Information by segment as defined by USBLS

2020 U.S. PET SERVICES SPENDING $6.89B…Down ↓$1.73B

Except for a small decline in 2017, Non-Vet Pet Services has shown consistent growth in recent years. In 2018, that changed as spending grew a spectacular $1.95B to $8.72B. The number of outlets offering Pet Services has grown rapidly and consumers have opted for the convenience. However, prices were also strongly increasing. In the 2nd half of 2019 spending turned down and then plummeted in 2020 due to COVID. The final $ were $6.89B, down $1.73B (-20.1%). In this report we will drill down into the data to see what groups were most impacted. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Services’ Spending per CU in 2020 was $52.53, down from $65.22 in 2019. (Note: A 2020 Pet CU (67%) Spent $97.34)

More specifically, the 20.1% decrease in Total Pet Services spending came as a result of:

  • 0.8% less households
  • Spending 3.40% less $
  • 16.62% less often

The chart below gives a visual overview of recent spending on Pet Services

You can see that after the big lift in 2018, spending essentially flattened out in 2019, similar to the pattern in 2016-17. Increased availability and convenience of Services has radically driven up the spending on Services. This happened despite a return to a more normal inflation rate, +2.4%. However, inflation grew even stronger, +2.5%. By the 2nd half of 2019, it made an impact as spending declined for the 1st time in 18 months. The 2020 pandemic brought restrictions and closures which drove spending radically down. Now, let’s look at some specific demographics of 2020 Services spending.

First, by Income Group.

In 2018, all groups spent more. In 2019, only the middle income group, $70>150K, spent more. In 2020 they had the biggest decrease, and their spending is now below the level in 2015. The only increase came from the $30>70K group, which is the only group earning under $150K which spent more than they did in 2015. The 50/50 dividing line in $ for Services was $123K. That is down from $125K in 2019 but still by far the highest of any segment.

  • <30K (25.4% of CU’s) – $19.66 per CU (-0.1%) – $0.66B, Down $0.05B (-6.7%)This segment is getting smaller and money is tight, so Services spending is less of an option. Their Services $ fell even farther below 2015.
  • $30>70K (31.1% of CU’s) – $35.95 per CU (+3.0%) – $1.47B, Up $0.01B (+0.9%) – In 2019 they had the biggest decrease. In 2020, they had the only increase and finished second in $ to the $150K> group.
  • $70>100K (15.0% of CU’s) – $41.87 per CU (-35.6%) – $0.82B, Down $0.42B (-33.7%) The spending of this middle income group had slowly but consistently grown since 2016. Then came the pandemic and the $ plummeted in 2020, falling even below the previous low point in 2016.
  • $100>150K (14.4% of CU’s) – $62.88per CU (-42.0%) – $1.19B, Down $0.79B (-40.0%)They had shown the strongest, most consistent growth since 2016. Then came 2020, when they had the biggest decrease, down 40.%.
  • $150K> (14.1% of CU’s) – $149.07 per CU (-19.6%) – $2.76B, Down $0.49B (-15.0%)They have moved steadily down since peaking in 2018. The pandemic drop in 2020 was -$0.49B, but they are still slightly above 2015 $.

Now, let’s look at spending by Age Group.

All age groups spent more on Services in 2018. In 2019, the groups under 45 spent less on Services while those 45 or older spent more. In the 2020 pandemic, everyone spent less but all stayed above 2015 $. Here are the specifics:

