While there are many reasons why some businesses succeed and others do not, one of the most important factors is choosing the right industry at the right point in time. One of the industries that many investors are currently betting on is the pet industry, and here are some reasons why.
Predictability is worth more than high demand during Halloween (e.g. for a costume shop) or summer (e.g. for a water-front restaurant), because it reduces the risk of having too much inventory and allows for long-term planning. As seen on the Google Trends traffic, the pet industry has peaks in December but maintains a steady level of base demand throughout the year.
There is Little Need to Educate the Customer
If you are a fan of Shark Tank or Dragon’s Den, you know that some of the most innovative products and services do not get funding. The reason being that the biggest expense would be to educate the customer on what the product does and why it is so important.
The vast majority of new pet products need no explanation whatsoever. Pet owners already know that health, training and the entertainment of their furry family members is important and are happy to give new products a shot in the hope that it will benefit their pets.
The pet industry seems to defy all odds during recessions and has been very little affected by economic crisis so far.
The Industry Benefits from the Kinderschema.
Ethologist and biologist Konrad Lorenz studied what set of traits makes things appear cute to us. This set of traits is now known as the Kinderschema which describes the head-to-body ratio, the position of the eyes, and size of the eyes relative to the size of the head and more. The idea behind the Kinderschema is that we are hardwired to find things cute whether we want to or not.
We are attracted by puppies, kittens or any young animal for that matter because they have the perfect Kinderschema. Big eyes, a large head, the right head to body ratio and other traits that our subconscious perceives as adorable.
There was a steep increase in demand over the recent years as the number of pets has grown to 312.1 million. Since 1994, the market has more than tripled in size and grown from 17 billion to over 60 billion in 2015 in the U.S. alone. In 2018, the market is expected to grow to $72 Billion. This means that not only are there more pets who need to be fed, but pet owners continue to spend money on them as well.
Dog owners spend an average of around $1,641 and cat owners approximately $1,125 per year. Less than one third of the costs are spent on vet visits, leaving the remaining two-thirds up to retailers and service businesses.