BUSINESS - Pet Care Market Predicted to Reach $117 Billion in 2021

Euromonitor International’s most recent forecast for the pet care market predicts it will hit $117 billion in 2021.

In the report, Healthy Pets, Happy Owners: Health & Wellness Product Development in Pet Care, it is projected that value sales will increase at a compound annual growth rate of 2.4 percent at constant prices.

According to the report: “health and wellness has become perhaps the main driver of innovation in pet care.”

Dog and cat food brands abound with products promising to aid weight management, slow cognitive decline in aging pets, or are grain- or gluten-free, natural and organic.

In pet products, natural ingredients and well-being have come to the fore, while electronic gadgets are enabling owners to monitor the activity levels of pets and even play with them remotely.

Euromonitor’s study aligns well with Packaged Facts’ report on the increasing popularity of natural and organic foods for pets, and the Nielson study on the humanization of pet foods.

The report analyzes a variety of factors influencing the pet care market such as:

• Owners increasing unwillingness to compromise on the quality of food they feed their pets
• The evolution of protein
• The growth of internet retail
• The lengthening life expectancy for dogs and cats and the increased prevalence of overweight and obese pets
• The growth in pet tech
• The accelerating pace of humanization.

Purchase and download the entire paper from Euromonitor.

BUSINESS - PetSmart Chewy Deal Causes Commotion in the Industry

The pet industry is abuzz about the recent announcement of PetSmart’s acquisition of Chewy.

How is this going to impact independent pet retailers?

Chewy has been a formidable opponent in online retail - often selling products at prices the big box stores are unable to come close to competing with.

Another major component of Chewy’s success is outstanding customer service.

Anywhere one looks, happy customers are sharing stories of how well the company treats them and how well the company knows them.

People are speculating on the purchase outside of the animal industry as well.

The $3.35 billion acquisition is being touted as the biggest e-commerce purchase in history by publishers like Tech Crunch.

Recode is pointing out the deal is larger than Walmart’s acquisition of Jet.com, which was done for many of the same reasons - expanding Walmart’s e-commerce abilities and positively impacting their customer service.

Even e-commerce focused eMarketer is writing about the deal.

This deal is a big deal!

A Pet Business article touches on independent retailers concerns regarding how this acquisition can impact their bottom line.

While some fear the deal can make PetSmart an even stronger competitor, others believe it can actually take away some of Chewy’s clout.

Why?

Some pet food brands have chosen to sell their products through Chewy rather than big box stores like PetSmart through loyalty to independent retailers and they may pull their products.

In fact, Tuffy has already announced they will stop selling through Chewy because of the acquisition.

Also, Chewy has been operating with a very low profit margin and therefore very little profit.

There is a belief that PetSmart will want to raise that margin and generate more profit and that can’t be done without increasing the prices of online products.

The impact on the independent retailer remains to be seen, but what is clear is many people are watching to see just what happens.

BUSINESS - PetSmart to Acquire Chewy Inc.

PetSmart, Inc. announced it has entered into a definitive agreement to acquire the online pet retailer Chewy, Inc.

The acquisition accelerates the execution of PetSmart’s strategy and is a critical milestone in its journey to be the most convenient, best-in-class pet retailer.

Chewy is one of the leading online retailers of pet products and has seen major growth since it was founded by Ryan Cohen and Michael Day in 2011.

With the recent upgrade to the PetSmart website that boosts e-commerce, it’s clear the acquisition is part of a plan to grow the online portion of their business.

The combination of PetSmart and Chewy will enhance both companies’ capabilities and reach, offering a wide selection of pet products and services available both in-store and online in North America.

Michael Massey, president and chief executive officer of PetSmart said in a release, “We are focused on improving our customers’ experience in-store and online as we continue to execute against our long-term strategic initiatives. Chewy’s high-touch customer e-commerce service model and culture centered around a love of pets is the ideal complement to PetSmart’s store footprint and diverse offerings. Together, PetSmart and Chewy will provide the most convenient customer experience to a wider base of pet parents across every channel.”

Upon closing, Chewy will continue to be led by CEO Ryan Cohen and operate largely as an independent subsidiary of PetSmart, focusing on its current business strategy, while PetSmart will continue to execute its strategic initiatives across the combined company.

“Since we started Chewy, we have been dedicated to understanding and satisfying the evolving needs of our customers to deliver the highest quality pet products and customer service,” said Cohen.

“Combining our strong e-commerce expertise with PetSmart’s best-in-class infrastructure, footprint and breadth of offerings including services will help us ‘wow’ our customers even more.”

The acquisition, which is subject to customary regulatory approvals, is expected to close by the end of PetSmart’s second fiscal quarter of 2017.

PetSmart’s recent acquisition of Allpaws was more about social innovation than retail services, demonstrating the importance of both aspects to the pet supply retailer.

BUSINESS - Consumers Barking Mad About Pet Leasing

81 out of 84 reviews for Monterey Financial Services give the company a single star, and the reviews are full of comments such as, “I was tricked into signing a contract that turned my 1300 dollar dog… into a 4000 dollar lease agreement in which I could either pay more money at the end or return him for a fee.”

Tricked into leasing a pet?

It seems many people have been.

Monterey Financial Services is one of the intermediary companies that Wags Lending assigns contracts to, and they facilitate the lease of high end pets, such as designer dog breeds and other highly valued animals.

Pet leasing and pet rental are not entirely new endeavors.

Walkzee was an app that connected dog lovers with shelter pets who needed an hour or two of love (the company is no longer active), and pet rental is a thriving business in Japan.

However, unlike a dog lover making a choice to rent a pet for an hour, many of the people who have leased dogs through Wags Lending were not aware that’s what they were doing.

They found a pet in a pet store, paid the price and signed the contract, and got home to find additional charges on their credit cards and fine print that they hadn’t read in the contract.

Additionally, these kinds of leases are not subject to the same regulations as standard loans, and so they can charge interest rates ranging from 36 to 170 percent.

Bloomberg recently ran an in-depth piece on Wags Lending and some of the people who have unknowingly leased a pet.

Although Dusty Wunderlick, the CEO of the company that operates Wags Lending, says that he is committed to transparency and sees these types of leases as one way to “democratize access to credit,” the pet stores and finance companies that act as intermediaries may not be as scrupulous in making sure that consumers know what they’re getting into.

The lack of transparency in many of these transactions has resulted in customers signing lease agreements that cost them thousands of dollars more than what they agreed to pay for the pet, damaging their credit ratings and leaving them without even a pet of their own.

Making the choice to rent a dog is a valid solution to the very human desire to have animal companionship, even when you can’t own a pet.

Providing companionship through leasing or renting is a creative way to meet a market need.

But while sneaking exorbitant interest rates into leases that people don’t even realize they’re signing is perhaps creative, it is not meeting a market need so much as exploiting a trusting consumer base.

And that is unlikely to be an effective long-term business strategy.

If Wunderlich is sincere in his desire to provide a valuable service, he will need to take these concerns seriously and ensure that the businesses Wags Lending partners with stay committed to transparency, or risk their credibility in a market that is increasingly reliant on consumer trust.

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.