Unchartered Territory for the Pet Care Industry

For quite some time many of us have been living under the assumption that the resilience of the pet care industry was unassailable and indestructible. Nothing could stop the Pet Care Industry juggernaut. It seemed that nothing could even slow it down: not inflation nor wars, not the Great Recession, not even a pandemic.

That resilience has even been attracting investment from financial institutions that for years rejected our applications and turned us away empty-handed. Ironically, after decades of struggling to secure funding to launch or scale up the small businesses that make up the majority of the pet care space, it is only now that venture capitalist and banks have come around; and they have done so in an undeniably big way.

It is ironic because for the first time, we are starting to see signs of some weakening in the fundamentals and underpinnings of this industry.

Reuters has reported a disturbing trend; one that some insiders had begun to sense. In a recent article, the news agency reported that Britons are unable to care for their beloved pets properly, citing economic pressures, and are having to surrender them. https://www.reuters.com/world/uk/cash-strapped-britons-give-up-pets-living-costs-soar-2022-08-14/

Britons have a long-standing, even renowned, reputation of being thoughtful pet parents and fierce animal advocates. It was in England that the first Society for the Prevention of Cruelty to Animals, the RSPCA, was founded in 1824! The modern pet care industry in the UK stood at US$6.5B (in a country of 67B people) in FY2021. This followed a slight dip in 2020, which immediately recovered the following year. Britons would not take the decision to surrender their pets lightly. Yet here we are. And this is not unique to the UK. They are not alone.

In the US, record numbers of pets (primarily dogs and cats) were adopted in 2020. That was partially in response to shelters and rescues begging families to take in animals from facilities that were forced to shut down due to COVID. This wave of adoptions was also a reaction to so many people feeling lonely while stuck at home and isolated. These choices might not have been for the best. Making a long-term commitment in response to a short-term problem has led to some predictable results.

A mere two years later, more pets than ever are being surrendered in the US. Many of these are due to people returning to work with no plan for their dogs (cats seem to be less affected) to be home alone and unattended all day. Behavioral issues that could be ignored while in isolation have now proven to be complicated and untenable. To their shame, there are many who simply no longer want the “bother” of carrying for a pet now that they themselves are no longer lonely by being stuck at home. And sadly, as economic and market pressures take their toll on US families, just as they have the UK, families that would otherwise love to be able to keep their beloved pets are forced to surrender them.

What we are seeing mid-2022 may be the tip of the iceberg. We may be witnessing a seismic, fundamental shift in pet ownership where only a small sliver of the population will be able to afford pet care products and services. If that happens, profits for a few companies may increase for a short time from high-worth customers, but in the end, it will not be sustainable. A market based on 70% of the population caring for pets will surely suffer if that market shrinks by tens, if not many tens, of millions of customers.

As demand falls, business will slow, manufacturers will fold, and the trickle will become an avalanche. Outside funding will return to pre-boom levels, choking off up-and-coming businesses and stifling innovation. The recovery from such a downward spiral could take a very long time.

Our “Teflon” industry may prove to be not so fundamentally different from other market sectors. It, too, is sensitive to socio- and psycho-economic shifts after all.

The industry would do well to take notice. As we may be facing a more challenging future, even if it is only for a short time, it behooves each of us across the Pet Care industry to seriously ask ourselves:

· Where are we and how did we get here?

· Where do we want to go?

· How do we get there?

· And who do we want to be when we arrive?

Happy Tails!