The Changing Face of Pet Ownership
The pet industry will have to respond to fundamental changes in consumer demographics in order to maintain success to the year 2020 and beyond.
The year is 2020, and the face of the American consumer has changed a bit in just a little more than six years.
The aging baby boomer generation has begun to fade away and the millennials are not kids anymore. Hispanics comprise 20 percent of the population—on their way to as much as 30 percent in another generation—but Asians and other minorities are becoming more prominent, too.
Digital shopping is now the norm for many consumers, but the disposable dollars many Americans had back in the day are not there anymore. They are still feeling a financial pinch from the recession that started way back in 2007, so paychecks must go toward needs, not notions.
As the future will show, demographics are always changing. The days of catering to just Caucasian consumers and expecting that to be enough are long over. By 2038, demographers say, more than half of the people living in the U.S. will be non-white or Hispanic.
Common sense says pet retailers and their suppliers must be ready to respond to these changes through their merchandising and marketing plans.
“The ones I’ve spoken to, and other things I’ve seen, lead me to believe nobody’s shocked by this,” says Michael Johnson, vice president of marketing information for Chuck Latham Associates of Parker, Colo., a sales and services provider for retailers and distributors in the pet specialty, veterinary and farm agriculture channels. “They’re aware of it coming down the pipe. They realize that things need to be different, but they’re not sure how to strike the optimal balance between the steady consumer of today and the evolving consumer of tomorrow yet. That’s not to say they are not working through solutions—they know this is important, and they’re on it.”
Although the changes may be dramatic in scope, they are happening gradually. As Johnson says, it is not as if a swarm of killer bees is going to come out of nowhere and ravage the industry. There is time for discussion and an opportunity to implement strategies for both retailers and the manufacturers that supply them.
That is what Bob Vetere is doing. As president and chief executive officer of the American Pet Products Association (APPA) in Greenwich, Conn., he realizes that aging baby boomers (those born from the mid-1940s to the mid-1960s), rising millennials (early 1980s to early 2000s) and the emerging Hispanic population signal change for the pet industry.
“The combination of those three is the biggest threat to pet ownership in the country right now, because baby boomers have the largest instances of pet ownership,” Vetere says. “Seventy percent of boomers—especially boomers whose kids have moved out of the house—have pets, and they’re keeping them longer and longer.”
Vetere points out that 10 or 15 years ago, age 60 was the drop-off point in pet ownership. However, the health-conscious boomers have changed that dynamic, so now it looks like 70 is going to become the new drop-off point. Many baby boomers will reach age 70 very soon, especially if you’re looking six to 10 years down the road.
That reduction in pet owners is likely to be significant—and Vetere does not believe the millennials or the emerging minority populations will make up the difference. To promote pet ownership, APPA is underwriting a program called Pets in the Classroom, which reaches out to teachers across the U.S. The result is that 22,000 classrooms now have pets.
“It becomes a great learning tool for the kids—learning responsibility, learning how other living beings are absolutely dependent on [students] to be alive,” Vetere notes. “Plus, it seems to be showing a resulting increase in the tendency toward pet ownership among kids. This is one that we’re encouraged by, and we want to continue to fund that.”
Vetere is also trying to pull the industry together. He notes that no single trade association covers retailers, manufacturers, distributors, veterinarians and others who work with live animals. APPA is pulling together a council of senior executives from each group in an attempt to coordinate messages to various demographics and encourage them to try pet ownership. APPA is also involved with the Human-Animal Bond Research Initiative (HABRI), a project that studies the relationship between pet ownership and human health benefits.
“We’re working with the Purdue University veterinary school, and so far we’ve identified something like 17,000 studies ranging from anecdotal—somebody says, ‘I felt good when I petted my dog’—all the way up to scientifically validated blocks of studies,” Vetere says. “All of them are showing that pet owners tend to know ‘I feel better when I’m around my pet.’ This is showing that there really is science behind it.”
Vetere notes that autistic children are much more responsive when there’s a pet in the area; that children who have pets tend to perform better in school than children without them; and that senior citizens and dementia patients tend to react more positively around pets.
Government agencies are working with these researchers to validate studies that show people with pets have lower health-care costs and tend to live longer. If they are successful, that news should have a very positive impact on an industry that must soon cope with the evaporation of its cash cow—the baby boomer.
Johnson cites what he calls the 80-80 conundrum—that 80 percent of pet spending is done by Caucasian consumers and 80 percent of pet caretaking is done by women. That makes the white female the primary marketing target—as she has been for many years.
“The key point, however, is there’s a whopping 20-20 out there we’re not paying attention to,” he says. “That 20-20 is comprised of the less well-off, comprised of Hispanics, comprised of Asians, comprised of African-Americans who all own pets in varying degrees and who all, at a much faster rate, are outpacing the growth of the ‘pet parent,’ so to speak.
“So, if we’re only paying attention to that pet parent, when that consumer drops out of the market, where are we going to sell all the food? The markets that are growing are not our target markets today.”
That demands a balancing act from the industry, which must retain its boomer customers while attracting minority and younger pet owners. For the boomers who are 70 and older, the industry must make pet ownership easier. For the retailer, that might mean carrying more products for the smaller pets that are easier to care for and control. It might also mean more pet services such as dog walkers, pet sitters and even companies that will regularly clean pet excrement from an owner’s yard.
