounts for the vast majority of Pet Spending. Their performance rating increased to 127.8% and they now rank #2 in terms of importance in Pet Spending demographic characteristics. However, they are in a virtual tie with Homeowners. Although this demographic, along with age, are 2 areas in which the consumers have no control, spending disparities within the group are enhanced by differences in other areas like Income, CU Composition and homeownership. There are also apparently cultural differences which impact Pet Spending. Asian Americans are first in income, education and spending but last in Pet Spending as a percentage of total spending – 0.33% vs a national average of 0.94%.
  2. Housing – Homeowners (81.4%) Controlling your “own space” has long been a key to larger pet families and more pet spending. 2019 was a bad year for renters, as their pet spending fell -$1.3B. Homeowners spent $1.14B more and the group’s performance rose to 127.7%, keeping them in 3rd place in terms of importance for increased pet spending. The homeownership rate is growing in the younger CUs but most of the pet spending lift in the group is coming from older people who have paid off their homes, whether they are retired or still working.
  3. # in CU – 2+ people (78.2%) Singles have the lowest performance of any group, but they continued to gain ground in 2019. This gain along with a drop in spending by 2 person CU’s caused the overall performance of 2+ CUs to drop to 112.0%. In the group, only 3 Person CUs spent more but 5+ person CUs remain the only one performing under 100%.
  4. Education – Associates Degree or Higher (68.4%) Higher Education level is usually tied to higher income and Pet spending. It can also be a key factor in recognizing the value in product improvements. 2019 was a mixed bag. HS Grads and those with Advanced Degrees spent $2.26B more while those with a BA/BS or Associates degree spent $1.97B less. These groups all spent more on Food and less on Supplies. The big difference was a $1.31B drop in Vet $ by the BA/BS/Assoc. group. Overall spending for the Assoc & Higher group fell -$0.97B and their performance fell from 127.5% to 123.1% – from 2nd to 5th. However, Education remains an import factor in Pet Spending.
  5. # Earners – “Everyone Works” (68.4%) These are CUs of any size where all adults are employed. This group’s share ranking jumped from 7th to 5th. Their performance increased from 110.3% to 117.0%, ever closer to 120%. These big gains came from a $4.4B increase by 2 earner and working single CUs. It shows a growing tie with income and also indicates the overall youth movement in pet spending. Gen X and Millennial CUs have more working adults.
  6. Occupation – All Wage & Salary Earners (65.0%) – An interesting year – Blue Collar & lower level White Collar workers spent more, while their bosses spent less. Overall, the group spent more but gained share largely because of big spending drops by self employed and retirees. Their performance also grew to 106.5%, but is still the lowest of any group. It remains below 110% because there is a big spending (and income) disparity within the group.
  7. Income – Over $70K (64.3%) With a big spending drop in the $50>69K group, a new higher dividing line made sense. Money increasingly matters in Pet Spending. With a performance rating of 155.0%, CU income is the single most important factor in increased Pet Spending. This performance is even up from 153.7% in 2018. This was largely driven by a -$1.7B spending drop in the $30>69K range, along with a strong lift from those earning $70>99K, +$1.2B.
  8. Age – 35>64 (63.3%) The 45>54 yr olds spent -$0.71B less but the other groups made that up. They primarily gained share because of a -$0.77B spending drop by the under 35 group. Their performance also increased from 119.5% to 121.0%. They are now officially included in the “120% Club” but are still ranked 6th in overall importance.
  9. Area – Suburban (61.9%) Homeownership is high and they have the “space” for pets. Their share of pet spending continues to grow. Their performance also increased from 110.0 to 111.3%. The gain in share and performance was due to a good year for Suburbs 2500> pop. All areas <2500, both rural and suburban, along with Center Cities had a bad year. Rural and Center Cities combined spending was down -$0.78B, which drove up Suburban performance.
  10. CU Composition – Married Couples (60.7%) With or without children, two people, committed to each other, is an ideal situation for Pet Parenting. In 2019, due in large part to a second consecutive big drop in spending by married couples only CU’s, this group fell from 9th to 10th in share of spending. A big spending lift by singles also contributed to a decrease in performance from 125.2% to 124.3%. However, they are still ranked 4th in importance.

