Spending, CPI, demographics of overall market

Retail Channel Monthly $ Update – January Final & February 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 January and then move to the Advance Retail Report for February. Remember, January and February 2020 were pre-pandemic, but we will continue our detailed comparison of 2021 to both 2020 and 2019 to track the ongoing evolution of the retail market.

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 2020 and 2019
  • Current YTD change – % & $ vs 2020 and 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

First, the January Final. U.S. Retail hit bottom in April then began to recover, hitting record $ in December. January $ fell but still set a monthly record. Here are the major retail groups. (Data in all graphs is Actual, Not Seasonally Adjusted)

The final total is $9.8B more than the Advance report projected a month ago. All Groups were up but most of the positive change came from Relevant Retail: +$6.2B; Restaurants: +$0.9B; Auto: +$1.8B; Gas Stations: +$1.0B. Only Gas Stations and Restaurants were up vs December, but Total Retail still set a January record. Total $ales finished strong in December and had a good start in 2021 thanks to another strong month from Relevant Retail and Auto. Restaurants and Gas Stations continue to struggle. Relevant Retail is still the driving force in the recovery.

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

  • Overall– All 11 channels were down vs December, but 10 of 11 were up both vs 2020 and 2019. A great start.
  • Building Material Stores – Their lift continued into the new year. We should note that the bulk of the ongoing surge came as a result of pandemic spending patterns developed in 2020. They’re still showing double digit % increases. Sporting Goods stores are not in this group, but they have a similar spending pattern. Sales took off in May, hitting a record peak in December. The lift continued in 2021 – up 36.2% over 2019 and 44.4% over 2020.
  • Food & Drug – Supermarkets finished 2020 up +$77.7B. Sales dipped slightly in January but are still +10.9% vs 2020. Drug Stores ended up +$17B (+5.7%) for 2020. Their $ also fell in January but are still +4.5% vs 2020.
  • General Merchandise Stores – $ in all channels fell a lot from December. However, Clubs/SuperCtrs, $ Stores and even Discount Dept. Stores had a strong January. Last year they were up a combined $1.5B from 2019. This year they are up $7.2B from 2020. Value has become even more important due to the pandemic.
  • Office, Gift & Souvenir Stores– Sales plummeted in January. Their struggles continue. Recovery is a long way off.
  • Internet/Mail Order – The pandemic has accelerated this channel’s growth. In January they were up $22.1B (+42.8%) vs 2019. 78.7% of that growth (+$17.4B) came from the pandemic lift spending pattern set in 2020.
  • 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. Stores began reopening in May and the $ grew. Their 2020 total sales were up +11.6%. January sales are +$1.0B (+14.4%) vs 2020. However, that is less than last year when they were +$1.2B (+21%) vs 2019.

The Relevant Retail Segment began recovery in May and reached a record level in December. $ plummeted in January but still set a monthly record. The key drivers in the continued strong growth of this group were and are the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, here are the Advance numbers for February.

2020 will always be a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history. Then sales began to recover and in October YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. Monthly sales records continued in January and now February. The primary drivers of this are Relevant Retail and Auto. Restaurants are the only big group still suffering across the board. As we progressed through 2020 and now into 2021, we have seen real evidence of the strength and resiliency of the U.S. Retail Market.

Total Retail – Spending fell in February but still was a record high for the month. $ were up 2.4% vs 2020 but 10.7% vs 2019. Most of the lift came last year. YTD $ are also showing strength but this was mainly due to a spectacular January.

Restaurants – This is the only group in which spending was down in all measurements. Last February sales were up vs January and February 2019. The Pandemic changed that. YTD sales are also down -10.7% from 2019. However, this was primarily due to the -$12.7B drop in February $ from 2020. Recovery is still a long way off.

Automobile & Gas Stations – Staying home causes your car to be less of a focus in your life. Auto Dealers combated this attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. Gas Station $ales are a mixed bag. They were still behind 2020 in February and YTD but ahead of 2019 sales in both measurements. It looks like they are beginning their comeback.

Relevant Retail – Less Auto, Gas and Restaurants – When you look at the individual channels in this group, you see a variety of results due to many factors – non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December ($411B). They finished 2020 up $251B, +6.8%. Sales fell in January but have continued to set monthly records through February. They are up $20.4B, +7.2% vs February 2020 and  +$57.9B, +10.1% YTD. Relevant Retail has now posted positive numbers versus last year and YTD for 10 consecutive months and their average YTD growth rate since 2019 now stands at +7.8%. The primary drivers continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a never ending “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels. Relevant retail was down vs January but continues to set monthly sales records. 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. We will continue to track 2021 monthly and YTD sales vs both 2020 and 2019.

Sales in 12 of 13 channels were down vs January. 8 channels beat February 2020 $ and 10 beat February 2019 $. In YTD $ales, 10 channels beat both 2020 and 2019.

After April’s widespread closures there was a retail surge in May, but things truly opened up in June/July. In Aug/Sept, sales slowed but growth began again in October and peaked with a record December. Relevant Retail finished  +$252.9B vs 2019 and has started 2021 strong, +10.1% YTD. Essential channels are responsible for the continued lift, primarily:

  • Nonstore Retailers – Online shopping continues to grow in households and $.
  • 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 – In 2020 they kept the whole Gen Mdse channel positive. Their growth slowed in February but their continued success clearly shows that value is still a major consumer priority.

Regarding the Individual Large Channels

General Merchandise Stores – Sales dropped so much from January that they were down vs February 2020. This was due to the continued negative performance by Department Stores and slowed growth by Club/SuperCtr/$ stores, +3.6% in February, down from +9.6% in January.

Food and Beverage, plus Health & Personal Care Stores – In February, growth slowed to +6.7% in the Grocery segment, compared to +11.3% in January. Sales in the Health, Personal Care group finished 2020 at +1.7%. They started 2021 even better, +3.3% in January, but that slowed to +2.4% in February. Drug Store $ remains the key to health/personal care.

Clothing and Accessories; Electronic & Appliances; Home Furnishings – Home Furnishings began their recovery in January and are now positive in both monthly and YTD $ vs 2020 and 2019. Electronic & Appliance stores remain negative across the board, but the gap is narrowing. Clothing Stores continue to be hard hit by the pandemic, but they were the only channel to increase sales vs January. There is still hope.

Building Material, Farm & Garden & Hardware – Their Spring lift began on time in 2020 and it has essentially never stopped. They have greatly benefited from consumers turning their focus to their home needs. They finished 2020 +53B (+13.8%). In February they were up 11.1% vs 2020 and +13.1% YTD.

Sporting Goods, Hobby and Book Stores – Book and Hobby stores are open but make no mistake, Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. Sales fell in February after a record January performance, but they were still +11.0% vs February 2020 and +17.8% YTD.

All Miscellaneous Stores – Pet Stores are in this group and deemed 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. They finished with a strong December and ended 2020 down $1.0B, -0.7%. January sales were +6.9% vs 2020 but February sales were actually down -0.01% vs 2020. Their $ are +2.5% YTD so they are recovering but it may not be a fast process.

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. The COVID-19 crisis accelerated the movement to online retail. In February 2020 NonStore $ were 8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.9%, +$173.9B YTD. Their increase was 69% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and they started off 2021 even better. February is +23.5% vs 2020 and YTD $ are +25.4%. Remember, this is their slowest season.

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 – 2020 was a year of ups and downs – April and May were the 2 biggest year over year monthly sales declines in history while December saw sales break $600B for the first time. Restaurants, Auto and Gas stations were impacted the most. Auto had recovered by yearend and started 2021 out strong. Gas Stations had a terrible 2020 but are now showing mixed results in 2021. Restaurants continue to show the most negative impact from the pandemic. The Relevant Retail segment has been the only ongoing positive, but for some segments in this group there is still a long way to go. Total Retail Sales ended the year +$37B (+0.6%) vs 2019. Through February Relevant Retail and Auto are both +10% vs 2020, which has pushed Total Retail to +5.1%. For Gas Stations and especially Restaurants the problems continue. As the battle to return to normal goes on, we will continue to provide regular updates. The March data should be especially interesting as we will compare 2021 to 2020 (Pandemic Impact Begins) and to 2019 (Old Normal).

Retail Channel Monthly $ Update – December Final & January 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 December and then move to the Advance Retail Report for January. This will allow us to look at both the final numbers for 2020 and do an initial comparison of January 2021 vs 2020.

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 one year ago.
  • Current YTD change – % & $ vs 2019 (Note: In the January Advance we will compare January 2020 to 2019)
  • Monthly and Year To Date $ will also be shown for each group/channel

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

The final total is $3.4B less than the Advance report projected a month ago. All but Gas Stations were down but most of the reduction came from Relevant Retail: -$2.5B; Restaurants: -$0.1B; Auto: -$0.6B; Gas Stations: N/C. All groups were up vs November and set a new record Total Retail $ peak. YTD Total $ales finished more positive vs 2019 thanks to another strong month from Relevant Retail and Auto. The Auto segment finally beat 2019 $, but Restaurants and Gas Stations are down -$229B. Relevant Retail was the driving force in turning Total YTD sales positive vs 2019.

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

  • Overall– $ in 10 of 11 groups were up vs November and 9 were up vs December 2019 and YTD. That’s very good.
  • Building Material Stores – Their “Spring” lift continued through Summer, Fall and now Winter. 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, and ultimately hit a record peak in December. In June, their YTD $ vs 2019 turned positive and by yearend they were up 16.6%.
  • Food & Drug – Supermarket $ slowed in Aug, Sep & Nov but turned up in October & December. They finished 2020 up +$77.7B. Drug Stores $ dipped in Aug & Nov but increased in Sep, Oct & Dec. They ended up +$17B.
  • General Merchandise Stores – $ in Clubs/SuperCtrs slowed in September then grew in Oct>Dec. They finished at +$33.2B vs 2019. $ Stores sales slowed from June>Sept but grew in Oct>Dec and ended 2020 +12.0% vs 2019. Discount Dept. store sales were slowing before the pandemic. This trend continues despite their Nov>Dec lift.
  • Office, Gift & Souvenir Stores– A 44% lift after a 28% November drop . A holiday lift but recovery is long way off.
  • Internet/Mail Order – The pandemic has accelerated this channel’s growth vs 2019. $ hit another record peak in December. 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. That number grew in June and YTD $ surpassed 2019. Sales have been stable and strong vs 2019 since then and peaked in December. Their 2020 total sales were up +11.6%.

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>Dec $ turned up and reached a record peak. The key drivers in the positive numbers vs 2019 were the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm.  Now, how is 2021 starting off? Here are the Advance numbers for January.

April & May 2020 were the 2 biggest spending drops in history. Then sales began to recover and in October YTD Total Retail turned positive for the 1st time since February. Sales dipped in November but not vs 2019 . In December, Total Retail set a sales record. In January, as expected, $ fell but still set a new record high. All but Gas Stations and Restaurants are up from 2020.

Total Retail – Total Retail spending hit a record $616.6B in December and 2020 finished +$37B vs 2019. As usual, $ plummeted in January but still hit a record $509B, $27.9B ahead of 2020 and $51.7B ahead of 2019. (add the $ changes in the 2 columns to get status vs 2019). Remember, the impact of the pandemic didn’t begin until March 2020.