  • 75> (11.2% of CU’s) – $23.09 per CU (-55.0%) – $0.34B – Down $0.42B (-55.1%) This group has the greatest need for pet services, but money is always an issue. In 2019 they had the biggest increase. In 2020 they basically gave it all back, with the biggest drops in spending and frequency. 0.2% fewer CU’s spent 28.5% less $, 37.1% less often.
  • 65>74 (15.6% of CU’s) – $47.60 per CU (-25.0%) – $0.97B – Down $0.28B (-22.2%). This group is also very value conscious and growing in numbers. From 2016 to 2019 their spending was very stable. In 2020 it plunged by over 20% primarily due to a big decrease in frequency. 3.7% more CU’s spent 5.7% less $, 18.9% less often.
  • 55>64 (19.1% of CU’s) $53.15 per CU (-23.4%) – $1.33B – Down $0.37B (-21.7%) After a big drop in 2017, they began to slowly increase Services spending. In 2019, they moved up to the #2 spot in Services spending. A big drop in frequency drove spending down in 2020 but they are still #2. 2.2% more CU’s spent 1.9% less $, 21.9% less often.
  • 45>54 (17.2% of CU’s)- $75.38 per CU (-16.5%) – $1.70B – Down $0.31B (-15.2%) This highest income group was the leader in Services $ until 2016. They regained the top spot in 2019 and held on in 2020 despite a 20% drop in frequency which drove spending down -$0.31B. 1.5% more CU’s spent 5.2% more $, 20.6% less often.
  • 35>44 (17.0% of CU’s) – $56.91 per CU (-18.8%) – $1.27B – Down $0.30B (-18.9%) Spending exploded in 2018 with a $1B increase pushing them to #1. In 2019 they spent $1.6B more on Veterinary and Food and cut back on Services and Supplies. In 2020 both their spending and frequency fell. 0.1% fewer CU’s spent 8.9% less $, 10.9% less often.
  • 25>34 (16.0% of CU’s) – $52.85 per CU (-1.9%) – $1.11B – Down $0.03B (-3.0%) This group of Millennials “found” the Services segment in 2018 with a 36% increase in $. Their spending has slowly fallen since then. In 2020, their 3% decrease was primarily driven by a -9.7% drop in frequency. 1.2% less CU’s spent 8.6% more $, 9.7% less often.
  • <25 (3.8% of CU’s) – $32.44 per CU (+24.6%) – $0.16B – Down $0.03B (-14.3%) After 2018 this group returned to being a very minor player. 31% fewer CUs is significant. 31.2% fewer CU’s spent 19.7% less $, 55.1% more often.

In 2019, when overall Services spending fell $0.1B, the over 45 age group spent $0.51B more. The situation was reversed in 2020 as they spent -$1.38B less, 79.8% of the total $1.73B drop in Services spending.

Finally, here are some key demographic “movers” that drove the big drop in Pet Services Spending in 2020. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2018. The red outline stayed the same.

In 2018 the Services spending increase was very widespread with (88%) of all segments spending more. 6 of 12 demographic categories had no segments that spent less on Services in 2018. 2019 was very different and reflected the slight decrease in spending for the segment. All categories had segments that spent less on Services and 49 total segments (51%) had decreased Services $ from 2018. In 2020, the situation got markedly worse as 76 segments (79%) spent less and in 3 categories, no segments spent more.

You see from the graph that the biggest negatives were all substantially larger than the small increases. This speaks to the severity and widespread nature of the loss in $ in the segment. There was also considerable turmoil in Services spending. 3 groups maintained their position but 7 flipped from 1st to last or vice versa.

There was only 1 “usual” winner – Self-Employed, which have the highest income in their category. There were some winners that were definitely a surprise – Renters, Rural, $50>69K Income, Gen Z, High School Grads, Hispanic and Under 25 years old. That means that more than half of the winners were not expected.

In terms of “usual” losers, there really were none in 2020. The losing segments are where we find these usual winners:

  • 2 People
  • Married Couple Only
  • Homeowner w/Mtge
  • Managers & Professionals
  • Suburban
  • $100>149K
  • College Degree
  • 2 Earners
  • White, Not Hispanic

This actually makes some sense. The drop in spending was largely due to restrictions and closures caused by the COVID Pandemic. This would most impact the groups that usually spent the most and would produce the biggest decreases.

In our earlier analysis, we didn’t see any truly distinct spending patterns. The only lift in any age or income group, and it was miniscule, was from the $30>69K income group. However, it is significant that they are the only income group under $150K that didn’t spent less in 2020 than they did in 2015. The 50/50 spending point moved down slightly from $125 to $123 but that is somewhat deceptive. The highest income group, $150K> actually gained ground. This group has 14.1% of CUs but did 40.1% of the Services spending in 2020. That’s up from 37.7% in 2019.

After the huge lift in spending in 2018, Services spending plateaued in 2019. There were a lot of ups and downs, but overall the segment remained essentially stable at its new elevated level of spending. That changed with the pandemic in 2020. Like many retail services segments, Pet Services outlets were deemed nonessential and subject to restrictions This resulted in a radically reduced frequency of visits and was the biggest reason behind the 20% drop in spending.