Total Pet Spending is a sum of the spending in all four industry segments. The “big demographic spenders” listed above are determined by the total pet numbers. Although the share of spending and performance of these groups may vary between segments, in only 1 case does any group’s share of spending fall below 60%, 57.0% Married Couples, Services $. In the Services segment analysis, we also altered 2 groups to better reflect where most of the business is coming from.

The group performance is a very important measure. Any group that exceeds 120% indicates an increased concentration of the business which makes it easier for marketing to target the big spenders. Although Income over $70K is the clear winner, there are other strong performers. The high performance in 6 groups also indicates the presence of segments within these categories that are seriously underperforming. These can be identified and targeted for improvement.

Now, let’s drill deeper and look at 2019’s best and worst performing segments in each demographic category.

Most of the best and worst performers are just who we would expect and there are only 5 that are different from 2018. Changes from 2018 are “boxed”. We should note:

  • Income is important in Pet Spending, which is shown by the 209.2% performance by the $200K> group . However, all income groups over $70K have 124+% performance and it increases with income.
  • # Earners – After 2 years, 2 Earners is back on top. Gen X and Millennial CUs are the most likely to have 2 workers.
  • Age – The 45>54 yr olds maintained their lead over the 55>64 yr old Boomers but the under 25 group returned to the bottom because of a strong year by the oldest Americans.
  • Region – With a strong year in Food and Veterinary, the Northeast replaced the usual winner, the West, at the top.
  • CU Composition/Number – The performance of Married, Couple Only fell again and they were replaced by older married couples with a child. The “magic” CU number also moved up from 2 to 3.

Most expected winners are still doing well. The “new” winners reflect the growing strength of Gen X. In the next section we’ll look at the segments who literally made the biggest difference in spending in 2019.

We’ll “Show you the money”! This chart details the biggest $ changes in spending from 2018.

There was more stability in 2019. There are 24 Winners and Losers. 5 Winners and 4 Losers are repeats from 2018. Only 3 held their spot in 2018. In 2019, only 4 segments switched from winner to loser or vice versa. In 2018 it was 13.