Restaurants – Spending was basically unchanged vs December but down $9.6B versus 2020, which shows the continuing impact of the pandemic on this group. Last January, $ fell 7% from December but were up 7.1% from 2019. Normally, January and February are the 2 slowest months, but they finished on top last year. Their 2020 totals were down $149B,  -19.5%. Recovery is still a long way off. If 2019 $ are the target for a return to normal, then they are only down $5.6B.

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 stayed that way, finishing 2020 at +1.0% vs 2019. 2021 started even stronger, +10.4%. Gas Station $ales hit bottom in April and have been up and down ever since. However, sales have remained consistently about 16% below 2019. They finished 2020 -$79.6B (-15.9%). January began down $3.4B but we should note that $ were up $0.1B vs 2019.

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>Dec, reaching a record $412.9B in December. For 2020, they were up $252.9B, +6.8%. That brought us to January. Sales fell 22.5% (-$92.7B) from December. However, that was less than the 24.5%     (-$93.7B) drop in 2020. So $ are up 10.8%, triple the 3.6% from a year ago and the Relevant Retail group now has posted positive numbers versus last year and YTD for 9 consecutive months. The primary drivers continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a radically extended “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels. After a record December, relevant retail $ took an expected plunge in January but was still +$31.3B vs 2020. 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.

In December, all 13 channels beat last month’s $. In January they were all down. 10 channels beat January 2020 $. Last year 12 beat 2019 $. However, the 2021 increases were generally significantly higher than 2020. Clothing stores had the biggest decrease vs 2020 but Department stores are the only channel with decreases in both years.

After April’s widespread closures there was a retail surge in May, but things truly opened up in June/July. In Aug/Sept, sales slowed but growth began again in October and peaked with a record December. Relevant Retail finished up $252.9B vs 2019 and started 2021 strong, +10.8%. Essential channels are responsible for the continued lift, 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 the previous year. They 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 – As expected Sales dropped in January after the holiday lift with the biggest % decrease coming from Department Stores. Their problems were amplified by the pandemic but existed before as they are the only channel down in January vs a year ago for 2 consecutive years. Club/SuperCtr/$ stores are still the big positive force. They finished 2020 up $33B, +7.4% and started off 2021 at +9.6%, considerably better than the +3.5% in January 2020.

Food and Beverage, plus Health & Personal Care Stores – The Grocery segment is still strong and growing, +11.3% in January, due to the continuing big drop in restaurant sales. Sales in the Health, Personal Care group turned positive vs 2019 in September and finished +1.7%. They started 2021 even better, +3.3%. Drug Store $ growth has been the driver.

Clothing and Accessories; Electronic & Appliances; Home Furnishings – Except for September, monthly sales have grown every month since May. All 3 channels finished the year down significant percentages in sales vs 2019. Clothing Stores have been the worst performers and that continued in January. Home Furnishing stores may be breaking the pattern in 2021. In January, their sales were up 9.3% vs 2020. Perhaps their recovery has truly begun.

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. Their Spring lift extended into winter and they finished +$53B (+13.8%). No change for 2021 – January $ +13.7% vs 2020.

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. They were down -$3.4B in April. This deficit was wiped out in September and driven by Sporting Goods stores, sales exploded in December. They ended 2020 up $4.4B, +5.5%. January 2021 sales fell 35.8% from December but they are still up an amazing 22.0% vs January 2020.

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. Sales seesawed up and down but finished with a strong December. They ended 2020 down $1.0B, -0.7%. They started out 2021 +6.9% but this is only about half of the +13.3% start in 2020. We’ll see how their recovery progresses 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 exceeded $100B for the 1st time. They ended 2020 at +21.9%, +$173.9B YTD. Their increase is 69% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeds their 12.9% annual increase in 2019 and they started off 2021 even better, +22.1%. Last January, in pre-pandemic times, they were only up 7.1%.

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 were mixed until yearend. The Auto segment did beat 2019 YTD $ in December, but Restaurants and Gas Stations finished down -$229B. The Relevant Retail segment was the only true positive. Sales began to recover in May and hit a record high in December. They finished 2020 up $253B but for some segments in this group there is still a long way to go. Total Retail Sales passed 2019 in October, set a new monthly $ record in December and ended the year +$37B (+0.6%) vs 2019. In 2021 Relevant Retail and Auto both began the year at +10% vs 2020, much better than last year. For Restaurants and Gas Stations the problems continue as both started off 2021 down significantly vs 2020. Thanks to Auto and Relevant Retail, Total Retail is +5.8% vs 2020. (last year they were +5.2%) However, this is an ongoing battle. We will continue to monitor the data and provide you with regular updates.

 

 

 

 

2019 Pet Services Spending was $8.62B – Where did it come from…?

Next, we will look at Pet Services. They are by far the smallest Segment at $8.62B. Spending turned down $0.10B in 2019 after a $1.95B (+28.9%) lift in 2018, which was by far the biggest increase in history. The number of outlets offering Services has been strongly increasing in recent years as brick ‘n mortar retailers look for a way to combat the growing influence of online outlets. After all, you can certainly buy products, but you can’t get your dog groomed on the Internet. This created a highly price competitive market for Pet Services. In 2017 there was a slight increase in visit frequency, but Pet Parents just paid less. This resulted in a 1.0% decrease in Services spending. In 2018 consumer behavior changed as a significant number decided to take advantage of the increased availability and convenience of Pet Services and spending literally took off. In 2019, Services $ essentially held their ground at this new higher level. However, there was some turmoil as the demographic segments spending more or less were almost equally divided. We saw evidence of some value shopping as the younger groups spent less. However, the older age groups stepped up to take advantage of this new more convenient and affordable marketplace.

Pet Services maintained their stronger “presence” at the Pet Industry “table” and spending in this highly discretionary segment became a little more balanced. Let’s look a little deeper into the demographics.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2019 and the $0.10B decrease. The first chart details the biggest Pet Services spenders for each of 10 demographic categories. It shows their share of CU’s, share of Services spending and their spending performance (Share of spending/share of CU’s). The differences from the products segments are immediately apparent. In order to better target the bulk of the spending we had to alter the groups in two categories – education and area. The performance level should also be noted as 5 of 10 groups have a performance level above 120%. This is the same as Food but less than the 6 for Total Pet & Veterinary, and 7 for Supplies. Last year they had 7 over 120% which indicates that there is a little less disparity between the best and worst performing segments in 2019. 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 8 matching groups.

  1. Race/Ethnic – White, not Hispanic (87.3%) up from 85.5%.This big group accounts for the vast majority of spending in every segment. Services Spending became slightly less diverse in terms of race and ethnicity in 2019 as their performance grew from 123.8% to 127.4% and they moved up from 5th to 4th in terms of importance.
  2. Housing – Homeowners (84.5%) up from 80.8%. Homeownership is a big factor in pet ownership and spending in all industry segments. The Homeowners’ share of Services rebounded sharply in 2019 as did their performance, which grew from 127.3% to 132.6%. Homeownership moved up to 3rd from 5th in terms of importance for increased Services $. Homeowners w/o mtge spent 25% more, but those w/mtge spent 4% less and … Renters $ were down 20%.
  3. # in CU – 2+ people (75.9%) down from 77.3% The share of market for 2+ CU’s is over 75% for all segments. It is lowest in Veterinary (75.0%) and Services (75.9%). Their performance of 108.7% is down from 109.6% and is also next to last. The explanation is that Singles (30.2% of CUs) spent 5% more while 2+ CUs spent -3% less.
  4. Education – College Grads (72.2%) up from 68.9% Income generally increases with education. Services spending moves up with each increasing level of education. This is why we again shifted the group up to College Grads. Performance of 162.6% was up from 157.9% and a college education is still the 2nd most important factor.
  5. # Earners – “Everyone Works” (67.6%) down from (71.5%) All adults in the CU are employed. Income is important so a high market share is expected. However, their performance fell to 115.6% from 123.8% and they are no longer in the 120% club. This was due to a 56% increase by No Earner, Singles and a 6% increase by 1 Earner, 2+ CUs.
  6. Occupation– All Wage & Salaried (69.8%) down from 71.4% – Blue Collar workers spent more but couldn’t overcome the decrease by White Collar workers, Managers and Professionals. Retirees also spent 18.5% more on Services. All of this contributed to All Wage & Salaried workers’ performance rating decreasing from 116.9% to 114.5%. Services spending became a little more balanced in terms of Occupation.
  7. Income – Over $70K (75.0%) up from 72.3% This group’s performance rating is 180.7%, up from 179.4% which shows that CU income is still the single most important factor in increased Pet Services Spending. <$70K was down -$0.26B. $70K> was up $0.16B but Services $ were on an income rollercoaster. <$30K was -$0.07B; $30>39K was +$0.19; $40>69K was -$0.38B; $70>149K was +$0.25B; $150K> was -$0.09B.
  8. Age – 35>64 (61.2%) down from 63.7%. Their performance fell from 120.4% to 117.0% and they dropped out of the 120% club. There was a clear age dividing line. <45 spent less. 45> spent more. In 2018 the 35>44 yr olds had the biggest increase. In 2019, they had the biggest decrease, -$0.43B. Spending by the 75+ group was up +$0.34B.
  9. Area – City/Suburbs >2500 (87.1%) up from 85.3% in share, while performance increased from 104.7% to 106.9%. Services is an Urban Segment. After a strong 2018, Central City $ fell -13% in 2019. The large Suburbs were the only segment to spend more, +$0.55B (+14.8%). All areas <2500 spent -$0.17B (-13.4%) less.
  10. CU Composition – Married Couples (61.4%) down from 62.8%. Married couples are a big share of $ and have 120+% performance in all segments but Veterinary. Their performance dropped to 125.7% from 126.6% and they fell to 5th place in terms of importance to Services spending. Married Couples with children spent -$0.28 less on Services while all CUs without children spent +$0.23B more.

We changed 2 of the groups for Services – Education and Area, to better target the biggest spenders. We should also note that Income is more important to spending in Services than in any other segment but the performance in categories related to income – # Earners, Occupation and Education was mixed. # Earners and Occupation became less important while higher Education grew in importance. In some categories, spending was slightly more balanced in 2019.

Now, we’ll look at 2019’s best and worst performing Pet Services spending segments in each category.

Most of the best and worst performers are not a surprise. There are 7 that are different from 2018 – 3 of the best and 4 of the worst, down from 8 last year. The 3 new winners are high income and big pet spenders. You can see the move away from youth after the big lift in 2018, but not completely as Gen Xers, including the 45>54 yr olds are still on top. Changes from 2018 are “boxed”. We should note:

  • Income is even more important to Pet Services. While the 342.3% Performance by the $200K> group is less than last year’s 364.0%, it is 45% higher than Supplies and 78% higher than the best performing income segment in Food.
  • Generation – Gen X retained Top Spot and Millennials/Gen Z returned to the bottom. 2019 reversed some of the gains made by the younger generations in 2018.
  • Age – The 45>54 group reflects the move to more expected winners. They spend the most $ and are by far the best performers. All groups from 35>64 perform at 100+%. The low income <25 group returned to the bottom.
  • Area –Suburbs 2500> kept the lead in $ and regained the lead in performance from Center City. As we have said Services is an Urban segment. Areas 2500> perform at 106.9%. Areas <2500 perform at 69.6%.
  • CU Composition Married Couples Only returned to the top by eking out a small, 2.2% increase. Married couples with children spent less on Services in 2019 but Marriage and children are important factors in Services spending. Married Couples only and those with children of any age all perform over 100%. They all earn their share.