There is no doubt that the Covid pandemic with widespread closures and “staying at home” had a big impact on this most discretionary Pet Industry segment. However, in recent years, with the increasing humanization of our pets, Pet Services have become more important to Pet Parents and the Pet Industry. For Pet retail outlets, offering Services provides a key point of differentiation and a reason to shop in their store. You can’t get your dog groomed on the internet or even in a Mass Market retailer. We expect this segment to come back strong in 2022.

 

2020 U.S. PET SUPPLIES SPENDING $15.16B…DOWN ↓$1.65B

Total Pet spending grew to $83.74B in 2020, up $5.31B (+6.8%) from 2019, a big turnaround. Unfortunately, the Supplies segment was on the other side as spending dropped to $15.16B, down $1.65B (-9.8%). (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

After flattening in the 2nd half of 2018, spending turned sharply down in the 1st half of 2019 and continued to decline through 2020 as the pandemic also contributed to the drop. 2019 & 2020 wiped out 93% of a 24 month $5B gain. We’ll “drill down” into the data to try to determine what and who are “behind” the 2020 drop in Supplies Spending.

In 2020, the average household spent $115.52 on Supplies, down 9.1% from $127.15 in 2019. (Note: A 2020 Pet CU (67%) Spent $172.42) This doesn’t exactly match the -9.8% total $ decrease. Here are the specific details:

  • 0.8% less CU’s
  • Spent 3.6% less $
  • 5.8% less often

Let’s start with a visual overview. The chart below shows recent Supplies spending history.

Since the great recession, spending trends in the Supplies segment have been all about price – the CPI. Although many supplies are needed by Pet Parents, when they are bought and how much you spend is often discretionary. Additionally, many of the product categories in this segment are now considered commodities, so price is the main driver behind consumer purchasing behavior. When prices fall, consumers are more likely to buy more. When they go up, consumers spend less and/or buy less frequently.

2014 was the third consecutive year of deflation in Supplies as prices reached a level not seen since 2007. Consumers responded with a spending increase of over $2B. Prices stabilized and then moved up in 2015.

In 2015 we saw how the discretionary aspect of the Supplies segment can impact spending in another way. Consumers spent $5.4B for a food upgrade and cut back on Supplies – swapping $. This, in conjunction with inflation, caused supplies to suffer as consumers spent 4.1% less, but they bought 10% less often. That drop in purchase frequency drove $1.6B (78%) of the $2.1B decrease in Supplies spending.

In 2016, supplies’ prices flattened out and consumers value shopped for their upgraded food. Supplies spending stabilized and began to increase in the second half. In 2017 supplies prices deflated, reaching a new post-recession low. The consumers responded with a huge $2.74B increase in Supplies spending that was widespread across demographic segments. An important factor in the lift was an increase in purchase frequency which was within 5% of the 2014 rate.

In 2018 prices started to move up in April and rapidly increased later in the year due to the impact of new tariffs. By December, Supplies prices were 3.3% higher than a year ago. This explains the initial growth and pull back in spending.

In 2019 we saw the full impact of the tariffs. Prices continued to increase. By yearend they were up 5.7% from the Spring of 2018 and spending plummeted -$2.98B. The major factor in the drop was a 13.1% decrease in purchasing frequency.

2020 brought the pandemic, with retail restrictions and the consumers focus on needed items. Both the amount spent and frequency of purchase of Supplies fell slightly. This could be the result of a strong consumer move to the internet.

That gives us an overview of the years leading up to 2020. Now let’s look at some specifics regarding the “who” behind the 2020 numbers. First, we’ll look at spending by income level, the most influential demographic in Pet Spending.

National: $115.52 per CU (-9.1%) – $15.16B – Down $1.65B (-9.8%).

All big income groups spent less but the 50/50 $ divide remained the same as 2019, $92K, the lowest of all segments.

