Pet technology, and the pet industry in general, has been called “recession proof,” citing the fact that during the 2008 financial crisis, the pet industry continued to grow.
Consumer spending overall shrank by 3% during the recession, but pet spending grew at 5% per year.
Those are some convincing, and encouraging, numbers for investors and business owners.
However, investors should still be cautious.
The resilience of the pet industry refers to the sector as a whole, and doesn’t mean that every pet stock will do well.
Investors need to look at each business as a unique and context-dependent case.
Individual companies can still sink if they don’t adapt to consumer demands and rapidly changing economic contexts.
Fresh pet food companies, for example, are subject to thin margins and increasing competition, and two companies – Freshpet Inc and Blue Buffalo Pet Products – have seen their stocks drop significantly.
On the other hand, pet healthcare companies aren’t subject to the same regulatory and policy debates that impact human healthcare, and these companies are doing well.
Pet technology is an area that’s heating up, and worth a close look.
2016 saw a record number of funding deals in this area, despite the overall drop in Venture Capital funding.
There are multiple factors at play that influence the popularity of pet tech stocks right now.
One important element is the millennials.
This is a generation heavily invested in their pets. They’re less likely than their parents to own a home or a car, but they’re much more likely to own a pet.
According to the Washington Post, “Three-fourths of Americans in their 30s have dogs, while 51 percent have cats, according to a survey released by research firm Mintel. That compares to 50 percent of the overall population with dogs, and 35 percent with cats.”
These individuals are marrying later, having kids later (when they have kids at all), and according to research by Wakefield Research, 76% of them are more willing to splurge on their pets than on themselves.
The economy drives some of these trends.
Pets are less expensive than children or houses, and Millennials have grown up with job scarcity and an abundance of student loan debt.
They aren’t big spenders, and they tend not to take big financial risks.
Their pets fill roles that previous generations have filled with both family and career goals and spending.
The other driving force behind the surge in pet technology stock is this generation’s love of wearable tech, integrated tech, Internet of Things, and other digital age devices and services.
Rover, which was the best funded company in the sector in 2016, matches pet owners with pet service providers such as dog walkers and pet sitters.
And BarkBox, which was similarly well-funded, has experimented with all kinds of digitally-integrated services, including BarkBuddy and BarkCam, marketed as Tinder and Instagram for dogs.
The industry, and the economy as a whole, will continue to change in response to global financial pressures and the quirks of the Millennial generation, but chances are good that pets will continue to be a solid choice for investment.
About Tiffany Sostar
Tiffany is a published academic, an editor with the Editors Association of Canada, an independent scholar and researcher, and a self-care and narrative coach. She is particularly interested in the intersection of technology and identity - how our tools shape our selves and change our stories, and in how the nature of work is changing as we incorporate more technology into our daily lives.
