The Money Pets

So many puns to be made in a story about pet-related commerce…

“Shopping has gone to the dogs!”

“The cat’s pajamas were bought at full price!”

“A fish … is also a … shopping … thing—” OK, there are two puns to be made in a story about pet-related commerce, and that was them, up there.

More than puns, people love their pets — and that’s not really news. Fact is, forging a bond with animals is part of the human experience going as far back as the earliest cave drawings. While the most stringent cat lovers of today might say that they “worship” their little felines, the Ancient Egyptians literally did that, as evinced in the hieroglyphics of the pyramids depicting cats as kings and guides in the afterlife.

Although the average house cat still may not have acknowledged that it is no longer a true deity (and it’s likely the animals will never fully embrace that harsh reality), members of that species and many others can rest assured that they remain considered, more so than ever, members of the human family. A recent survey by The Harris Poll states that nearly 95 percent of pet owners in the United States consider their animals to be part of their own brood — and that’s a number seven points higher than when the question was first asked in 2007.

It follows, then, that the common capitalist habit borne out of affection for other humans — buying them stuff — extends to the non-bipedal members of the household.

The Harris Poll study reveals that pet owners spend a total of $1,200 per year on food, treats, boarding and other pet-related expenditures. Familial sentiment has contributed to the steady, two-decade-long rise of the pet care industry. The business has seen 20 percent growth just since 2010 and now (according to a report on the industry from IBISWorld) boasts a worth of $17.5 billion.

That’s a lot of puppy chow … is, perhaps, something dogs would remark on the matter if they could speak and possessed a general understanding of finance.

As members of the family, we all want the best for our pets — and that includes what they eat. In a 2013 Mintel survey, 79 percent of U.S. pet owners said the quality of their pets’ food is as important as their own. That being the case, the high importance — and resultant higher prices — that humans put on their own health and wellness is being mimicked somewhat in the pet food industry.

Organic, grain-free, gluten-free, raw and “ancestral blend” foods are all part of the new pet commerce ecosystem. According to a survey released by Euromonitor (via CNN), gourmet pet food brands now outsell the lower-priced and mid-market brands combined, with the most sales coming from households that earn above $70,000.

Despite all of this health consciousness, though, it is the “McDonaldization” of the pet food industry — as The Washington Post put it — that is catching the attention of Wall Street. Large brands like J.M. Smucker, Nestle, Big Heart and Mars — all of whom historically have made food products for the human sector — have spent the last few years buying up pet food manufacturers and pet retailers. According to The Washington Post, roughly 93 percent of the mid-priced dog and cat food sold in North America can be attributed to just three companies: Big Heart, Mars and Nestle.

This move into the pet market allows these brands to optimize supply chains using the same ingredients in their human and pet food, steadily increasing profits as the pet industry continues to grow in the U.S and around the globe. Even Amazon — through its company Quidsi — got into the furry (or scaly) friend business in 2011 with the launch of Wag.com.

However, there may still be room for smaller local retailers in the new era of pet commerce. While the variety of offerings and lower prices of the large brands are attractive to some pet owners, many want to feel like they are pampering their pets like the members of the family they view them to be. To attain that means personalized options, attention to service and someone behind the counter who seemingly cares as much about your pet as you do — or at least keeps to himself any judgments he might have about your public displays of affection towards your Labradoodle.

Focusing on customized service gives locally owned pet supply stores a leg-up on the name-brand competition. “These smaller chains are really successful because they get to know their customers,” Steve King, president of the Pet Industry Distributors Association, recently told the Los Angeles Times. “They can be much more nimble in the marketplace and bring on products that are new and trending and hot.”

That last piece is a critical second ingredient for success. While conglomerates like PetSmart and Petco may be able to buy in larger quantity, their size can also be a hindrance in getting hot items to their shelves quickly enough to capitalize on short-lived trends. Smaller stores with only one or two locations can test out new products that cater to the changing tastes of their human and animal clients alike.

Perhaps the fastest growing sector of the pet industry over the last five years, according to the IBISWorld report, are pet services — such as full-service grooming, tooth brushing and day camps. This is an area where local providers can — and do — dominate. Pet boutique Pussy & Pooch Co-owner Janene Zakrajsek told the Los Angeles Times that her four-location business focuses on premium offerings, including an in-store cafe — The Pawbar (naturally) — that serves raw and organic food and treats. “What humans now have for themselves, they want that for their animal,” Zakrajsek said.

Big name brands are not taking this threat to their foothold lying down, mind you. Rather, they are responding with new concepts of their own that satisfy the consumer demand for more personalized service offerings.

In 2009, Petco launched Unleashed, a smaller-footprint store that was meant to recapture that small neighborhood pet store feel. A company press release touts the spinoff chain as being “designed specifically for the most discerning dog and cat lovers who believe their pet is an extension of themselves, their values and beliefs,” one that offers “pet parents the best in sustainable, organic and natural products as well as exclusive fashions and accessories.”

You see what Petco did there? They used the term “pet parents.” In the battle to draw customers who might otherwise seek out smaller pet stores that specialize in personal attention, the company at the very least knows how to speak the language.

Big business breeds competition, and all signs indicate that the pet commerce industry — despite the cuddly and affectionate human-animal relationships that it services — is a real dogfight.

Three! There are three puns to be made about pet-related commerce.