In Pet Services spending performance, income is still the major factor. After the youth movement in 2018, spending skewed towards older groups in 2019.

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

Pet Services Spending was down $0.10B, essentially flat. In this chart you immediately see a difference from last year. In 2018, six categories had no segments that spent less on Services. In 2019, there were none. You also see that in most cases the changes for the winner and loser tend to cancel each other out. Although the total $ change was small, the spending was more tumultuous than in 2018. There were only 2 repeats, compared to 7 last year. Also, 9 of 24 segments switched their position from first to last or vice versa. There were only 5 in 2018. Here are the specifics:

  • Area Type – Center City flipped from 1st to last. They have flipped every year since 2016.
    • Winner – Suburbs 2500> – Pet Services Spending: $4.28B; Up $0.55B (+14.8%)           2018: Center City
    • Loser – Center City – Pet Services Spending: $3.23B; Down $0.48B (-12.9%)                   2018: Suburbs <2500
    • Comment – The large Suburbs won and were also the only area to spend more on Services in 2019.
  • Housing – Homeowners w/o Mtge flipped from last to first.
    • Winner – Homeowner w/o Mtge – Services: $2.33B; Up $0.46B (+24.9%)           2018: Homeowner w/Mtge
    • Loser – Renter – Services: $1.34B; Down $0.33B (-20.0%)                                          2018: Homeowner w/o Mtge
    • Comment – Renters and Homeowners w/mtge spent less. The lift by Homeowners w/o mtge is tied to Retirees.
  • Age – The 35>44 yr olds flipped from 1st to last…
    • Winner – 75+ yrs – Pet Services Spending: $0.76B; Up $0.34B (+80.5%)                                 2018: 35>44 yrs
    • Loser – 35>44 yrs – Pet Services Spending: $1.57B; Down $0.43B (-21.7%)                               2018: 65>74 yrs
    • Comment: In 2018, all age groups spent more on Services. The 35>44 yr olds led the way, followed by 45>54. In 2019 all groups under 45 yrs old spent less, -$0.60B, while all groups over 45 spent more, +$0.50B. The 75+ year olds led the way and like 2018, the 45>54 yr olds came in second.
  • # Earners– No repeats or flips. No Earner, Singles and 1 Earner, 2+ CUs had the only increases.
    • Winner – No Earner, Single – Pet Services Spending: $0.86B; Up $0.31B (+56.0%)     2018: 2 Earners
    • Loser – 1 Earner, Single – Pet Services Spending: $1.22B; Down $0.20B (-14.4%)         2018: No Earner, 2+ CU
    • Comment – The # of Earners became slightly less important as “Everyone Works” CUs spent -$0.40B less.
  • Generation – Gen X flipped from 1st to last.
    • Winner – Born <1946 – Services: $0.95B; Up $0.24B (+33.0%)                                             2018: Gen X
    • Loser – Gen X – Services: $3.04B; Down $0.31B (-9.1%)                                                           2018: Baby Boomers
    • Comment – Despite their drop in $, Gen X maintained their position as the biggest Services Spenders. 2019 saw a clear Generational divide in Pet Services spending. Gen X & Millennials spent less while Boomers and those born before 1946 spent more,
  • Occupation – Both the winner and loser flipped.
    • Winner–– Retired – Pet Services Spending: $1.46B; Up $0.23B (+18.5%)                   2018: Mgrs & Professionals
    • Loser – Mgrs & Professionals – Pet Services Spending: $3.55B; Down $0.34B (-8.6%)                    2018: Retired
    • Comment – Retirees & Blue Collar workers spent more while White Collar workers & Self-Employed spent less.
  • Education – Advanced College Degree held their spot on top.
    • Winner – Adv. College Degree – Pet Services Spending: $3.30B; Up $0.20B (+6.6%)             2018: Adv. College Degree
    • Loser – HS Grad w/some College – Pet Services Spending: $0.93B; Down $0.24B (-20.3%)        2018: HS Grad
    • Comment – Again we have a clear dividing line on Services Spending. All those with a formal college degree, from Associates on up, spent more. All other education levels spent less.
  • Income – The winner flipped from last to first.
    • Winner – $30 to $39K – Pet Services Spending: $0.46B; Up $0.19B (+69.9%)                           2018: $200K+
    • Loser – $50 to $69K – Pet Services Spending: $0.63B; Down $0.21B (-24.8%)                            2018: $30 to $39K
    • Comment – The win by the $30>39K is not surprising. This income range corresponds to the average income of Retirees, so they undoubtedly were the primary driver. However, as we stated earlier, we had a rollercoaster in Pet Services spending in 2019. <$30K was down -$0.07B: $30>39K was up $0.46B; $40>69K was down -$0.38B; $70>149K was up $0.25K; $150K> was down -$0.09B.
  • Region – The Midwest won while flipping for the second consecutive year.
    • Winner – Midwest – Pet Services Spending: $1.82B; Up $0.18B (+11.3%)                                 2018: South
    • Loser – Northeast – Pet Services Spending: $1.45B; Down $0.23B (-13.8%)                             2018: Midwest
    • Comment – Last year all regions spent more. This year it was only the Midwest and West.
  • # in CU – 5+ Person CUs flipped from last to first.
    • Winner – 5+ People – Pet Services Spending: $0.63B; Up $0.11B (+21.5%)                        2018: 2 People
    • Loser – 3 People – Pet Services Spending: $1.29B; Down $0.17B (-11.6%)                           2018: 5+ People
    • Comment: The winner was a bit of a surprise and narrowly edged out Singles to come out on top.
  • CU Composition – The winner and loser are both new.
    • Winner – Married, Oldest Child 6>17 – Services: $1.16B; Up $0.11B (+10.3%)                  2018: Singles
    • Loser – Married, Oldest Child <6 – Services: $0.41B; Down $0.20B (-32.8%)                    2018: Single Parents
    • Comment – Although Gen X had the biggest decrease, they are still strong. The winner in this group was likely produced by the 45>54 yr old group. The loser was more likely to be younger.
  • Race/Ethnic – White, Not Hispanics held their position at the top.
    • Winner – White, Not Hispanic – Services: $7.53B; Up $0.08B (+1.0%)                     2018: White, Not Hispanic
    • Loser – Hispanic – Services: $0.53B; Down $0.11B (-17.6%)                                           2018: African American
    • Comment – Higher incomes – Whites & Asians spent more. Lower incomes – Hispanics & Blacks spent less.

We’ve now seen the winners and losers in terms of increase and decrease in Services Spending $ for 12 Demographic Categories. After a fabulous 2018, Services $ essentially flattened out in 2019. 49% of segments spent more compared to 88% in 2018. The winning increase in each category averaged +$0.25B, down from +$1.04B in 2018, while the biggest decreases averaged -$0.27B, up from -$0.02B. The spending also flipped from younger to older groups. Income is still of primary importance, but we saw a mixed bag of results for different levels. Urban areas are still the primary spenders but in 2019 more $ moved to the big Suburbs. The -$0.10B decrease was minor and we have detailed the best segments in performance and $. However, there were others who performed well but didn’t finish on top. They deserve….

HONORABLE MENTION

Higher income is important, but the results were mixed in 2019. The $30>39K group won but there were also positive performances by the high income Asians, the middle income $70>99K group and Blue Collar Workers. Also, unless your oldest child was between 6>17, CUs with kids spent less on Services. CUs with no children spent more. 1 Earner, 2+ CUs was 1 of only 2 segments in the Earners category to spend more and are the only segment to increase Services spending for 4 consecutive years. The largest, 5+ Person CUs narrowly edged out the smallest, 1 Person CUs for the win.  Spending increases, 49% and decreases, 51% were evenly split.

Summary

The Services segment has usually been “above” changes in other segments. Since 2010 prices have steadily increased but so did Spending …until 2017. An increase in outlets offering Services created a much more competitive environment. While prices didn’t deflate, inflation slowed significantly, and “deals” abounded as Retailers began a pitched battle for Consumers’ Services $. The net result was turmoil and a 1% decrease in spending. In 2018, the abundance of outlets and competitive prices finally had their intended impact. Many more consumers took advantage of the convenience of Pet Services and spending literally took off. In 2019 Consumers held their ground at the new higher level but we saw turmoil similar to 2017. Value shopping likely contributed to the small decrease.

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 usually CU income is of real importance to increased Services spending. While we saw mixed results according to income level in 2019, higher incomes still won out. 41.5% of CUs make over $70K and account for 75.0% of Services spending. This is a performance rating of 180.7% – the highest rating earned in any industry segment.

Performance is an important measurement. There were 5 categories with high performing big groups, down from 7 in 2018. This is equal to Food but less than Supplies (7) & Veterinary (6). This indicates less disparity in Services Spending.

  • Income    · Higher Education     · Homeownership    · CU Composition     · Race/Ethnicity

The two categories that dropped out were Age and # of Earners. They surpassed the 120% marker in 2018 because there was a strong youth movement. In 2019 the increases came from groups over 45 so the Age category became more balanced. Younger CUs also have more earners, so this category became less important as spending skewed a little older. However, we should note that while Gen X had the biggest decrease, they are still #1 in Services Spending.

2018 saw the biggest lift in history and it was widespread as 88% of all demographic segments spent more on Services. In 2019 Services essentially held their ground, only falling -$0.10B (-1.1%). The small decrease is reflected  in the mixed demographic spending pattern. 51% of the segments spent less while 49% spent more.

The Services segment has seen a radical increase in the number of outlets. Services is the most discretionary industry segment and much of the spending is driven by the consumers’ need for convenience. The increase in outlets certainly made things more convenient, but it also created a more competitive market. This produced “deals”, the biggest driver for all Americans. This made Services an option for more Americans and drove the huge 2018 lift. “Value shopping” was probably a factor in the small decrease in 2019. The 2020 pandemic probably hit this segment rather hard. We’ll see.

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 2 people – a married couple, only. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. They are 45 to 54 years old and both of them work, in managerial positions. They’re doing well with an income over $200K. They live in a large suburb of a metropolitan area of over 2.5 million in the Western U.S. and are still paying off their mortgage.

2019 Pet Supplies Spending was $16.81B – Where did it come from…?

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 more discretionary in nature. There are other factors too. Spending can be affected by the spending behavior in other segments, especially Food. Consumers often trade $ between segments. However, the biggest factor is price. Many supplies categories have become commoditized so pricing changes (CPI) can strongly impact Consumers’ buying behavior in this segment. In the 2nd half of 2016, deflation began, and Supplies started a 24 month spending lift, totaling $4.97B. Then prices turned up in mid-2018 due to impending new tariffs. Spending fell -$0.01B in the 2nd half but the tariffs really hit home in 2019. 93 of 96 demographic segments spent less and Supplies $ fell a record -$2.98B.

