While the US pet industry was able to resist the Great Recession of 2008-09, the retail pet industry is set to take a 17% hit due to the coronavirus pandemic, according to data from Packaged Facts.
The data forecasts that total US retail sales of pet products and services will decline by 17% in 2020, compared with the 5% growth anticipated before the coronavirus pandemic hit. These projections translate to a drop of $78.5 billion in 2020 compared to $95.0 billion in 2019 sales. However, the firm projects a substantial though partial rebound in 2021, given the underlying strength of the pet industry.
The forecast factors in double-digit sales declines in 2020 for three out of the four pet industry sectors.
Non-medical pet service sales are expected to suffer the sharpest drop in 2020, at 47%, due primarily to the link between pet boarding services and business/leisure travel. Also projected to drop in 2020 sales are the veterinary sector and non-food pet supplies, reflecting in part the discretionary nature of some of the services and products involved.
On the other hand pet food, the largest pet industry sector, is forecast to grow 4% in 2020, compared with a 6% growth forecast before the Covid-19 pandemic impact. Pet food sales will reflect, as occurred in the Great Recession, some trading down to value and store brands.
David Sprinkle, research director for Packaged Facts, said increased ownership rates for dogs, another pattern evident in the wake of the Great Recession, “might also help soften the blow of pet industry losses, and in the long term, losses aren’t characteristic to the U.S. pet market.”
Ownership (and adoption from pet shelters) of the most companionable and pet-table pets may get a boost among a national population that is now largely isolated, staying at home, and well aware of the mental and physical health benefits of pet ownership.
Last week it was reported that the number of people adopting pets across the world is soaring.
In 2019 the overall sales of products and services rose 5.4%. A continued boom in pet product e-commerce delivered incremental gains in 2019, while a larger-than-expected pet food sales increase in mass channels bolstered the overall market.
The data added that online retailers are well-positioned to continue gains in shares and sales.
A pre-coronavirus pandemic surge in Internet sales of pet products spurred massive pet market investment in e-commerce logistics, which Packaged Facts said should help shore up the products side of the industry in the coming months. Packaged Facts projects the online share of overall pet product sales to reach 24% this year and 26.5% by 2024.
Commentary
Pet food was the only industry out of the four that were measured here to show an increase in sales. This was no surprise as dogs will have to eat during lockdowns and consumers likely stocked up on pet food due to these uncertain times during the pandemic. Interestingly, the data showed growth in online retail which indicate consumers are turning to the internet to buy pet products.
However, just like the toilet paper crisis this year, consumers should remember to avoid hoarding in order for companies to avoid having supply issues.
The other three sectors reported decreases in forecasted sales, however, certain sectors, such as the veterinary sector, have the opportunity to adapt to provide services during these uncertain times using methods such as tele-care.