Over the past decade-plus, we’ve all watched the pet care market continue to grow at a rate that other industries can only dream about, but a few months ago, Morgan Stanley Research came out with a bold forecast that would make even the most bullish among us do a double-take. In a report published in April 2021, the research arm of the well-known investment banking firm asserted that U.S. consumers could be spending more than $320 billion on their pets each year by 2030—a number that represents 148-percent growth over the company’s estimate for pet industry spending in 2021.
Much of this growth, according to Morgan Stanley Research, will be driven by what is expected to be a 14-percent increase in pet ownership over the same period, combined with younger consumers’ (i.e. Millennials and Gen-Z) propensity to spend more on their pets than previous generations. While this is certainly great news for the broader pet care market, there are a few factors that neighborhood pet retailers must consider before they start expecting to see a corresponding increase in their bottom lines.
First, there’s the fact that a significant portion of any expected pet industry growth will most certainly be driven by veterinary services
According to the American Pet Products’ (APPA) data, veterinary care and product sales accounted for 30 percent of pet industry spending last year, and the fast-rising cost of these products and services could easily drive that percentage higher over the next decade.
[Editor’s note: APPA’s total pet industry spending numbers are significantly different than Morgan Stanley’s, but that is a subject for another day].
Another important element that pet stores must keep in mind is that purely e-commerce players like Chewy and Amazon continue to outpace the rest of the retail field in gaining market share. In fact, as I’ve discussed in a previous column, Chewy achieved seven-percent market share in FY2020, which is dangerously close to the estimated 10 to 11 percent market share that goes to independent and neighborhood pet stores.
With all that in mind, it is vital that brick-and-mortar pet retailers continue to evolve their business models to best position themselves to make the most of the industry’s expected growth. For those who are wondering exactly what that evolution should look like, I suggest that there is no better example to follow than the subject of our August cover story—Pet Business’ 2021 Retailer of the Year, EarthWise Pet.
The EarthWise Pet chain has more than doubled in size over the past four years, thanks in large part to an almost uncanny ability to proactively identify and quickly respond to shifts in the marketplace. From prominently incorporating service offerings to building out an e-commerce platform that proved invaluable when the pandemic struck, EarthWise Pet has proven that a forward-thing, always-evolving approach will drive opportunities and, more importantly, results.