Let’s see which groups were most responsible for the bulk of Pet Supplies spending in 2019 and the $2.98B drop. The first chart details the biggest pet supplies spenders for each of 10 demographic categories. It shows their share of CU’s, share of Supplies spending and their spending performance (Share of spending/share of CU’s). Although their share of the Pet Supplies $ may be different, all of the big spending groups are the same as Total Pet and Food. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. All 10 of the groups have over a 60% market share. The big difference is we have 7 groups with performance over 120%. Pet Food had only 5. Education and # Earners were added. Both of these categories correlate with higher income which is more important in Supplies spending. 2 more 120+% performers also indicates that Supplies spending is less balanced.

  1. Race/Ethnic – White, not Hispanic (84.6%) down from (86.3%) This large group accounts for the vast majority of spending in every segment. Their share fell and their performance rating was down from 125.0% to 123.4% but they remain #4, in terms of importance in Supplies Spending. Minority groups account for 31.4% of all CUs but spend only 15.4% of Supplies $. This is actually up from 13.7%. Minorities also spent less but their drop was less severe because lower income Hispanics and African Americans are more focused on essential supplies, not more discretionary items.
  2. Housing – Homeowners (76.6%) down from (79.9%) Homeownership is a major factor in pet ownership and spending in all industry segments. Their performance dropped to 120.1%, from 125.9%, and they fell from 3rd to 6th place in terms of importance for increased Pet Supplies spending. Both Homeowners and Renters spent less. However, the bulk of the spending drop – $2.50B (84%) came from Homeowners with a mortgage.
  3. # in CU – 2+ people (79.8%) down from (82.7%) Their Supplies performance was 114.3%, down from 117.3%. All CU sizes spent less but 1 person CU’s had the smallest decrease, -0.8%. Also, in 2018 all 2+ CUs performed above 100%. In 2019, it was only 2 & 3 person CUs. In fact, 5+ Person CUs replaced singles at the bottom. Basically, 2+ CUs lost share and performance because 1 Person CUs had a less bad year.
  4. Education – Associates Degree or Higher (67.6%) down from (68.2%) Higher Education lost market share and their performance level dropped from 125.0 to 121.6%. They also fell from 4th to 5th in importance for generating greater Supplies spending. All groups spent less, but 71% of the decrease came from the Associates> Group. They have higher income and purchase more truly discretionary supplies. This was the spending most impacted by prices.
  5. # Earners – “Everyone Works” (70.0%) up from (65.4%) Their performance grew from 113.2% to 119.6% and they entered the 120+% club at #7. In this group, all adults in the CU are employed. Income and now # Earners is very important in Supplies $. They gained in share and performance because of $1.78 drop by 2+ CUs with 1 or no earner.
  6. Occupation – All Wage & Salary Earners (65.6%) up from (65.2%) – The performance of this group was 107.5%, up from 106.8%. All wage/salary groups spent less on Supplies. They gained in share and performance because the Self-Employed and Retirees had even bigger decreases in Supplies $, -20%.
  7. Income Over $70K (62.6%) up from (60.1%) With a performance rating of 150.8%, up from 148.9%, CU income is the single most important factor in increased Pet Supplies Spending. The $30>39K group actually spent more but the $70K> made gains again because they had a smaller decrease than <$70K. The increased discretionary nature of much of Supplies purchases pushes the performance above Food, but it is significantly below the Services segments.
  8. Age – 35>64 (65.3%) up from (65.2%) Traditionally, Supplies Spending skews more towards the younger groups. The 35>64 group maintained their dominance and their performance level increased to 124.9% from 123.2% moving them up to 2nd in importance. Supplies Spending was down in all segments but <25. However, they have a very small share. The 35>64 performance grew because the big spending 55>64 yr olds had only a small decrease.
  9. Area – Suburban (61.6%) down from (63.3%) Suburban CUs are the biggest spenders in every segment. They lost a little ground in Supplies and their performance fell to 110.6%, from 114.4% in 2018. All areas spent less but the Suburbs fell in share and performance because Central City spending was only down -3.9%.
  10. CU Composition – Married Couples (60.9%) down from (64.8%) Their performance also dropped from 130.5% to 124.6% and they fell from 2nd to 3rd in importance. Married Couple w/other adults, but no kids actually spent more on Supplies. However, Married Couples $ were down -20%. They loss ground because Singles only spent -0.8% less.

The biggest spending groups for Pet Supplies are the same as Total Pet and 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, perform better than in Food. Homeowners, Married and Whites, the biggest spenders, had the biggest drops in Supplies $. Also, 7 groups with 120+% performance indicates greater disparity between segments.

Now, we’ll look at 2019’s best and worst performing Pet Supplies spending segments in each category.

Almost all of the best and worst performers are those that we would expect. In Pet Supplies spending, there are 5 that are different from 2018. That is the same as Total Pet but 2 fewer than Pet Food. It is actually the lowest number for any Industry segment. As we move deeper into the data, we will start to see even more differences between the Industry Segments. Changes from 2018 are “boxed”. We should note:

  • Income matters in Supplies spending.
    • The 236.7% Performance by the $200K> group is 22.5% better than the best income segment in Food.
    • All of the 12 winners for best performance were either 1st or 2nd in income of any segment in the category.
  • Education – Although the winner and loser were different from 2018, the performance dividing line in Supplies Spending remains the same. Only those with a formal degree, Associates>, earn their share with 100+%.
  • CU Composition – Single Parents Supplies spending fell -44.3%, the biggest drop of any segment in any category.
  • Area – The second biggest Supplies Spending percentage decrease was Rural, -35.2%.
  • # in CU –In 2019 the performance of 2 to 4 people CUs was again very close. 3 edged out 2 for the win. However, even 5+ earned their share at 103.0%. That truly leaves Singles “standing alone”. In Supplies $, it still just takes 2.

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

In 2019 Supplies Spending was down $2.98B. The decline began in the second half of 2018 as spending turned down slightly. Then the full impact of the tariffs hit home and the $ plummeted. In the chart, there are 2 repeats from 2018 – 1 winner and 1 loser. 9 segments switched from last to first or vice versa. This is much greater turmoil than in the Food Segment. Almost all winners were a surprise. However, the biggest surprise or change from recent history was that in 2019, every segment in 9 of 12 Demographic Categories decreased spending on Supplies. In 2018, in 3 categories every segment increased spending and in 2017 this was true for 10 categories. This provides perhaps the biggest indication of the massive impact of tarifflation on the Supplies Segment. Here are the specifics:

  • Age – Only the <25 group spent more.
    • Winner – <25 yrs – Pet Supplies Spending: $0.87B; Up $0.20B (+29.5%)                                2018: 35>44 yrs
    • Loser – 35>44 yrs – Pet Supplies Spending: $3.24B; Down -$0.82B (-20.1%)                          2018: 65>74 yrs
    • Comment: The 35>44 yr olds flipped from first to last. 74% of the $2.98B drop came from 25>54 yr olds.
  • CU Composition – Married Couples Only flipped from 1st to last.
    • Winner – Married, + Adults, No Kids – Supplies: $0.79B; Up $0.10B (+14.4%)   2018: Married, Couple Only
    • Loser – Married, Couple Only – Supplies: $4.50B; Down -$1.55B (-25.6%)            2018: Single Parents
    • Comment – Only Married Couples with additional adults but no kids spent more. Unmarried CUs of all sizes with no children had the smallest decrease, -$0.11B (-1.8%).
  • Income – Both winner and loser are new.
    • Winner – $30>39K – Pet Supplies Spending: $1.32B; Up +$0.09B (+7.1%)                              2018: $200K >
    • Loser – $50 > 69K – Pet Supplies Spending: $1.93B; Down -$0.68B (-26.2%)                           2018: $70>99K
    • Comment – The $30>39K is the third and last segment in any category to spend more. There was no clear spending trend dividing line. The $70>99K had the second best performance, down only -$0.02B, while the $100>149K group was almost the big loser at -$0.67B.
  • Race/Ethnic – White, Not Hispanic flipped from first to last but the winner was new.
    • Winner – African Americans – Supplies: $0.79B; Down -$0.005B (-0.6%)               2018: White, Not Hispanic
    • Loser – White, Not Hispanic – Supplies: $14.23B; Down $2.86B (-16.7%)                  2018: Asian Americans
    • Comment – White, Not Hispanics drive this discretionary segment. They have the highest % of pet ownership and the second highest income. The interaction of these two factors is very clear in the Racial/Ethnic category. Asians have the highest income but lowest Pet ownership – $ down -11.0%. Hispanics are 3rd in income but second in pet ownership – $ down -5.0%. African Americans have low pet ownership and lowest income – $ down -0.6%.
  • # Earners – All segments spent less but 1 Earner, 2+ CUs stayed on the bottom.
    • Winner – 1 Earner, Single – Pet Supplies Spending: $2.11B; Down -$0.013B (-1.1%)          2018: 2 Earners
    • Loser – 1 Earner, 2+ CU – Pet Supplies Spending: $2.77B; Down -$1.36B (-32.9%)             2018: 1 Earner, 2+ CU
    • Comment – Income is a big factor and the # of Earners is becoming more important, at least for the 69.8% of CUs with 2+ people. Singles only spent $0.01B less, regardless if they worked or not. However, in 2+ people CUs, those with 1 or No Earner spent -32.0% less. Those with 2 or more Earners spent -10.9% less.
  • Education – Winner and loser flipped but all segments spent less.
    • Winner – < High School Grads – Pet Supplies Spending: $1.80B; Down -$0.02B (-3.5%)    2018: BA/BS Degree
    • Loser – BA/BS Degree – Pet Supplies Spending: $5.34B; Down $0.93B (-14.9%)                     2018: < HS Grads
    • Comment – Once again, those that spent the least in 2018 won because they had the smallest decrease.
  • # in CU – Just like in CU Composition, 1 person CUs had the smallest decrease.
    • Winner – 1 Person – Pet Supplies Spending: $3.39B; Down -$0.03B (-0.8%)                       2018: 4 People
    • Loser – 2 People – Pet Supplies Spending: $6.40B; Down -$1.53B (-19.3%)                           2018: 5+ People
    • Comment: The 2 person CUs were particularly hard hit as their spending decrease was bigger than the combined drop of all 3 or more person CUs.
  • Housing – Another flip by the 2018 winner and loser.
    • Winner – Renter – Supplies: $3.94B; Down -$0.04B (-1.0%)                                         2018: Homeowner w/Mtge
    • Loser – Homeowner w/Mtge – Supplies: $8.30B; Down -$2.50B (-23.2%)               2018: Renter
    • Comment – Renters have a significantly lower level of pet ownership, so they “won” because they had less to lose. We should also note that the spending for Homeowner w/o a mortgage only fell -8.8%.
  • Region – The Northeast flipped from last to first.
    • Winner – Northeast – Pet Supplies Spending: $3.31B; Down -$0.04B (-1.2%)                 2018: Midwest
    • Loser – South – Pet Supplies Spending: $5.68B; Down -$1.52B (-21.1%)                            2018: Northeast
    • Comment – Last year the South finished a close second to the Midwest for the biggest increase. In 2019 they were the clear “loser” in $ but they were down -21.1% while the Midwest fell -25.8%.
  • Occupation – Both winner and loser are new.
    • Winner – Blue Collar – Pet Supplies Spending: $3.15B; Down -$0.09B (-2.8%)              2018: Tech/Sls/Clerical
    • Loser – Managers & Professionals – Pet Supplies Spending: $5.14B; Down -$1.27B (-19.8%)        2018: Retired
    • Comment – All Occupation groups spent less on Supplies in 2019. In 2018 all but Retirees spent more so they are the only segment with 2 consecutive decreases in Supplies spending. Blue Collar workers are the only group with a single digit % decrease. The 2 biggest spenders, Managers & Self-Employed, cut back spending by 20%.
  • Area Type – The big Suburbs flipped from 1st to last.
    • Winner – Center City – Pet Supplies Spending: $5.39B; Down -$0.22B (-3.9%)                2018: Suburbs 2500>
    • Loser – Suburbs 2500> – Pet Supplies Spending: $7.44B; Down -$1.45B (-16.3%)           2018: Suburbs <2500
    • Comment – Central Cities, the area with the lowest pet ownership, had the smallest decrease.
  • Generation – Those born in 1981 or after, Millennials/Gen Z, held their spot at the top
    • Winner – Born 1980> – Supplies: $4.34B; Down -$0.23B (-5.0%)                       2018: Millennials
    • Loser – Gen X – Supplies: $5.47B; Down $1.35B (-19.8%)                                          2018: Baby Boomers
    • Comment – This win by Millennial/Gen Z was driven by the <25 group, which had the only spending increase in the age category. Gen X, which had the highest CU Supplies spending in 2018, cut back the most in 2019.

