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VIDEOEconomy Goes to the Dogs
Pet-care industry still looking recession-proof.
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It starts with PetSmart (PETM), the Arizona-based pet retailer that's also the country’s largest provider of pet services and solutions. During a down 2008 for most industries, the company generated over $5 billion in net sales, increasing 2.3% in the fourth quarter of 2008 compared to the same period last year.
Over the course of the year, the company opened 112 new stores and launched 45 new PetsHotels - a special all-amenities day and overnight care service for pets.
Others in the industry are also taking the opportunity to help people and animals during difficult financial times. PetCo, the other pet-services giant, has started offering low-cost vaccination clinics for families looking to budget their way through tough economic times. While parent company Central Garden & Pet Company’s (CENTA) stock surged through February, first-quarter figures showed an 8% drop in net sales for their pet-products segment, possibly due to a sudden surge in small-scale, high-end competitors. That pampered-pets trend could see the big-box PetCos of the world lose their market share.
A recent study conducted by the Research Group of New York, entitled US Pet Market Outlook 2009-2010: Surviving and Thriving in challenging Economic Times, found that high-quality pet foods and preventive medical care for pets could both see a boom, with 2009 spending reaching roughly $53 billion, a 6% increase from 2008.
Overall, the Research Group sees the US pet market enjoying 7.1% annual compounded growth between 2008 and 2013, up from 6.4% between 2004 and 2008. Not only will the growing industry defy harsh economic realities, but the care most pets receive could actually improve - more than you can say for most Americans.
This love for animals has even managed to permeate all aspects of popular culture. Just look at programming over at the National Geographic (NWS) cable channel, which originally featured the global imagery for which its print namesake is best known. But in recent years, the channel has given itself over to a thoroughgoing infatuation with dogs: 2 of the channel's most popular shows, Dogtown, and the Dog Whisperer, focus on our canine companions.
In fact, Whisperer’s host, dog trainer and therapist Cesar Millan, has become a doggie Dr. Phil in his own right, complete with DVDs, apparel, dog toys, and the Cesar Millan Center, a dog-psychology mecca in Los Angeles.
On the big screen, 2 of the year’s biggest surprise hits, Disney’s (DIS) Beverly Hills Chihuahua and Paramount’s Hotel For Dogs, were animal-friendly productions, grossing almost $240 million in global box offices combined.
By all accounts, it does appear as if the economy has indeed, gone to the dogs.
For more on the joys -- and inherent costs -- of pet ownership, read Spending Diary of a New Pet Owner.
And For more on the business of pets, check out Hoofy & Boo's always astute report.
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