  • # Earners – The 2018 Winner and Loser kept their positions and their $ change (+ or -) increased in 2019.
    • Winner – 2 Earners – Pet Spending: $33.95B; Up $2.81B (+9.0%)                      2018: 2 Earners
    • Loser – 1 Earner, 2+ CU – Pet Spending: $13.27B; Down -$3.55B (-21.1%)        2018: 1 Earner, 2+ CU
    • Comment – Income is growing in importance in Pet spending as is the # of earners in a CU.
  • CU Composition – Singles continued their strong growth while Married, Couple Only had another big $ decrease.
    • Winner –– Singles – Pet Spending: $17.08; Up $2.09B (+14.0%)                                 2018: Singles
    • Loser – Married, Couple Only – Pet Spending: $22.91B; Down -$1.67B (-6.8%)      2018: Married, Couple Only
    • Comment – 2 other groups are suffering – married with an oldest child 6>17 and single parents. Couples with younger or older children spent more, as did 2+, all adult CUs.
  • # in CU – Again, no change from 2018. The winner and loser stayed on their existing path.
    • Winner – 1 Person – Pet Spending: $17.08B; Up $2.09B (+14.0%)                  2018: 1 Person
    • Loser – 2 People – Pet Spending: $31.00B; Down -$2.36B (-7.1%)                   2018: 2 People
    • Comment: Although 2 people CUs still spend the most, 39.5% of all Pet $, 2 is losing some of its “magic”. Only 1 and 3 person CUs spent more in 2019. All other sizes spent less.
  • Income – There were no repeats or flips here but the winner & loser remain correlated to income level.
    • Winner – $70 to $99K – Pet Spending: $14.15B; Up $1.23B (+9.5%)               2018: $150 to $199K
    • Loser – $30 to $39K – Pet Spending: $5.05B; Down -$0.69B (-12.0%)            2018: Under $30K
    • Comment – All income groups under $70K spent less, -$1.90B. Because of a total spending decrease from the $100>149K segment due to Supplies & Veterinary $, the $70K> group couldn’t quite make up the difference.
  • Region – After 2 years at the top, the Midwest flipped to the bottom and the Northeast flipped to the top.
    • Winner – Northeast – Pet Spending: $14.99B; Up $1.14B (+8.3%)                  2018: Midwest
    • Loser – Midwest – Pet Spending: $16.62B; Down -$1.13B (-6.4%)                   2018: Northeast
    • Comment – In 2018 the Northeast was the only region with a decrease in Total Pet $. In 2019 they were the only region to spend more. They offset the Midwest but couldn’t quite make up for -$0.17B from the South and West.
  • Education – BA/BS flipped to the bottom while Advanced Degrees took over the top spot.
    • Winner – College Degree – Pet Spending: $20.95B; Up $1.00B (+5.0%)       2018: BA/BS Degree
    • Loser – BA/BS Degree – Pet Spending: $23.83B; Down -$1.30B (-5.2%)       2018: HS Grad w/some College
    • Comment – Education matters in Pet Spending but 2019 was a “mixed bag”. Those with Advanced Degrees spent more but so did HS Grads with no degree. Assoc/BA/BS degrees along with < HS grads all spent less.
  • Housing – Homeowners w/o Mtge flipped from last to first.
    • Winner – Homeowner w/o Mtge – Pet Spending: $20.79B; Up $0.99B (+5.0%)      2018: Homeowner w/Mtge
    • Loser – Renter – Pet Spending: $14.58B; Down -$1.29B (-8.1%)                                   2018: Homeowner w/o Mtge
    • Comment – All Homeowners spent more. Renters actually had their first spending decrease since 2014>15.
  • Race/Ethnic – White, Not Hispanics (87.6% of all Pet $) won again, but their spending lift was not quite big enough.
    • Winner – White, Not Hispanic – Pet Spending: $68.73B; Up $0.87B (+1.3%)       2018: White, Not Hispanic
    • Loser – African American – Pet Spending: $2.73B; Down -$0.68B (-19.9%)          2018: Asian American
    • Comment – Whites and Asians spent more but couldn’t overcome a big drop by Hispanics and African Americans.
  • Occupation – No repeats and an unexpected winner.
    • Winner –– Technical, Sales, Clerical – Pet Spending: $13.15B; Up $0.87B (+7.1%)        2018: Self-Employed
    • Loser – Managers & Professionals – Pet Spending: $25.15B; Down -$1.34B (-5.0%)     2018: Blue Collar Workers
    • Comment – Along with the lower level White Collar winners, Blue Collar workers also spent more on their pets, while their “bosses”, Managers & Professionals, spent less.
  • Age – A new winner and loser. Both are surprising!
    • Winner – 75+ yrs – Pet Spending: $5.21B; Up $0.73B (+16.3%)               2018: 35>44 yrs
    • Loser – 45>54 yrs – Pet Spending: $17.01B; Down $0.71B (-4.0%)         2018: 55>64 yrs
    • Comment: Spending was on an Age Roller Coaster in 2019. Under 34 – Down -$0.77B; 35>44 – Up $0.39B; 45>54 – Down -$0.71B; 55>64 – Up $0.29B; 65>74 – Down -$0.08B; 75+ – Up $0.73B.
  • Area Type – After 1 year on top, Central City flipped back to the bottom.
    • Winner – Suburbs 2500> – Pet Spending: $36.16B; Up $0.70B (+2.0%)       2018: Central City
    • Loser – Central City – Pet Spending: $23.07B; Down -$0.52B (-2.2%)            2018: Rural
    • Comment – Suburbs 2500> have the biggest share of Pet $, 46.1%. They were also the only area with an increase.
  • Generation – Both Generations held their spots at the top and bottom of the Total Pet spending change ladder.
    • Winner Gen X – Pet Spending: $25.75B; Up $0.59B (+2.4%)                               2018: Gen X
    • Loser – Baby Boomers – Pet Spending: $28.73B; Down -$0.88B (-3.0%)            2018: Baby Boomers
    • Comment – While the pace slowed, the Boomer Bust and spending growth by Gen X continued.