Of course, there are always new products for the boomers to try. Doug Poindexter, president of the World Pet Association, based in Monrovia, Calif., notes some trends in the types of pets and accessories available.
“We’re seeing more mixed breeds and designer breeds,” he says. “We’re also seeing human trends translate into pet product trends, including spa/grooming products from brands like Paul Mitchell, luxury accessories, plastic surgery, more healthful eating such as gluten-free and organic, etc.”
Many millennials have been unable to find high-paying jobs after college and face a mountain of
debt in terms of college loans.
If there’s a product out there that humans like, you’re likely to see a pet version of it within a few months. Health and dental care products top the list. Poindexter points out that even though the population is aging, people are spending more money per pet. “As a result, there’s been a lot more product development,” he says. “Each year, SuperZoo sells out its floor show and has a long wait list of new vendors trying to enter the marketplace with their latest pet-industry innovations.”
While new products and services aim to retain the boomer pet owner, initiatives are needed to attract that other 20 percent, which comprises younger people and minorities. “We are seeing increasing pet ownership among Hispanics, which is really good news for the market,” says David Lummis, senior pet market analyst for Rockville, Md.-based Packaged Facts, which provides market research on consumer products. “I haven’t seen a lot of Latino-specific [pet] marketing—to my knowledge there really hasn’t been any—by a major marketer. Among Hispanics, anything that is kind of family-focused is going to resonate pretty well, not to stereotype or generalize.”
Lummis points to the Pets in the Classroom initiative, with its focus on children and family, as being an effective way to reach the Hispanic market. Another way, in which manufacturers can help, is through bilingual labeling on pet products.
The Human-Animal Bond Research Initiative has spawned a marketing campaign that crosses over demographics, specifically targeting such groups as Hispanics, Asians and others. Vetere says he has done three interviews with Hispanic TV stations, and his words were translated into Spanish. He also notes that the Hispanic community is reaching out to his pet association.
According to Poindexter, “Historically, Hispanics have a lower incidence of pet ownership; however, this could change as the industry targets this consumer group to promote ownership. Hispanics represent a vast amount of buying power that could potentially benefit the pet industry as ownership.”
What makes marketing to ethnic groups even more challenging is the degree to which they have blended into American culture. A first-generation minority parent might speak little or no English and retain home-country values. A second- or third-generation Hispanic child who has American friends and has been educated in U.S. schools, might have a very different set of needs and wants.
A trend Johnson notices is how millennials (Generation Y) and the next generation (Generation Z) have embraced cultural diversity and become extremely multicultural and inclusive, which means marketers can approach young people more by age group than by ethnic orientation.
“If you have the marketing budget to go out and do them all separately with separate messaging, I would never discourage that,” he says. “That said, the multiculturality gives you the advantage of being able to kind of talk to them as a group.
“That’s not to say they’re incredibly similar, but they’re going through the same period, they’re going through the same technology, they’re going through the same shift, and more than any other generation, they’re really kind of inclusive. While I think you can talk to them as a group, it would be a welcoming gesture or tip of the hat if you have some bilingual signage and packaging.”
Unfortunately, many of today’s millennials are suffering financially. The recession hit Americans hard in terms of job losses. According to U.S. Census Bureau statistics presented in April during the pet industry’s Top2Top Conference by Chuck Latham Associates, the real median household income has decreased 8.1 percent since 2007.
Many millennials have been unable to find high-paying jobs after college and face a mountain of debt in terms of college loans. Although they were raised in households with pets, many are unable to afford their own. In many cases, they have moved back in with mom and dad—and Rover and Fido.
“While millennials are indeed burdened with more debt and expenses, they are also slower to marry and have children,” Poindexter notes. “Only 22 percent of millennials are currently married, compared with 30 percent of Gen Xers at the same age and more than 40 percent of the baby boomers at the same age.
“Pets are fast becoming replacements for children. And while they don’t cost as much as children do, they are still treated as family members with pet parents spending accordingly.”
The recession showed that people are willing to cut back on personal extravagances, but they
are not willing to give up their pets or stop spending on them.
And that is probably what will happen. The recession showed that people are willing to cut back on personal extravagances, but they are not willing to give up their pets or stop spending on them. “I would say from 2004 on, you were seeing sales gains averaging around five to six percent,” Lummis says of spending on pets. “Then, with the recession, we saw them go to more like three to four percent, which isn’t a huge fallback.
“In our latest predictions, we’ve got the market beginning to rebound, but not jumping. It’s just gradually sort of crawling up to the five-percent level—somewhere between where it was earlier and where it was during the recession.”
Humanization, where products for pets mimic products for people, is one of the most compelling trends in the industry today, Lummis says. It underscores just how important pets are in our households.
“That group that’s saddled with debt and had a tough time going through all this—the one thing that stayed constant for them was the love of their pet,” Vetere says. “Their pet stood by them. Their pet never had a bad day. No matter how bad a day these folks had, or how many stresses were in the lives, they could always go home, sit down, talk to Rover, have Rover lick their face, go out and play with him, walk with him, whatever.”