The pet industry is famously recession resistant, having come through the Sept. 11, 2001, attacks and the Great Recession of 2008-09 relatively unscathed. But not even the new “pet parent” sensibility can make the pet industry recession proof in the midst of the novel coronavirus pandemic, according to Packaged Facts.
In its just-published U.S. Pet Market Outlook 2020-2021, the market research firm forecasts that total U.S. retail sales of pet products and services will decline by 17% in 2020, compared with the 5% growth anticipated prior to the coronavirus pandemic. These projections translate to a drop from $95 billion in 2019 sales to $78.5 billion in 2020. The firm projects a substantial, though partial, rebound in 2021, given the underlying strength of the pet industry.
This 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.
Somewhat mitigating the overall market loss will be continued (though tapered) growth in essentially non-discretionary pet products, primarily pet food and cat litter. 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.
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,” said to David Sprinkle, research director for Packaged Facts, “and in the long term, losses aren’t characteristic to the U.S. pet market.” Pet ownership (and adoption from pet shelters) 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.
The U.S. pet industry comes off a strong performance in 2019, with overall sales of products and services rising 5.4% despite the maturity and impressive scope of the pet industry. 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.
Online retailers are well-positioned to continue gains in shares and sales. A pre-coronavirus surge in internet sales of pet products — leading to a platinum-plated IPO for Chewy.com — spurred massive pet market investment in e-commerce logistics, which should help shore up the products side of the industry in the coming months. This advantage is doubly important because the shift to e-commerce has grown the overall pet products sector, and not merely cannibalized sales from brick-and-mortar. Packaged Facts projects the online share of overall pet product sales to reach 24% this year and 26.5% by 2024.