• Shannon Maguire

The Future of the Pet Industry

Updated: Nov 7



Pet Ownership Behavioral Changes and Predictions


In this piece, we look at pet ownership in U.S. households. Specifically diving into how feelings towards pets in the home are shifting, how the COVID-19 pandemic has influenced those sentiments, and ways these attitudes have the potential to modify the behavior and purchasing practices of current and future pet owners. To do so, I will reference Venture Captial Firm Alpha Edison's Predictive Models of Behavior Changes, outlined in Issue Number 6 of their Perspective Series, to help illustrate these predictions.


The evidence will show that pet ownership is increasing, specifically in younger generations, and more money is being spent as higher value is placed on pets within the family unit. As young adults in the U.S. follow the trend of their peers, we are likely to see younger generations adopting animals earlier with a high likelihood of continued pet ownership throughout their lifetime. This means pet industry businesses will continue to increase their consumer base with younger demographics and customer loyalty will be highly sought after. This is especially true for businesses geared toward high-quality pet nutrition and health care as owners look to keep their animals healthier longer and are willing to spend the money to do so.


An Increase in Pet Ownership

Evidence for behavior change

American pet ownership has seen an increase in the last few decades with 67% of households now owning one or more pets. This is an 11% increase in household penetration rates from 1988 to 2019. There is also evidence to suggest younger generations are more likely to own animals. A survey conducted in 2019-2020 discovered that Millennials (ages 25 and 40 years old) represent the largest portion of pet ownership within a generation with 31% having a pet in the home, 29% of Baby Boomers (ages 57-75 years old) reported owning pets, followed very closely by 26% of Generation X (ages 41-56 years old).


A case for why this might be is the reported physical and mental health benefits of owning a pet. Studies have shown that pet owners, specifically those who own dogs, are likely to be more active, have less stress, and are overall healthier individuals. Americans also report being more social and are generally happier after adopting a pet. A 2008 study found that looking into your dog’s eyes releases oxytocin, also known as the “love hormone,” which helps individuals form attachments and have more fulfilling relationships.


COVID-19 Influence

When looking at whether the COVID-19 pandemic had any effect on pet ownership, it was determined that fostering and surrendering animals to shelters because individuals could no longer care for them stayed relatively consistent between May and December of 2020. While pet adoptions briefly decreased at the start of the crisis, there was a slight increase among younger generations as lockdowns and work-from-home mandates persisted throughout 2020 and into 2021. This could be due to people seeking reprieve from feelings of isolation in the companionship of an animal. It also presented a unique opportunity for those who always wanted a pet but felt their schedules and time away from home wouldn’t allow them to properly care for one.



During a survey conducted in December 2020, 10% of participants said they adopted a new pet during the Coronavirus pandemic. This was a 3% increase compared to a May 2020 poll, where 7% of participants reported getting a new pet. Once again, these adoption rates were higher among younger generations, with 16% of Gen Z participants in America saying that they got a new pet in response to the COVID-19 pandemic. By comparison, only 3% of Baby Boomers reported getting a new pet. This could be due to the fact that many Boomers are already retired and pandemic lockdown mandates had less effect on their daily routines.


Model Predictions

Two of Alpha Edison's Predictive Models of Behavior Change are applicable to those who chose to get a pet: habit formation and switching costs. While the change of a new animal in the home is significant at first, most pet owners consider the switching costs before deciding to adopt a pet. Upfront bills like initial vaccines, spaying/neutering, and buying durable goods like a kennel, leash, and other necessities can be expensive but are to be expected. Households adjust to their new routine and form habits around care and cost for their pets, for example paying for food, annual veterinary care, health insurance, daycare, and boarding all become a part of the monthly budget. These habits are likely to persist throughout the duration of pet ownership.


An Increase in Pet Spending

Evidence for behavior change

Pet Industry spending has seen a steady annual increase, growing by a startling 560% between 1994 and 2019. In the U.S. alone, it was projected that approximately $99 billion would be spent on pets in 2020. The increase in the number of households that have pets could partly explain the rise in pet industry expenditure. However, that is not the only factor at play here. There has been a notable shift in sentiments towards pets in the family and the status they hold, leading consumers to spend more money on their beloved animals.


A shift in sentiment

Data shows more pet owners, or as they like to say ‘pet parents,’ are viewing their animals as equal members of their family. This sentiment has been expressed by the popularly coined term ‘fur babies’ when referring to pets. The numbers are significant, with about 75% of Millennial participants and 80% of Gen X participants in a 2020 U.S. study stating they considered their pet a 'fur baby.’ This shift in pet owners’ attitudes has resulted in several behavioral changes such as non-essential spending, fewer boundaries when interacting with pets, and treating them as if they were members of the family.



The change in the way ‘pet parents’ are interacting with their ‘fur babies’ has caused consumers to spend money in more unique ways. This can be seen by purchasing holiday gifts for animals, with over half of the respondents of a 2019 YouGov survey saying they have bought holiday gifts for their pets in the past. Behavior changes go beyond just consumerism and permeate how pets and their owners cohabitate in the home. 66% of participants in the same survey reported allowing their pet to sleep in bed with them and half allowed their pet to lick their face. Younger generations once again trend higher for those willing to spend money on “non-essentials” for their pets. Of the participants surveyed, 60% of Gen Zers planned to buy their pet a holiday gift. In comparison, only 42% of Baby Boomers planned to do so.


Model Predictions

So what does this mean for future behaviors? The applicable model of signaling suggests medium persistence in spending more money on pets and taking, what many view as, better care of domesticated animals. There is cultural pressure in the U.S. to provide more than just the minimum essentials to your pet and people are praised when they ‘spoil’ their animals, with many believing these gentle and loyal creatures deserve nothing less. It could also be suggested that network effects in younger generations will encourage more people to own pets and treat those animals like ‘fur babies’ with fewer restrictions in the home and higher spending habits that are consistent with their peers.





Sources

Do you consider your pet as your 'fur baby'? (Harris Poll, Compiler). (2020). TD Ameritrade. ID 1128358

How has your pet ownership been affected by COVID-19? (APPA, Compiler). (2020). APPA. ID 1191395 How owners treat their pets in the United States as of November 2019* (YouGov, Compiler). (2019). YouGov. ID 1114438 Nagasawa, M., Kikusui, T., Onaka, T., & Ohta, M. (2008, December 14). Dog's gaze at its owner increases owner's urinary oxytocin during social interaction. National Library of Medicine. https://pubmed.ncbi.nlm.nih.gov/19124024/ Pet industry expenditure in the United States from 1994 to 2020 (in billion U.S. dollars) (APPA, Compiler). (2020). APPA. ID 253976 Pet-ownership: household penetration rates 1988-2019 (APPA, Compiler). (2019). APPA. ID 198086 Share of pet ownership in the United States in 2019/20, by generation (Pet Food Processing, Compiler). (2020). APPA; Pet Food Processing. ID 1130651 Share of respondents who got a new pet due to COVID-19 in the United States in 2020, by generation (APPA, Compiler). (2020). APPA. ID 1191487 Share of respondents who plan on purchasing a holiday gift for their pet in the U.S. 2020, by generation. (2020). APPA;. ID 1191782 Suen, R., Kramer, C., & Mehmood, S. (2019, October 8). Dog Ownership and Survival: A Systematic Review and Meta-Analysis. Circulation: Cardiovascular Quality and Outcomes. https://www.ahajournals.org/doi/10.1161/CIRCOUTCOMES.119.005554

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