We’ve now seen the winners and losers in terms of increase/decrease in Pet Supplies Spending $ for 12 Demographic Categories. In 2019, spending fell a record -$2.98B due to tarifflation. Only 3 of 96 segments had increases and 9 of 12 categories had no segments that spent more on Supplies. In performance, we saw many expected winners, but it was a different story in $ change. Most of the 2019 winners were those that had the least to lose from 2018. However, like previous years, not every good performer can be “the” winner and some of these “hidden” segments should be recognized for their performance, which was “bad”, but better than most. They don’t win an award, but they deserve…

HONORABLE MENTION

The numbers from these segments are not good but merit some recognition in such a devastatingly bad year. Like many of the winners, most are unusual and a very eclectic mix. The $70>99K middle income group was only down 0.8% so their decrease was truly minimal. No Earner, Singles was literally only $1M away from winning the # of Earners category. The best performances generally came from “no kids” CUs like those consisting of 2+ Unmarried Adults. The lower income Hispanics finished 2nd with only a 5% decrease because their focus was primarily on more essential supplies. The 55>64 yr old Baby Boomers have the largest share of Supplies $ of any age group and their % decrease was about half of the national number. HS Grads with some College were the only other group besides those with no HS Diploma to have a % decrease less than double digits. 2018 was not a great year but it was still pretty good as 72 of 92 Demographic Segments spent more. In a marked contrast, 2019 was nearly universally bad as 93 of 96 demographic segments spent less on Supplies.

Summary

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

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

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

Among the demographic categories in which a consumer has some control, Higher Income, Marriage, Homeownership and Higher Education are still the biggest factors in Supplies spending. In 2019 Income stayed on top and two categories directly associated with income – Occupation and # of Earners increased in importance.

Increased Tariffs increased prices which obviously severely impacted Supplies Spending. Those that spent the most in 2018 were often the most negatively affected in 2019. A prime example of this is that 6 of the 12 segments with the biggest increase in 2018 flipped to having the biggest decrease in 2019. In terms of performance, 10 of the 12 best performing segments repeated in 2019. There has always been a big gap in performance between the best and worst performers in Supplies. It’s still there as It narrowed only 0.6% from 2018 to 2019.

It appears the 2019 decrease most affected the groups that spent the most money on the more discretionary supplies categories. It will be interesting to see the impact of the COVID-19 pandemic on Supplies $pending Demographics.

Finally – The “Ultimate” Pet Supplies Spending CU consists of 3 people – a married couple, with 1 child, over 18. They are 45>54 yrs old. They are White, but not of Hispanic origin. At least one has a BA/BS 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 live in a small suburb, adjacent to a big city in the Western U.S. and are still paying off the mortgage.

 

 

 

2019 Pet Food Spending was $31.19B – Where did it come from…?

As we continue to drill ever deeper into the demographic Pet spending data from the US BLS, we have now reached the level of individual Industry segments. We will start with Pet Food, the largest and arguably most influential of all. We have previously noted the trendy nature of Pet Food Spending. In 2018 we broke  a pattern which began in 1997 – 2 years up then spending goes flat or turns downward for a year. We expected a small increase in 2018 but what we got was a $2.27B decrease (-7.3%). This was due to the reaction to the unexpected FDA warning on grain free dog food. A pattern of over 20 years was broken by 1 statement. The grain free warning lost some credibility and spending rebounded in 2019, +$2.35B (+7.1%). Let’s take a closer look.

First, we’ll see which groups were most responsible for the bulk of Pet Food spending and the $2.35B lift. The first chart details the biggest pet food spenders for each of 10 demographic categories. It shows their share of CU’s, share of pet Food spending and their spending performance (Share of spending/share of CU’s). All groups are the same as Total Pet and Pet Products. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. In Pet Food spending, Education was less important while Marriage matters more. Also, while Income is still the highest performing demographic characteristic, it carries a little less weight in Food spending. Another big difference is that Total Pet had 6 groups performing at or above 120%. Pet Food had only 5. This indicates that Pet Food spending and Pet ownership is spread more evenly across demographic segments. Pet Products also had only 5 groups over 120% which shows the influence of the Pet Food Segment which in 2019 accounted for 65% of Pet Products $ and 40% of Total Pet Spending.

  1. Race/Ethnic – White, not Hispanic (87.0%) – up from 83.2%. This large group accounts for the vast majority of spending in every segment. They gained in share and their performance increased to 126.9% from 120.5%, but this category still ranks #4 in terms of importance in Pet Food Spending demographic characteristics. While Hispanics, African Americans and Asian American account for 31.4% of U.S. CU’s, they spend only 13% of Pet Food $. This is down from 17% last year. All minorities spent less on Pet Food in 2019, -$0.78B, a stark contrast to the $3.13B increase by White, Not Hispanic CUs.
  2. Housing – Homeowners (81.9%) – up from 76.8%. Homeownership is a huge factor in pet ownership and more pet spending and it became even more important in 2019. They gained over 5% in share and their performance grew from 121.0% to 128.5%. Homeownership remained 3rd in terms of importance for increased pet Food spending. It was a good year for Homeowners, with or without a mortgage and a bad year for renters.
  3. # in CU – 2+ people (80.2%) – down from 80.3%.The share of market for 2+ CU’s is now only over 80% for Pet Food. Last year they had 80+% in all but Services. While their share fell slightly performance grew from 113.8% to 114.9%. This happened because the 2019 $ were produced by 360K fewer CUs. (over 1M fewer 2 person CUs). 3 Person households took over as the performance leader and now in the 2+ group, only 2 & 3 person CU’s perform over 100%. 2+ Person CUs are still the 6th most important group in Pet Food $ but Singles are growing in numbers and $.
  4. Education – Associates Degree or Higher (61.6%) – down from 62.8%. Education lost a little importance in Pet Food Spending. The performance of higher education fell from 115.2% to 110.7%. All groups with at least a High School Diploma spent more. However, HS Grads with no degree of any kind (Assoc/BA/BS) spent $1.84B more.
  5. # Earners – “Everyone Works” (66.4%) – up from 58.2%. There was a big increase from last year and their performance also grew from 100.7% to 113.6%. Income matters most in Pet Food Spending and the # of Earners also became more important.
  6. Occupation – All Wage & Salary Earners (61.7%) – up from 60.4% – All wage & salary workers, both Blue & White Collar increased spending. Only Retirees spent less. This drove the performance of All Wage & Salary earners up from 98.9% to 101.2%. This big group is again earning their share in Pet Food Spending.
  7. Income – Over $70K (60.9%) – up from 55.6%. Their performance rating also grew significantly from 137.8% to 146.9%. CU income remains the single most important factor in increased Pet Food Spending. The dividing line was $40K. All groups <$40K spent less. All over $40K spent more. The gain in share and performance was driven by a $2.97B increase in spending by $70K>. Pet ownership is common across all income levels but in 2019 higher income became even more important in Pet Food Spending.
  8. Age – 35>64 (62.9%) – up from 59.6%. The performance of the group grew from 112.7% to 120.2% so the “Age” category rejoined the 120+% club at #5. Only the <25 group spent less on Pet Food. However, a $2B increase drove the big lift in share and performance by the 35>64 year olds.
  9. Area – Suburban (61.6%) up from 60.1%. Their performance grew from 108.4% to 110.7. All Suburban areas spent more but the gains were driven by a $1.61B increase by Suburbs 2500>, along with -$0.17B drop by Center City.
  10. CU Composition – Married Couples (63.0%) – up from 61.3%. They gained in share and their performance grew from 123.5% to 129.0%, so they stayed in 2nd place. Only Married couples with an oldest child 6>17 spent less.

The big spenders for Pet Food are the same as those for Total Pet and Pet Products and in the past they generally had a lower market share and performance. That was not always true in 2019. Pet Food Spending grew $2.35B and 8 of the 10 big groups gained in both share and performance.  Pet Food spending became a little less balanced in many demographic categories.

Now, we’ll look at 2019’s best and worst performing Pet Food spending segments in each category.

Even as we drill down to the Industry segment level, many of the best and worst performers are the ones that we would expect. In Pet Food spending, there are  7 that are different from 2018, which is 2 more than for Total Pet but the same as Pet Products. 9 of 12 winners are the same as Pet Products and 10 of the losers match. This demonstrates the impact that the Food spending increase had on overall Pet Products. Changes from 2018 are “boxed”. We should note:

  • Income is important in every segment but the “need” segments, Food and Veterinary are the only ones in which the winner is not $200K+. Also, all income groups above $40K perform at 92+% in Food, by far the best of any segment.
  • # Earners – 2 Earner CU’s took the top spot as the number of Earners became more important.
  • CU Size – With a 25% increase in spending, 3 Person CUs edged out the usual winner, 2 Person.
  • Occupation – After a good 2018, Retirees returned to the bottom.
  • Generation – The Boomers remain the perennial best performers in Pet Food, but Gen X is closing the gap.
  • Age – The 45>54 yr olds replaced the 55>64-yr olds on top and the <25 group returned to the bottom.
  • CU Composition – Married, Couples Only won for the 5th straight year and Single Parents fell to a very low bottom.
  • Area – Rural CUs increased spending and performance, but it wasn’t enough to hold off the <2500 Suburbs.

