Pet power propels $4.5-billion industry


Aug 24, 2007

By Laura Severs - Business Edge
Published: 08/24/2007 - Vol. 7, No. 17

Pets are now a cash register's best friend.

Pampering pets has become big business in Canada, with items such as apparel, shoes, food and carseats helping to drive sales in a market estimated to be worth as much as $4.5 billion a year.

Today's pet owners can find just about anything for their pets - from heart-shaped rhinestone sunglasses or hiking boots for their dogs, to seatbelt harnesses and Harley-Davidson-themed collars for cats. There are wheelchairs to assist pets with disabilities, filet mignon-flavoured toothpaste for those who want to make brushing Rover's teeth more palatable and multiple designer options, including pet carriers from Juicy Couture, better known for its contemporary apparel for women and men.

"The Canadian pet sector is thriving," says Louis McCann, executive director of the Ottawa-based Pet Industry Joint Advisory Council of Canada (PIJAC), a not-for-profit, member-based organization that advocates on behalf of the Canadian pet industry.

Photo courtesy of Laurel Kostuk
Urban Dog owner Laurel Kostuk has Meiko outfitted with hiker boots and a designer-inspired plaid jacket.

"It's a vibrant growing industry as evidenced by every mass-market operation (stores such as Zellers, Costco and Wal-Mart) getting into the pet sector and increasing the shelf space in their stores for pet products," adds McCann.

According to McCann, the industry has grown from a value of about $3.5 billion in 2001 to $4.5 billion today. "People are spending more. There are lifejackets and strollers for their dogs. There is demand for dog apparel, dog jewelry and dog perfume and not only is this also evidenced in (more) pet food choices and pet products, in the veterinary field in major city centres they will have cancer specialists and chemotherapy for your pet."

Statistics Canada says Canadians have increased spending on their pets from $277 per household in 1999 to $377 in 2005.

The trend is being called the "premiumization and humanization" of pets. It's all about the introduction of new products, particularly those with a strong health or luxury angle, that will play a significant role as manufacturers appeal to the parental nature of pet owners, offering major improvements on existing products.

In the U.S., the non-food pet supplies market is forecast to grow from US$9.9 billion in 2006 to nearly US$15 billion by 2011. Similar figures for Canada were not available.

According to a recent report on U.S. pet supplies by Packaged Facts, which publishes market intelligence on a wide range of consumer industries, this will mean pet-product development trends that will include "human" enhancements, such as the use of higher-quality materials as well as natural and organic substances.

Pet products of all types will also offer a wider range of styles designed to be more convenient and match different home decors.

"It's a good time to be in the pet industry," says Karen McCullough, director of marketing for Winnipeg-based Petland Canada, which operates both company-owned and franchise stores across the country.

While Petland stores carry a range of products from basic needs to higher-end items, McCullough says the American "premiumization and humanization" effect is definitely evident in Canada.

"People are looking for more these days - absolutely. We see a lot now in higher-end products, people are demanding more for their pets, from treats to grooming supplies to brand-name toys and even clothing," says McCullough.

When it comes to toys, it's just like buying for your own children, she adds. "We get Shrek (pet) toys and any big movie that comes out now, you will see pet toys as well. They're merchandising for pets as well as children."

At Urban Paws, described as the largest independent pet food and accessories store in Kingston, Ont., owner Jennifer Allan agrees that pets have taken on an increasingly important role in the family.

"People are treating their pets better. They're wanting to move from things that are just utilitarian - people are using their pet to be an extension of who they are," says Allan.

She adds an increasing number of her customers are going after the bling when it comes to shopping for their pets.

"People are looking for the funky little T-shirts and the bling-bling like the designer collar and leashes."

Allan says her operation competes well with the big-box counterparts such as PetSmart and Petcetera, both of which operate within the same general trading area.

In part, that's because Urban Paws runs an adjacent veterinary operation with the store and the animal hospital creates traffic and customers for both.

However, Urban Paws has also found a niche by emphasizing quality customer service and sourcing products that the big-box stores don't carry.

"We cater to a different market. Our product lines are quite different," says Allan. "Our unofficial motto is 'from functional to funky'. We carry a lot of different kinds of things that are not found in Kingston and we spend a lot of time searching for new products.

"There's always going to be the consumer driven by price point who will buy their things at Wal-Mart or PetSmart, but there's also a number of discerning consumers who look for more information and who really appreciate that we have the staff to help them make the best choices for their pet."

That is also evident at The Urban Dog in Edmonton, which caters to canine and cat couture for the pampered pet.

Urban Dog owner Laurel Kostuk opened her store three years ago after failing to find the type of products she was seeking for her own dog.

"I was trying to find products for him that fit properly in clothing and shoes that were stylish and found that there was nothing in Canada," says Kostuk.

Now Urban Dog designs and manufactures its own products that it sells worldwide. It also offers a selection and quality product that Kostuk says can't be found at her big-box counterparts.

"I don't compete against the big-box stores - they actually refer people to our store," she says. "There are things I don't have and I will refer people to them.

"There's no competition with them because the quality isn't the same. That's why people come to us, they get the quality, the fit and the uniqueness.

"We're a small independent but we're big - we do huge volume here," she adds. "In the last year we probably sold 10,000 sets of boots just in our store."

However, the big-box stores still hold the lion's share of the retail pet market sector.

An estimated 60 per cent of the industry - depending on the region of the country - is dominated by big-box players such as Petcetera, Petland, Pet Valu, PJ's Pet Centres and PetSmart, according to PIJAC Canada.

PetSmart, which has about 50 stores in Canada - and continues to expand; it acquired 19 Super Pet retail stores in Canada earlier this year that will be rebranded under the PetSmart banner - is bullish on the Canadian market.

"We've certainly identified Canada as a growth area for us. We know there are many pet parents in Canada, and a lot of opportunity to expand that audience," says Michelle Friedman, spokeswoman for the Phoenix-based PetSmart Inc.

PetSmart's target audience - as with most other pet retailers - tends to include people in their 20s who are delaying getting married and having children and are turning to pets instead, as well as empty-nesters who decide to get a pet and have the disposable income to pamper their new addition.

But there is one potential cloud on the horizon. If there's a drop in disposable income, the pet sector will take a hit.

"When there's a crunch, this is one of the industries that sees it," says PIJAC Canada's McCann. "It's one of the first areas where spending is cut back."