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Pet Industry Spending Exceeds $66B — 3 Takeaways

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It’s a 10.7 percent increase.

Pet industry spending for 2016 came in at $66.75 billion, up from $60.28 billion in 2015, according to a new report.

The 10.7 percent increase means spending reached a record high, according to the American Pet Products Association, which released the figures at the recent Global Pet Expo.

The report covers pet spending in the market categories of food, supplies/over-the-counter medications, veterinary care, live animal purchases and other services.

Here’s a chart from APPA:PETS SpendingChart

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And here are three takeaways from the report:

1. It’s not quite as good as it sounds. “While this shows a significant increase over last year, it is more reflective of an adjustment in data reporting than actual growth,” said Bob Vetere, CEO of the APPA. “Actual growth when compared to previous reporting methods is closer to 4 percent.” The increase in pet food spending of 22.6 percent in 2016 is primarily due to APPA accounting for new data from the U.S. Bureau of Labor Statistics, which indicated that previous spending figures released may have been too conservative. With $28.23 billion spent, the increase in this category now accurately reflects the steady growth the pet food industry has experienced all along, according to an APPA press release. Interest in high-end, premium pet food and treats continues to be a key driver for increased spending in the pet food category.

2. Health is huge. Veterinary care spending remains the second source of spending in the pet industry at $15.95 billion. While routine veterinary visits have not necessarily increased, new advances in health care and services available may be contributing to the 3.4 percent growth. Additionally, there is growing research on the human health benefits of pets and research from the Human Animal Bond Research Institute shows that the more pet owners become aware of the health benefits of their pets, the more likely they are to take care of them.

3. There’s major growth in “other.” Other services such as grooming, boarding, walking, training, pet sitting, yard services and more saw significant growth from 2015, second only to pet food category growth. While spending on pet services is behind the next closest spending segment by nearly $9 billion, category growth for the past few years is something to take note of, according to the release. It is estimated to grow another 6 percent in 2017, higher than expected growth percentage for any other spending segment.

“Now that millennials have officially taken the reins as primary demographic of pet owners, they stand to further develop the humanization of pets trend,” Vetere said. “We’ve been anxious to see how this new group of pet owners will affect the industry, and now that they’re here and the industry spending is higher than ever, it’s a promising sign that our country’s pets are in good hands.”

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State Bill Would Ban Pet Leasing

A few other states already have similar laws.

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A proposed law in Connecticut would ban the practice of pet leasing.

The legislation seeks to outlaw leases in which the new pet owners accept high interest rates and believe they are agreeing to a payment plan, the Connecticut Post reports.

Such agreements open the possibility of the pet being repossessed at a later date, according to the publication.

The state Senate approved the ban last week. The proposed legislation will now be considered in the state House.

Bob Duff, a Democrat serving as Senate majority leader, said: “As a pet owner myself, I could never imagine leasing a pet and then after six or nine months or whatever it is, giving it back. They might actually think they own the pet instead of leasing the pet.”

According to the Post, pet leasing has already been banned in Nevada, California and New York.

The Connecticut proposal would still allow for certain types of pet leases, including “those for breeding purebred dogs, renting show animals or obtaining guide or law enforcement dogs,” according to the Post.

Find out more at the Connecticut Post 

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Chewy to Open $55M Facility, Creating 1,200 Jobs

It’s planning a fulfillment center.

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Chewy, an online pet supply retailer, has selected Rowan County, NC, for its new fulfillment center, with plans to create 1,200 new jobs and invest $55 million.

“Chewy selected North Carolina because from our infrastructure to our workforce, we have everything businesses need to succeed,” said Gov. Roy Cooper. “These new jobs will make a positive impact on Rowan County and the surrounding area.”

The e-commerce company will locate in Salisbury, NC.

Chewy is dually headquartered in Dania Beach, FL, and Boston, MA. It has customer service centers in Dallas, TX, and Hollywood, FL, and eight fulfillment centers around the country.

“We’re excited to expand Chewy’s fulfillment operations to North Carolina, our first in the state and ninth in the country,” said Pete Krilles, vice president, corporate real estate and facilities, for Chewy. “We greatly appreciate the partnership with the City of Salisbury, Rowan County, the Salisbury-Rowan Economic Development Commission, North Carolina Department of Commerce, and the Economic Development Partnership of North Carolina.

“We look forward to making a positive economic contribution to the region with the creation of 1,200 new jobs. In addition to job creation, our new fulfillment center will enhance our delivery network across the southeastern United States, allowing us to better service Chewy customers with even faster delivery times.”

“Companies like Chewy will find success in North Carolina because we have a strong workforce and desirable business climate,” said Secretary of Commerce Anthony M. Copeland. “Pair that with our location and quality of life and you’ve got a winning formula.”

The North Carolina Department of Commerce and the Economic Development Partnership of NC were instrumental in supporting the company’s expansion decision.

A performance-based grant of $166,650 from the One North Carolina Fund will support the creation of 150 of the new jobs, facilitating Chewy’s establishment of the facility in North Carolina. The One NC Fund provides financial assistance to local governments to help attract economic investment and to create jobs. Companies receive no money upfront and must meet job creation and capital investment targets to qualify for payment. All One NC grants require a matching grant from local governments and any award is contingent upon that condition being met.

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Pet Store Chain Files for Bankruptcy

Its owner died in January.

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Petland Discounts, a chain that operated in New York, Connecticut and New Jersey, has filed for Chapter 7 bankruptcy.

The action follows the January death of the company’s owner, Neil Padron.

The company has closed its stores.

Notices with each of the three states’ labor departments indicated that more than 300 jobs could be lost across 70 store locations.

The bankruptcy petition was filed in New York Eastern Bankruptcy Court.

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Padron started the business in 1965. He died of bladder cancer on Jan. 14.

Details of the bankruptcy case are available here.

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