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

There are 4 repeats from 2018 and only 5 of the 24 segments (21%) flipped from 1st to last or vice versa. That’s considerably calmer than 2018 when there was only 1 repeat and 71% flipped. The only true surprise winner was High School Grads. The South flipped from last to first but even more importantly, all regions spent more on Pet Food. This indicates that the Food rebound was geographically widespread across America. Here are the specifics:

  • Race/Ethnic – A dual flip as the rebound in Pet Food spending was only for the White group…
    • Winner – White, Not Hispanic – Pet Food Spending: $27.14B; Up $3.13B (+13.0%)     2018: Hispanic
    • Loser – Hispanic – Pet Food Spending: $2.30B; Down $0.44B (-16.1%)                        2018: White, Not Hispanic
    • Comment – The U.S. is slowly becoming more racially/ethnically diverse but White, Not Hispanic is still by far the biggest spender in every Pet Industry Segment. In 2018 Whites had their smallest share in Food, 83.2%. In 2019 all minorities spent less on Food and the White share of spending jumped to 87%, the highest in 7 years.
  • # Earners – Income grew in importance as did the # of Earners.
    • Winner – 2 Earners – Pet Food Spending: $12.98B; Up $2.54B (+24.4%)                       2018: No Earner, Single
    • Loser – 1 Earner, 2+ CU – Pet Food Spending: $5.90B; Down $1.23B (-17.2%)             2018: 1 Earner, 2+ CU
    • Comment – 1 Earner, 2+ CUs stayed at the bottom. Everyone Works CUs of all sizes spent $3.92B more while all others spent -$1.57B less.
  • Housing – Renters flipped from first to last.
    • Winner – Homeowners w/Mtge – Food: $17.35B; Up $2.32B (+15.5%)            2018: Renters
    • Loser – Renters – Food: $5.64B; Down $1.05B (-15.7%)                                         2018: Homeowners w/o Mtge
    • Comment – Homeowners with and without mortgages spent $3.4B more and Renters spent -$1.05B less. This is a more expected result in this category.
  • Generation – Gen X edged out the Boomers for the win.
    • Winner – Gen X – Pet Food Spending: $10.03B; Up $1.71B (+20.5%)                         2018: Millennials
    • Loser – Born <1946 – Pet Food Spending: $2.48B; Down $0.22B (-8.1%)                 2018: Boomers
    • Comment – Only the oldest group spent less. Gen X dominated in a segment usually ruled by Boomer behavior.
  • Area Type – Winner and Loser are new but not surprising.
    • Winner – Suburbs <2500 – Pet Food Spending: $5.99B; Up $1.61B (+36.7%)        2018: Suburbs 2500>
    • Loser – Center City – Pet Food Spending: $7.63B; Down $0.17B (-2.2%)                  2018: Rural
    • Comment – Center City spent less. Everyone else spent more. This reflects the results of the Housing category.
  • Education – A new and surprising winner, HS Grads and a new loser, <HS Grads which is not much of a surprise.
    • Winner – HS Grads – Food Spending: $5.27B; Up $1.36B (+34.9%)              2018: Associates Degree
    • Loser – <HS Grad – Food Spending: $0.56B; Down $0.59B (-51.2%)            2018: HS Grad w/some College
    • Comment – Every education level except those without a High School Diploma spent more. One possibly is that this group had a delayed reaction to the 2018 FDA warning.
  • Region – Last year every region spent less. This year they all spent more – a second consecutive flip.
    • Winner – South – Pet Food Spending: $12.03B; Up $1.30B (+12.1%)                                         2018: West
    • Loser – Midwest – Pet Food Spending: $7.02B; Up $0.17B (+2.5%)                                            2018: South
    • Comment – The South flipped from the bottom to the top. The fact that the spending behavior of all regions has been the same for 3 consecutive years shows the universality of recent trends in Pet Food.
  • Age – The winner and loser are new but not surprising.
    • Winner – 45>54 yrs – Pet Food Spending: $7.09B; Up $1.20B (+20.4%)                           2018: 65>74 yrs
    • Loser – <25 yrs – Pet Food Spending: $0.76B; Down $0.36B (-32.4%)                                2018: 55>64 yrs
    • Comment: The highest income 45>54-yr olds moved to the top but all groups but <25 spent more. The decrease by the youngest group was substantial, but not surprising after an +80% increase last year.
  • # in CU – 3 People CUs continued their strong growth and won for the second consecutive year.
    • Winner – 3 People – Pet Food Spending: $5.85B; Up $1.18B (+25.3%)                                   2018: 3 People
    • Loser – 5+ People – Pet Food Spending: $2.46B; Down $0.35B (-12.4%)                               2018: 2 People
    • Comment: In 2018 only 3 person CU’s and singles increased Food spending. In 2019 only the largest, 5+ person CUs spent less. We are increasingly moving up from the previously magic “2” number, which probably reflects the growing strength of the younger groups, even in the Food segment.
  • Occupation – Self-Employed held their winning position.
    • Winner – Self-Employed– Pet Food Spending: $3.38B; Up $0.97B (+40.1%)           2018: Self-Employed
    • Loser – Retired – Pet Food Spending: $4.66B; Down $1.02B (-18.0%)                        2018: Blue Collar Workers
    • Comment – Retirees were the only big group to spend less on Pet Food. Blue Collar Service workers spent a little less too, but the total Blue Collar worker group spent $0.41B more on Food. Overall, the “bosses” – Managers, Professionals and Self-Employed spent +$1.83B more, which was 78% of the total increase.
  • Income – The $150>199K group won again.
    • Winner – $150 to $199K – Pet Food Spending: $3.77B; Up $0.94B (+33.4%)                   2018: $150 to $199K
    • Loser – $30 to $39K – Pet Food Spending: $4.04B; Down $0.80B (-27.8%)                      2018: $50 to $69K
    • Comment – Only the groups below $40K spent less on Food in 2019. However, the increases didn’t become significant until income reached $70K or more which increased the income disparity in Food spending.
  • CU Composition – Married Couple Only flipped from last to first and remain the performance leader.
    • Winner – Married, Couple Only – Food: $9.92B; Up $0.86B (+9.5%)          2018: Married, Oldest Child <6
    • Loser – Single Parents – Food: $0.61B; Down $0.44B (-41.6%)                       2018: Married, Couple Only
    • Comment – Married, Couple Only returned to the top, no surprise. In 2018 Married, Oldest Child 6>17 and Single Parents spent more on Food. In 2019 they were the only segments to spend less. Although Married CUs with children spent $0.74B more, the bulk of the increase, $2.0B (85%) came from all adult CUs – Singles, married or unmarried – just no kids.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Food Spending $ for 12 Demographic Categories. The results reinforce just how widespread the spending rebound to the 2018 FDA warning was. Most of America remains firmly committed to high quality Pet Food. However, super premium Food comes with super premium prices, so income has grown in importance in Pet Food spending. I suspect that the internet and value shopping will become even more important in this segment. We have identified the winning segments in performance and $ increase but they were not alone. Not every good performer can be a winner. Some “hidden” segments should also be recognized for performance. They don’t win an award, but they get…

HONORABLE MENTION

Married Couples, Oldest Child 18> came in second to Couples Only by just $0.04B. They are generally older and may soon be a couple only. Rural finished 2nd to the Small Suburbs and together areas <2500 in population spent $2.26B more on Food.  4 Person CUs narrowly beat 2 People for the 2nd biggest increase. All Homeowners spent more and those with no mortgage finished 2nd despite having a $1B increase. All regions spent more but the Northeast finished 2nd despite being the worst performer at 94%. High School Grads with no College were the winners but those who had some College courses finished second. This combined performance helped reduce the importance of higher education to increased Pet Food spending. The lift was widespread as 75% of 96 demographic segments spent more.

Summary

Pet Food has been ruled by trends over the years. The drop in 2018 due to the FDA grain free warning broke a pattern of 2 years up followed by 1 year of flat or declining sales which had been going on since 1997. This trendy nature increased with the first significant move to premium foods in 2004. The Melamine crisis in 2007 intensified the pattern and resulted in a series of “waves” which became a tsunami with the introduction of Super Premium Foods.

The 25 to 34 yr old Millennials were the first to “get on board” with Super Premium in the second half of 2014. In 2015 a substantial portion of consumers began to upgrade to this new trend. The result was a $5.4B spending increase. These consumers were generally more educated, often worked as managers or were self-employed and had higher incomes. One negative was that they often paid for the upgrade by spending less in other segments. In 2016 the anticipated drop in spending happened. The “upgraded” group began value shopping for their new food and found great deals online and in some stores. They spent some of the $3.0B “saved” Food dollars in other segments but not enough to make up for the drop in Food. Total Pet Spending was down $0.46B. In 2017 we were ready for a new “wave”. Thanks to a very price competitive market, what we got was a deeper penetration of Super Premium foods. This group of upgraders was mostly middle-income, not college educated and often Blue-collars workers. Most also were in the 55>64 year old age group. The result was a $4.6B increase but this time there was no trading $ with other segments.

In 2018 we were “due” a small annual increase in Pet Food and spending in the first half was up $0.25B. Then the bottom dropped out as spending fell $2.51B in the second half in reaction to the FDA warning on grain free dog food. It turned out that the big decrease in pet food spending came directly from the groups who had fueled the big 2017 increase. This turmoil was illustrated by the fact that 71% of the demographic groups with the biggest change in Pet Food $ switched from first to last or vice versa from their position in 2017.

That brought us to 2019. The impact of the FDA warning faded as there was little evidence to back it up. Pet Parents either returned to Super Premium or in some cases chose even higher priced options. Premium supplements $ also grew as the health and wellbeing of their Pet Children remained the number 1 priority. Pet Food $ grew $2.35B with less turmoil and 72 of 96 (75%) demographic segments spending more. Higher Education became a little less important but income and income related categories – from # Earners to Race/Ethnicity mattered more. Overall, Pet Food Spending became a little less demographically balanced in 2019, reversing a previous trend. Indications are that the 2020 Pandemic, with stay at home protocols, caused consumers to place an even greater focus on their pets and that Pet Food Spending increased, but by whom? A 2020 lift was likely again driven by income. We’ll have to wait and see.

Finally – 2019’s “Ultimate” Pet Food Spending CU is 3 people – a married couple, with 1 child over 18. They are 45>54 years old and White, but not of Hispanic origin. At least one has an advanced college degree and they both work in their own business. They earn $150>$200K but still have a mortgage on their house in a small suburb in the Midwest. By the way, they just barely edged out their neighbors, a Married Couple Only.

 

2019 Pet Products Spending was $48.01B – Where did it come from…?

We looked at the Total Pet Spending for 2019 and its key demographic sources. Now we’ll start drilling down into the data. Ultimately, we will look at each individual segment but the first stop in our journey of discovery will be Pet Products – Pet Food and Supplies. Food and Supplies are the industry segments that are most familiar to consumers as they are stocked in over 200,000 U.S. retail outlets, plus the internet. Every week over 21,000,000 U.S. households buy food and/or treats for their pet children. Pet Products accounted for $48.01B (61.2%) of the $78.44B in Total Pet spending in 2019. This was down $0.64B (-1.3%) from the $48.65B that was spent in 2018. Pet Food spending rebounded from the reaction to the 2018 FDA warning on grain free dog food, but the impact on Supplies from the new tariffs really hit home in 2019. Supplies prices rose sharply which affected virtually every demographic segment and spending plummeted.

Overall, in 2019 Pet Food spending rose +$2.35B, while Supplies spending fell a record -$2.98B. We’ll combine the data and see where the bulk of Pet Products spending comes from.