We’ve seen the best overall performers and the “winners” and “losers” in terms of increase/decrease in Total Pet Spending $ for 12 Demographic Categories. Now, here are some segments that didn’t win an award, but they deserve….

HONORABLE MENTION

Let’s start with Married, Oldest child <6. They are the repeat best performer in this “almost” group. Their spending has increased $1.58B (+76.7%) since 2017, quite an accomplishment. This group is generally younger and evidence of the increasing commitment of younger Americans to their Pet Children. That brings us to our 2nd repeat on this list. The Millennial/Gen Z group also gets honorable mention again for their $0.58B spending increase. Gen X only beat them out for the top spot by $0.01B. Overall, Singles have gotten a lot of accolades for their 2019 performance, but I have added one of their subgroups – 1 Earner, singles to the honor roll. They provided 78% of the Singles’ total Increase. We can’t forget another high income group. $150>199K was up $0.78B (+8.6%). College Grads win the awards, but Pet Parenting is widespread. High School grads with no college spent $0.68B (+7.7%) more in a tumultuous year. Finally, most pet spending is done by “white collar” workers and bosses, but there are a lot of Blue Collar pet parents too. In a flat year, they spent $0.81B (+6.8%) more on their pet children.

Summary

To properly review 2019, we must put it into context with recent history. Total Pet Spending peaked in 2018 at $78.60B, a $14.28B, 22.2% increase from 2014. However, it was not a steady rise, Total spending actually fell in 2016 and each segment had at least one down year. There were a number of factors driving both the growth and tumult within the industry. Two big positives were the movement to super premium pet foods and the rapid expansion of the number of outlets offering pet services. On the downside were value shopping, trading $ between segments and outside influences like the FDA dog food warning and tariffs. Pricing, inflation/deflation was also a negative/positive factor in some cases.

That brought us to 2019. The industry had another small decrease, -$0.16B (-0.2%) which was largely driven by a huge drop in spending in Supplies caused by Tarifflation. This affected virtually every demographic segment and caused Supplies $ to fall below 2014. Services spending also fell slightly as consumers value shopped. The good news was Pet Food bounced back from the impact of the 2018 FDA warning to reach a new record high. Veterinary $ also increased 2.7%. Unfortunately, this was entirely due to a 4.1% increase in prices. The amount of Vet Services actually decreased.

There was one change in the big demographic groups responsible for most pet spending as the <$70K income group replaced the <$50K group. Income is becoming even more important in Total Pet Spending, which is reinforced by performance. The number of most influential big groups remains 6, but income truly stands alone at the top.

In the best/worst performing segments, 3 Person and 2 Earner CUs became #1 and Gen X stayed on top, more validation of the ongoing youth movement. A surprise was the Northeast, taking over from the West, the usual winner.

The biggest $ changes saw far less turmoil than in 2018. 9 segments held their position, compared to 3 in 2018, while just 4 switched from 1st to last or vice versa. There were 13 “flips” in 2018. Singles continued their strong growth, and many winners were the “usual suspects: but there were 5 surprises – 75+ yr olds, $70>99K, Northeast, Homeowners w/o Mtges and Tech/Sales/Clerical. This was a mixture of both younger and older Americans. Of note, Baby Boomers spending continued to fall. Gen X and Millennials spent more but couldn’t quite make up the difference. Race/Ethnicity also was a factor in 2019. White, not Hispanics spent $0.87 more but Hispanics and African Americans spent $1.06B less. To get to the heart of 2019 Pet Spending, we will continue our analysis by drilling down into the individual segments.

But before we go…The “Ultimate” Total Pet Spending Consumer Unit in 2019 consists of 3 people – a married couple with a child over 18. They are in the 45 to 54 age range. They are White, but not Hispanic. At least one of them has an Advanced College Degree. The parents work in their own business and are doing well  – over $200K. They’re still paying off their house located in a small suburb of a metropolitan area with a population of about 4,000,000 in the Northeast.