  • <$30K (25.4% of CU’s)- $57.73 per CU (+2.1%) $1.93B– Down $0.09B (-4.6%). This group is very price sensitive, but they actually spent more per CU. 6.5% fewer CUs caused the decrease and put them even further below 2015 $.
  • $30K>70K (31.1% of CU’s)- $97.38 per CU (-5.1%) $3.97B Down $0.30 (-7.0%). This big, lower income group closely matches both the national pattern and that of the $150K+ group. The tariff prices had a big impact and COVID a lesser one. Amazingly enough, until 2019 they were the leader in Total Supplies Spending $.
  • $70>$100K (15.0% of CU’s) – $117.65 per CU (-21.3%) – $2.32B Down $0.54B (-19.0%). This middle-income group had been consistent in Supplies spending. 2020 hit them hard in all segments, including a 19% drop in Supplies $.
  • $100K>$150K (14.4% of CU’s) – $146.42 per CU (-14.4%) – $2.76B Down $0.36B (-11.4%). This higher income group is also sensitive due to family needs. They had the 2nd biggest % drop and traded Supplies $ for Food & Veterinary.
  • $150K> (14.1% of CU’s) – $225.91 per CU (-13.0%) $4.18B Down $0.36B (-8.0%). The $150>199K was up $0.01B but the $200K+ group spent $0.38B less. Money matters in Supplies, but the pandemic impact was widespread.

Every group spent less but the biggest negative impact occurred in the middle range – $70K >$150K. This group has the biggest family and career pressures, so it is not surprising that their discretionary spending on Supplies was less.

Now, we’ll look at spending by Age Group.

National: $115.52 per CU (-9.1%) – $15.16B – Down $1.65B (-9.8%).

It’s split, but simple. Young Millennials and old Boomers spent more. Everyone else spent less. Here are the details.

  • 55>64 (19.1% of CU’s) $108.93 /CU (-33.0%) – $2.73B – Down $1.26B (-31.5%). Low Supplies prices in 2017 got them on the Supplies Band Wagon. When prices turned sharply up in the 2nd half of 2018 and 2019, spending stalled then dropped. Spending fell again in 2020 as 2.2% more CU’s spent 26.2% less on Supplies, 9.2% less often. Part of the cut back on Supplies was to help pay for a huge spending increase in Food as they traded $.
  • 45>54 (17.2% of CU’s) $146.36 per CU (-13.2%) – $3.31BDown $0.45B (-11.9%). Until 2019, this highest income age group had been the leader in Supplies spending since 2007. More CU’s (+1.5%) spent 6.8% less on supplies, 6.9% less often. They had a 12% drop but returned to the top $ spot, now battling the 35>44 group.
  • 35>44 (17.0% of CU’s) $141.94 per CU (-2.1%) – $3.17B; Down $0.07B (-2.2%). This group is second in income and overall expenditures but also has the biggest families. After 3 strong years, the strong inflation drove the $ down in 2019. However, the Pandemic had little impact. 0.1% less CUs spent 5.5% more $, 7.2% less often.
  • 25<34 (16.0% of CU’s) $133.17 per CU (+29.8%) – $2.80B; Up $0.62B (+28.3%). After trading Supplies $ for upgraded Food and Vet Care in 2016, these Millennials turned their attention back to Supplies. The rising prices hit them hard in 2019 but they reversed this in 2020 as 1.2% fewer CUs spent 30.4% more $, 0.5% less often.
  • 65>74 (15.6% of CU’s) $96.07 per CU (+2.1%) – $1.96B – Up $0.11B (+5.8%). This older group is very price sensitive. When prices turned up in 2018, they immediately cut back on spending which continued into 2019. They came back in 2020 but not as strong as the 25>34 group. 3.7% more CUs spent 4.9% more, 2.7% less often
  • 75> (11.2% of CU’s) $43.04 per CU (-31.4%) – $0.63B, Down $0.29B (-31.5%). This lowest income group is truly price sensitive. They began to cut back on spending in the 2nd half of 2018 and this behavior continued in 2019. Their spending was severely impacted by the Pandemic as 0.2% less CU’s spent 19.4% less, 14.9% less often.
  • <25 (3.8% of CUs) $110.71/CU (-6.4%) $0.56B – Down $0.31B (-35.6%). 31.2% fewer CUs spent 8.8% less $, 2.6% more often. This group was fundamentally impacted by COVID as they lost 2.2M CUs, down 31.2%.

The impact of COVID was widespread but mixed. Only 2 disparate groups – 25>34 and 65>74 spent more.

Next, let’s take a look at some other key demographic “movers” in 2020 Pet Supplies Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2019. The red outline stayed the same.

In 2019, in 9 of the 12 demographic categories all segments spent less on Supplies. In 2020 it was only 1. Also in 2019, 97% of 96 demographic segments spent less. In 2020 it was 81%. 2020 was bad but still an improvement over 2019.