We will follow the same methodology that we used in our Total Pet analysis. First, we will look at Pet Products Spending in terms of the same 10 demographic category groups that were responsible for 60+% of Total Pet 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 2019.

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 (spending share/share of CU’s). Although their share of the total products $ may be different from their share of the Total Pet $, the biggest spending groups are the same. The categories are shown in the order that reflects their share of Total Pet Spending. This highlights the differences. In Pet Products spending, the # of earners, age and marriage are more important while education matters less. We should note that, like Total Pet Spending, Income is the highest performing demographic characteristic. In Pet Products there are 5 groups with a performance rating of over 120%, up from 4 last year. This is one less than Total Pet, which indicates that Pet Products spending is growing more concentrated but is still spread more evenly across the category segments.

  1. Race/Ethnic – White, not Hispanic (86.2%, up from 84.5%) They are no longer the largest group but still account for the vast majority of spending in every segment. With a 125.7% performance rating, this category now ranks 3rd in terms of importance in Pet Products Spending demographic characteristics. Hispanics, African Americans and Asian American account for 31.4% of U.S. CU’s, but they only spend 13.8% of Pet Products $. Although pet ownership is relatively high in Hispanic households, it is significantly lower for African Americans and Asians.
  2. Housing – Homeowners (80.0% up from 78.1%). Controlling your “own space” has long been the key to pet ownership and more pet spending. Their performance grew from 123.0% to 125.6% but they officially fell from third to fourth place in terms of importance for increased pet products spending. Homeowners spending only increased by 0.1% in 2019. The small increase was totally driven by those without a mortgage. Those with a mortgage spent less. Their overall gain in share and performance was due to a bad year for Renters, -10.1%.
  3. # in CU – 2+ people (80.1%, down from 81.3%) The share for Pet Products is higher than for Total Pet, 78.2%. 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 performance of 114.7% is down from 115.2% because of a bad year for 2, 4 and 5+ person CUs and a good year for singles. Performance peaks at 3 people but only CUs with 5+ people and singles perform below 100%.
  4. Education – Associates Degree or Higher (63.7%, down from 65.0%). Their performance level also fell significantly from 119.2% to 114.5%. Formal Education mattered less in 2019. Those without a High School diploma spent less, $0.61B, but the biggest decrease came from those with either an Associates or College degree, -$1.05B. The only group to spend more were High School Grads with or without some college courses, +$1.02B.
  5. # Earners – “Everyone Works” (67.7%, up from 61.2%). Their performance is 115.7%, up from 105.8%. In this group, all adults in the CU are employed. Every segment in the group spent more while everyone else spent less. The 2+ people and only one earner segment was down -$2.58B in 2019 and -$4.3B from 2017. Income is a growing priority in Pet Products Spending, but now how many people work to get it is also becoming more important.
  6. Occupation – All Wage & Salary Earners (63.0%, up from 62.4%). Their performance also grew from 102.1% to 103.4. These small changes are somewhat deceptive as there was some turmoil. Internally, there was a big spending drop from Managers but a lift from Blue Collar. Externally, Self-Employed also spent more while Retirees spent less.
  7. Income – Over $70K (61.5%, up from 57.4%). Pet Parenting is common in all income groups but money increasingly matters in spending behavior for all industry segments. With a performance rating of 148.2%, up from 142.4%, CU income continues to grow as the single most important factor in increased Pet Products Spending. As a general rule,  Higher Income = Higher Pet Products Spending. This was especially true in 2019. All income groups over $70K spent more, +$1.61B but couldn’t make up for the decrease by all groups under $70K, -$2.24B.
  8. Age – 35>64 (63.7%, up from 61.9%). Their performance also bounced back from 117.0% to 121.9% and they rejoined the 120+% performance club. Every group under 45 or over 64 spent less. The 45>64 yr olds spent $0.91B more but couldn’t overcome the -$1.55B drop by the older and younger groups. The <35 group was down -$0.72B.
  9. Area – Suburban (61.6%, up from 61.4%). Their performance stayed at 110.7%. Suburban households are the biggest pet spenders but space mattered in 2019. Suburban and Rural areas under 2500 population spent $0.95B more while Suburban areas over 2500 were down -$1.19B and Center City $ fell -$0.39B.
  10. CU Composition – Married Couples (62.3%, down from 62.7%). Their performance grew from 126.4% to 127.4% due to fewer CUs and a big $ drop by Single Parents. Couples only and those with an oldest child 6>17 spent less. The other Married segments spent more. They kept 2nd place so Marriage remains very important in Pet Products $.

The biggest spending groups are the same for Pet Products as for Total Pet, but there are subtle differences in market share and performance. Money matters most but now how many earners also matters. It also appears that Pet Products Spending is becoming less balanced  across almost all demographic categories.

Now, let’s drill deeper and look at 2019’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. However, there are 7 that are different from 2018. That is the same as last year and 2017, but again is 2 more than Total Pet. Changes from 2018 are “boxed”.

We should note: Only 1 of the Product winners is different from Total Pet – the West, who lost in Total Pet to the Northeast because of their Veterinary segment performance.

The average performance of the 2019 Product winners was 140.7%, up from 134.6% – 10 were up. The average for the losers was 56.8%, down from 63.4% – 11 were down. The significant widening of the gap between best and worst indicates that Pet Products spending became less balanced across America in 2019. We should also note:

  • Generation – Gen X replaced the Boomers at the top in 2018 and they continue to hold their ground.
  • CU Composition, CU Size and # Earners – The new winners in all of these categories reinforce the growing “youth” and “higher income” movements in Pet Products and the total industry.
  • Age – The high income 45>54 group replaced 55>64, specific evidence of the transition from Boomers to Gen X and of the growing importance of income in Pet Spending in all categories.
  • Region – The West held on to the top spot but once again only 2 regions are performing above 100%

Almost all of the winners are the ones we expected, but the gap between them and the losers has increased.

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 who drove Pet Products spending down. There are three repeats from 2018 and 9 Segments switched positions – from first to last or vice versa. This is less turmoil as 2018 had only 1 repeat but 15 flips. There is only 1 truly surprising winner, High School Grads Only. Here are the specifics:

  • # Earners – The winner is new but 1 Earner, 2+ People CUs held on to the bottom spot.
    • Winner – 2 Earners – Products Spending: $20.49B; Up $1.79B (+9.6%)                       2018: No Earner, Single
    • Loser –– 1 Earner, 2+ CU – Products Spending: $8.67B; Down $2.58B (-23.0%)         2018: 1 Earner, 2+ CU
    • Comment – The # of Earners is becoming more of a factor in Pet Products spending. Only CUs where all adults worked spent more, +$2.72B. The other CUs were down -$3.36B.
  • Area Type – The larger Suburbs flipped from first to last.
    • Winner – Suburbs <2500 – Products Spending: $8.90B; Up $0.88B (+11.0%)             2018: Suburbs 2500>
    • Loser – Suburbs 2500> – Products Spending: $20.67B; Down $1.19B (-5.4%)              2018: Rural
    • Comment – Anti-Urbanization? All areas under 2500 pop.: Up $0.95B; Areas over 2500 pop.: Down $1.58B.
  • # in CU – The winner and loser held their spots. 1 and 3 People CUs were the only groups to spend more.
    • Winner – 3 People – Products Spending: $8.96B; Up $0.88B (+10.9%)                           2018: 3 People
    • Loser – 2 People – Products Spending: $19.18B; Down $1.03B (-5.1%)                             2018: 2 People
    • Comment: All CU sizes spent less on Supplies but only 5+ CUs spent less on Food.
  • Education – BA/BS Degree holders flipped from first to last.
    • Winner – HS Grad Only – Products Spending: $7.08B; Up $0.85B (+13.6%)              2018: BA/BS Degree
    • Loser – BA/BS Degree – Products Spending: $13.49B; Down $0.67B (-4.7%)              2018: HS Grad w/some College
    • Comment – Education became less of a factor in 2019 Pet Products Spending. Only HS Grads with no formal degree spent more. Everyone else, <HS Grads and anyone with an Associates or College degree, spent less.
  • CU Composition – Both the winner and loser are new.
    • Winner – Married, Oldest child 18> – Products: $5.41B; Up $0.67B (+14.2%)         2018: Married, Oldest Child <6
    • Loser – Married, Oldest Child 6>17 – Products: $5.55B; Down $1.21B (-17.9%)        2018: Married, Couple Only
    • Comment – It truly was a strange year. Married Couples Only and Single Parents were down again. If you were married and had children, the oldest had to be under 6 or over 18 to spend more. Singles had a good year plus other all adult CUs with no kids, whether Married or not, also spent more.
  • Housing – The winner and loser swapped places for the second year in a row.
    • Winner – Homeowner w/o Mtge – Products: $12.77B; Up $0.63B (+5.2%)            2018: Renter
    • Loser –– Renter – Products Spending: $9.58B; Down $1.09B (-10.2%)                       2018: Homeowner w/o Mtge
    • Comment– Wealthier Homeowners who have paid off their homes, but are not retired, appear to be the drivers.
  • Region – Both the 2018 winner and loser flipped in 2019.
    • Winner – Northeast – Products Spending: $8.47B; Up $0.63B (+8.0%)                         2018: Midwest
    • Loser – Midwest – Products Spending: $10.19B; Down $0.93B (-8.4%)                          2018: Northeast
    • Comment – All regions spent less on Supplies but more on Food. Only the Northeast had a Products $ increase.
  • Income – Both winner and loser were new.
    • Winner – $70 to $99K – Products Spending: $8.76B; Up $0.60B (+7.4%)                  2018: $150 to $199K
    • Loser – <$30K – Products Spending: $6.06B; Down $0.85B (-12.3%)                           2018: $50 to $69K
    • Comment – There was a clear divide in spending by income. Every income group making less than $70K spent less. Every group above $70K spent more. The lowest income member of both either won or lost.
  • Occupation – Both the Winner and Loser are new, but neither is surprising.
    • Winner – Self Employed – Products Spending: $4.92B; Up $0.58B (+13.4%)         2018: Tech, Sales, Clerical
    • Loser – Retired – Products Spending: $7.12B; Down $1.62B (-18.5%)                        2018: Blue Collar Workers
    • Comment – Blue Collar workers and low level white collar workers also spent more. Spending decreases by their Managers and Retirees produced the decrease in Products $.
  • Age – The 55>64 year olds (mostly young Boomers) flipped from last to first.
    • Winner – 55>64 yrs – Products Spending: $11.54B; Up $0.46B (+4.2%)                    2018: 65>74 yrs
    • Loser – 25>34 yrs – Products Spending: $6.09B; Down $0.55B (-8.3%)                      2018: 55>64 yrs
    • Comment: The spending dividing line was unusual to say the least – 25 years old. The <25 yrs group spent more on Supplies. All older groups spent less. For Food, the exact opposite was true. However, when you added up the changes in Food and Supplies, only the 45>54 and 55>64 year olds spent more on Pet Products.
  • Generation – Both the winner and loser are new, but neither is a surprise.
    • Winner – Gen X – Products Spending: $15.50B; Up $0.36B (+2.4%)                           2018: Millennials
    • Loser – Born <1946 – Products Spending: $3.58B; Down $0.67B (-15.7%)                2018: Baby Boomers
    • Comment – All Generations spent less on Supplies and everyone born after 1945 spent more on Food. However, when you add them up, Gen X was the only Generation to spend more on Pet Products.
  • Race/Ethnic – White, Non-Hispanics gained ground in 2019 and now account for 86.2% of Pet Products’ $.
    • Winner – White, Not Hispanic – Products Spending: $41.37B; Up $0.27B (+0.7%)        2018: Hispanic
    • Loser – Hispanic – Products Spending: $3.73B; Down $0.52B (-12.1%)                               2018: White, Not Hispanic 
    • Comment – White, Not Hispanics spent more on Food which produced positive Products $pending. All Minorities spent less on both Food and Supplies. African Americans & Hispanics had double digit % drops in Products $.

