WHAT PEOPLE BUY: PET ACCESSORIES

Consumers are buying more for their pets, with the purchase incidence of pet accessories rising to 41 percent of U.S. households in 2003 from 35 percent in 2000. In the most recent study done of pet ownership by the American Veterinary Medical Association, nearly 60 percent of U.S. households (58.9 million) owned one or more companion animals, as they are called in the study. American households keep 59 million cats and nearly 53 million dogs. Consumers are more likely to have multiple cats than dogs, so there are 4.2 million more households that own dogs.

Industry Snapshot

Between the beginning of the twentieth century and this century, a paradigm shift occurred in how Americans relate to their cats, dogs, and other pets. Back in 1900 when America was a far more agrarian country, people were in many ways dependent on animals to maintain their standard of living. At that time, animals "paid their way" in services rendered to the turn-of-the-century household. Horses were still the primary means of personal transportation. Dogs were kept to guard the land or help with herding or hunting. Cats did duty protecting grains and feed from vermin.

But today, our relationship with animals, especially pets like dogs and cats, has undergone a radical transformation. Pets today no longer are expected to perform services in exchange for their room and board. Rather, they are valued as companions and friends. They have become full-fledged members of the family. In a recent survey among pet owners, over 90 percent agreed with the statement: "Your pet is considered part of the family."

With this transformation of the relationship with our pets, Americans are lavishing more attention, emotional affection, and spending on their four-legged "family" members. Given their new status as family members, Americans spent $42.2 billion on their pets in 2002 (see Figure 7.10).

	2000	2002	% CHG '00–'02
Total Personal Consumption in millions	$37,711	$42,149	11.8
Pet food	21,315	23,588	10.7
Veterinarians and other pet services	16,396	18,561	13.2
Source: Bureau of Economic Analysis

Figure 7.10: Pet Accessories Industry Snapshot

Retail Overview

When it comes to shopping for their pets, consumers visit two types of stores in nearly equal numbers to buy accessories and pet items. Half of the consumers visit discount department stores to shop for pet accessories, and nearly half (49 percent) visit other specialty stores, a category that includes pet specialty stores. No other category of store comes close to these two in terms of shoppers' preferences, although food and beverage stores rank third, used by 16 percent of shoppers to buy pet accessories.

Today more and more retailers are targeting the pet business as a growth market. Some 7,500 shops in the United States specialize in selling pets, while more than 9,300 stores classify themselves as pet food and supply stores. Many of the nation's 50,000 veterinarians also service their patrons' pet supply needs. Wal-Mart, Target, Kmart, and the rest of the nation's nearly 35,000 mass merchants, department stores, and warehouse clubs also provide pet supplies. Wal-Mart is estimated to generate $2 billion out of their pet supply department alone. But the most significant change in pet accessories retailing today is the emergence of national big-box retailing giants PETsMART and PETCO, whose strip mall stores in affluent areas target the needs of enthusiastic pet owners.

PETsMART is the market share leader in pet supplies, with nearly 600 stores in the United States and Canada (see Figure 7.11). Pets are allowed in the stores with their owners to browse the 12,000 products available in each large-format store ranging from 19,000 to 26,000 square feet. Their current growth plan calls for adding 60 more stores in 2003. PETsMART's target market is the large group of pet owners they define as "pet parents." Pet parents are passionately committed to their pets and consider their pets family members. To meet the pet parents' needs, PETsMART focuses on providing a one-stop shopping destination that offers Total Lifetime Care™ for pets in an easy-to-shop, full-service specialty environment. They also sell through direct marketing channels including two branded catalogs, on the Internet at PETsMART.com, and through a Web site dedicated to equine products. PETsMART sells both national brands and the company's private labels. Many of the stores offer services such as grooming and obedience training. Veterinary care is also available in 300 PETsMART stores through a strategic relationship with Banfield, The Pet Hospital™.

	2002 SALES
PETsMART (about 600 stores)	$2.5 billion
PETCO (about 600 stores)	1.3 billion
Source: Unity Marketing's Pet Report

Figure 7.11: Pet Accessories Market Share Leaders

Trailing PETsMart is number two PETCO Animal Supplies, which operates 600 stores in 40 states. While the competition in pet supplies is hot and heavy, there is little discernable difference in the shopping experience offered by the two market share leaders.

Purchase Drivers

There has been a fundamental shift in consumer psychology that has impacted the purchase of pet accessories. Today's pet-owning households tend to look at their pets as members of the family, rather than simply animals. With this shift in the way that people view their relationship with their pets, they are spending more money buying "gourmet" pet foods, toys, beds and carriers, and other accessories for their pets. A respondent explains: "We have a dog and a cat. They are like members of the family."

Pets are often treated as surrogate children, given toys, and taken on play or adventure outings. One consumer explains: "We have four cats, a fish, and a guinea pig. Our cats have to have their toys." Another says: "It took us five years to have a baby. During that time, my pets were my children. If you don't have children, then you put a lot into your pets because they fill that need to care for someone. Then when you have kids, it becomes a money factor, a time factor, and a room factor. My animals suffered a change in living standards."

The American Pet Products Manufacturers Association reports that the majority of pet owners bought a gift for their pet in the past year. Typically, gifts are purchased for either no special occasion or for Christmas.

Demographic Variables

Women were more likely purchasers of pet accessories than men, with 45 percent of women, as compared to 38 percent of men, buying these items for their household. Younger and middle-aged households are more active purchasers of pet accessories, as households aged 55 and above show a marked drop in their purchase incidence of this category of products.

The more affluent the households the more likely they are to buy pet accessories, as are those with children in the home. Nearly half of households with children bought pet accessories in the past year. Except for consumers that have not finished high school, pet accessories purchases cut across educational levels.

Key Demographics of Pet Accessories Buyers.

• Women purchase more often than men.

• Households under age 55 buy more.

• Purchase incidence rise with income levels.

• Households with children buy more pet accessories.