Only 2 segments flipped from last to 1st as Managers/Professionals and Homeowners w/Mtge returned to their usual position at or near the top. 5 Segments held their position – 1 on top, 4 on the bottom. All of these are surprises as they are often in the opposite spot.

On the “winning” side there are a couple “usual suspects” – Mgrs/Prof & Adv. College Degree. The others are all somewhat surprising although Supplies has trended younger in recent years which would include Millennials & 25>34 yr olds. On the losing side, we already mentioned 4 surprises but there are a couple more – Suburban & 2 Earners.

Supplies is a discretionary segment, so it is more susceptible to market factors than the more needed segments. In fact, Supplies spending has decreased in 16 years since 1984. Since 2010, it has become very commoditized and price sensitive. 2 years of deflation drove spending up $5B. Then inflation hit and things turned around, -$2.98B. The 2020 Pandemic caused Pet Parents to focus on Pet Needs. This means that the more discretionary categories, Supplies & Services, lost ground. The overall decrease in Supplies was relatively small, under 10%, compared to the changes in other segments but it still shows the vulnerability of this more discretionary segment.

2015 U.S. PET SERVICES SPENDING $6.3B…UP ↑$0.6B

Although Non-Vet Pet Services is the smallest industry segment, it continues to grow and 2015 was another good year. Spending reached $6.26B, a 0.58B (10.2%) increase over 2014. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Pet Services Spending per H/H in 2015 was $48.70, up from $44.68 in 2014. (Note: A 2015 Pet H/H (65%) Spent $74.92) More specifically, the increase in total spending came as a result of:

  • 1.2% more H/H’s
  • Spending 11.1% more $
  • …1.9% less often

The chart below gives a visual overview of recent spending on Pet Services.

2015-services-1

The increase has been consistent since 2013 with a definite spending “lift” in the second half of both years. Now we’ll start “drilling down” to look at spending by demographic categories. First, by Income…

2015-services-2

Observations

  • <$70K; >$70K – Although it looks like the entire increase comes from the >$70K group, it is not that simple.
  • $100K – This group is 21.5% of H/H’s and generated an increase of $0.78B – 132% of the total increase for the segment. If they were up this much, somebody had to be down…
  • $30K to <$100K – They had a $0.31B (-13%) decrease in spending. This mid-income group is 46.5% of U.S. H/H’s and was responsible for 42% of the Services Spending in 2014. They can be very price sensitive and Services are often considered discretionary spending. The $30>$70K group also spent $1.7B more on Food.
  • <$30K – It’s not all about $. This group (32% of H/H’s) had a $0.12B (18%) increase. This increase is not coming from the retired people in this group. It was generated by low income wage earners.

Now let’s look at spending by Age Group.

2015-services-3

Observations

  • 25>54 – (52.1% of H/H’s) – Service Spending is generally more discretionary in this group and they spent $0.75B more. They have the money to spend as they are the 1st, 2nd and 4th highest income groups. Also remember, the 25>45 group spent $1.7B less on Food.
  • 55>74 – (32.3% of H/H’s) – As consumers age, Pet Services often become more of a “need”. However, they spent slightly less -$0.14B. These are primarily Baby Boomers and they just spent $6.1B more on Pet Food.
  • <25 & >75 – (15.7% of H/H’s) Spending by these Age “Bookends” was basically flat. Each was down $0.01B.

Take a look at some Key Demographic “Movers” then we’ll wrap it up.

2015-services-4

Summary

Overall, the increase in Services Spending was about convenience, rather than physical need, as it was driven by the younger crowd – Gen X and the older Millennials. The Boomers spent so much in upgrading their Pet Food that a small decline was not unexpected. Income was also important in order to afford the rising service prices. Whether the household consists of 1 or 2+ members, all the adults worked. College educated, managers or professionals accounted for the vast majority of the increase. Retired people had a big decrease.

It really didn’t matter in what region of the country that you lived, as long as it was in a city or the suburbs. Homeowner ship also wasn’t a big factor as both homeowners and renters had increases. The spending increase by Hispanics was good news. Singles had the biggest growth while the “traditional” married couple with one earner and 2 children was almost certain to spend less. Basically, the increase was driven by busy “younger” (25>54) groups who needed help with Pet Parenting and could afford to pay for it.