We’ve now seen the winners and losers in terms of increase/decrease in Pet Products $ for 12 Demographic Categories. 2019 was not a good year for Pet Products Spending. Food rebounded from the negative impact of the 2018 FDA warning on grain free dog food but couldn’t overcome the record drop in Supplies $ due to Tarifflation. All but 3 segments spent less on Supplies, but 75% spent more on food so that 36 (37.5%) spent more on Pet Products. Of course, not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding effort. I’ve narrowed the group down to 6. They don’t win an award, but they deserve….

HONORABLE MENTION

Honorable Mention

Pet Products spending was down $0.64B in 2019. However, It was again a mixed bag. A rebound in Food couldn’t quite counter the big, widespread drop in Supplies. Married Couples often lead the way but not in 2019. Only select segments like those with Other Adults but No Kids spent more. The # of Earners mattered more, including 1 Earner, Singles. In 2019 it was basically all about money as all groups with income over $70K spent more, including $150>199K. Spending by 1 Person CUs also continued to increase as they had a second consecutive year of 5% growth. They are still the worst performing size but are 30.2% of U.S. CUs and their numbers are increasing, +1.1M CUs in 2019. Spending by Blue Collar workers, especially nonService workers, began to bounce back after their drop in 2018. Finally, Education became a little less important in 2019 as High School Grads, including those with some College were the only segments in the category to spend more on Pet Products. Pet Products spending was down again in 2019 and like 2018, this drop was due to outside factors. 2018: FDA Warning; 2019: Tariffs

Summary

Spending has seen a lot of turmoil since 2015. Many consumers upgraded to Super Premium Food and cut back on Supplies in 2015. In 2016 they value shopped for Food and Spent some of the saved money on Supplies. In 2017 there was increased availability and value in both segments. More Consumers recognized the opportunity and spent $7B more. 2018 was calm, until the second half when the FDA warning on grain free dog food caused many consumers to downgrade their food and new tariffs on Supplies flattened spending growth. The result was -$1B drop in Products $.

In 2019 Pet Food spending rebounded to a new record level but the full impact of higher prices in the Supplies segment really hit home, with a record $2.98 decrease in spending. The drop was almost universal as 93 of 96 demographic segments spent less. The result was a -$0.64B drop in Pet Products $, the second consecutive decrease.

On the surface, one change was immediately apparent. In the demographic groups responsible for most of Pet Products Spending, $50K> was replaced by $70K>. In their spending share and rankings, # Earners and Age moved up while Higher Education and Marriage became less important. In performance, Income, Marriage and now Race/Ethnicity are the top 3. There were again 5 groups with 120+% performance as the Age Group rejoined the club. Total Pet has the same 5, plus Higher Education so Pet Products spending is still slightly more balanced than Total Pet.

When we looked at the performance of individual segments, most winners were expected. The 4 new winners reflect the movement to younger (Gen X vs Boomers) and higher income CUs.

The $ drop was smaller in 2019 and there was more stability than in 2018. In terms of $ change, 3 segments held their position (only 1 in 2018) and 9 flipped from 1st to last or vice versa (15 in 2018). However, there were fewer segments with increased spending, 36, compared to 54 last year. Most of the winners were the “usual suspects”. There was only one true surprise – High School Grads with no college. Many of the other winners support the trends to higher income and younger CUs – 2 Earners, 3 People, Married, Oldest Child >18. These segments all tend to be a big part of another winning segment – Gen X. However, Baby Boomers aren’t done yet – 55>64 yr olds and Homeowners w/o Mtges also won. Now…2020. By almost any measure, the pandemic made it a year like no other. Indications are that Pet Parents spent more time with and money on their pet children. The year was radically different, but our question will remain the same. Who was spending the money?

Finally,… The “Ultimate” 2019 Pet Products Spending CU is a married couple with 1 child over 18. They are in the 45>54 age range and are White, but not Hispanic. At least one has an advanced College Degree. Both of them work in their own business, earning over $200K. They still have a mortgage on their house located in a small Suburb  in the West.

 

 

 

 

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.

 

 

 

Retail Channel Monthly $ Update – October Final & November 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.

To get the full picture in our monthly channel update we will look at the latest release of both reports. We will begin with the Final Retail Report from October and then move to the Advance Retail Report for November. This will also allow us to better track the consumers’ evolving spending behavior in terms of channel migration.

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 October Final report. The retail market hit bottom in April then began to recover. October saw a new peak and $ are still growing vs 2019. Here are the major retail groups. (The Data in all graphs is Actual, Not Seasonally Adjusted)

The final total is $1.0B less than the Advance report projected a month ago. All groups were slightly down. Relevant Retail: -$0.4B; Restaurants: -$0.3B; Auto: -$0.2B; Gas Stations: -$0.2B. All groups were up vs September and monthly Total Sales exceeded the previous peak in July. Driven by an exceptionally strong month from Relevant Retail and Auto, YTD Total $ales turned positive for the first time since February. The Auto segment is closing in on 2019 $ but Restaurants and Gas Stations are down -$192B. Relevant Retail remains the only positive group in YTD sales.

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

  • Overall – $ in 10 of 11 groups were up vs September and 9 were up vs October 2019 and YTD. A strong month.
  • 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 continued to grow vs 2019. In June, their YTD $ vs 2019 turned positive and by October they were up 14.9%.
  • Food & Drug – After slowing in August & September, Supermarket $ were up again in October and are +$66.9B YTD. Drug Stores $ dipped in August but came back stronger in September and October. They’re +$12.4B YTD.
  • General Merchandise Stores – $ in Clubs/SuperCtrs bounced back after slowing in September and are up $28.5B vs 2019. $ Stores sales slowed from June>Sept but grew again in October and are now +12.6% vs 2019. Discount Dept. store sales were slowing before the pandemic. This trend has continued despite their small lift.
  • Office, Gift and Souvenir Stores – A big lift but still below 2019 $. They were hit hard and have a long way to go.
  • Internet/Mail Order – The pandemic has accelerated this channel’s growth vs 2019. Sales hit a new peak in October. Many new 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 stabilized and remain strong vs 2019. In fact, YTD sales are up +10.3%.

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 August>September $ slowed but were still strong vs 2019. In October sales grew to 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 November.

April and May were the 2 biggest spending drops in history. In June, monthly sales increased for the first time since February 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. $ dipped in November but not vs 2019 so the YTD $ vs 2019 increased.

Total Retail – Total Retail spending fell -$7.3B vs October but was up $13.5B vs November 2019. In February 2020 sales were up $60B, +6.6% YTD versus 2019. Then came COVID-19. We hit bottom at -$112B in May and began moving in the right direction. We broke even in October and are now up $14.5B in November but still down -$44.5B from February.

Restaurants – Spending fell -$6.5B from October and -$12.0B vs November 2019. $ales usually drop in November, but not -11.4%. Things remain Topsy Turvy. January and February, normally the 2 slowest months, are on top in 2020. In February YTD sales were up $9B. Then came the forced closures. Re-openings began in May but have run into problems with a resurgence of the virus. Delivery/Pickup can’t make up the difference as spending is now down $135.8B YTD.

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 maintained this pace. Although sales dipped in November, this group is now +0.01% YTD vs 2019. Gas Station $ales increased in May>July but fell in August & September. They turned up again in October but were down 10.4% in November. This group is now -$75.4B YTD. People are still not driving as much, for commuting or road trips.

Relevant Retail – Less Auto, Gas and Restaurants – Many non-essential businesses shuttered their doors in March but there was also a rash of binge/panic buying for “necessities” and a big lift in groceries as consumers focused on home cooking 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 this growth continued through July. $ales fell in Aug/Sept but turned up again in Oct/Nov. We should note that the monthly June>November $ are larger than all months in 2019 but December. The primary drivers have been Nonstore, Grocery and SuperCenters/Clubs & $ Stores along with an “extended” spring lift from the Hardware/Farm and Sporting Goods channels. The Relevant Retail group now has posted positive numbers versus last year and year to date for 7 consecutive months and is up $225.6B YTD (+6.8%) vs 2019. In May when the streak began, it was up +2.7%.

Now let’s look at what is happening in the individual retail channels across America. In November, consumer spending in the relevant retail market grew even more positive versus 2019. 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.

In October 11 of 13 channels beat last months $. In November it was down to 9. In September & October 10 channels beat the same month in 2019. This number dipped to 9 in November. In YTD $, 8 are showing an increase, the same as in September & October. 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 then grew again in October & November. Relevant Retail Channels are up $225.6B vs 2019. The 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– A big Spring lift continues into the Summer/Fall 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 as we move into the Christmas lift for GM. However, sales for both Regular and Discount Department were fading before the crisis. 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 consumer spending return to a more normal, strong pattern in the big and small stores that promise value.

Food and Beverage, plus Health & Personal Care Stores – Although $ were flat, the Grocery segment is still strong, +$70.9B YTD, due to the continuing big drop in restaurant sales. Monthly Sales fell in the Health, Personal Care group but have been up vs 2019 since June. Since August, the YTD $ have been positive. Drug Store $ growth was 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 October with Electronics/Appliances leading the way at +23.2%. All 3 channels are down significant percentages in YTD sales. Clothing Stores are by far the worst performers. In November they were down 19.2% vs November 2019 and 28.5% YTD. Together, these groups are down $85B 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 into the Fall. $ were up 17.2% vs November 2019 and up +$47.6B (+13.4%) 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 outdoor recreation. Sales reached a new peak in November, up 10.1% vs last month and 14.0% vs November 2019. The $ exceeded all months in 2019, but December. In April YTD $ were -$3.4B. This deficit was wiped out in September and through November, YTD sales were +$3.0B (+4.3%). Their holiday lift has begun.

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 but are down again in November. In February, this group was up $2.6B YTD. Through November they are down -$2.7B, a difference of $5.3B. Recovery will be a long journey.

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 November monthly sales were the highest for any month in history and they are now up 22.6%, +$158.5B YTD. Their increase is 70% 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 has become a key turning point 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 and down again in November. The Auto segment drew even in YTD $ vs 2019 in November 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, peaking in November. Their Monthly and YTD sales vs 2019 are now up for 7 consecutive months. Overall, they are +$225B YTD but for some segments in this group there is still a long way to go. Total Retail Sales peaked in October. Although $ dropped in November, Total Retail continued to exceed 2019. YTD Total Retail is now up +$14.5B (+0.3%) vs 2019. Unfortunately, the virus is surging, and retail restrictions are being reimposed in many areas. This will be a long battle. We will continue to monitor the data and provide you with regular updates.