The Growth of Pet Services (Part 2) . . . a continuance from last week’s #shoptalk blog
Returning to our discussion of the rapidly expanding pet services’ industry, the location-based pet care/pet hosting business is also evolving. Camp Bow Wow, a large franchisor of dog day and overnight care, was acquired by VCA in mid-2014, and since then numerous models have sprouted up in dense urban and suburban areas. Cities such as Boston, New York, Chicago, Dallas and Toronto, among others, have businesses that largely operate a hub and spoke model with the spokes being doggy daycare, and the hub being a hosting facility (oftentimes near the city’s large airport). While the model holds promise, few companies have achieved significant multi-market scale. Challenges include the cost of real estate, finding the right type of workers to service a highly demanding clientele (pet parents), and brand names that, while sporting strong local recognition, mean little in adjacent markets. Several players have also attempted to partner with large multi-family, residential real estate players and contract for the entire property where the service is part of renters’ lease agreements, akin to the cable industry’s model.
Grooming, oftentimes offered by a hosting facility, is a particularly interesting area given the humanization dynamics (pets are extensions of their owners…or is it vice versa?), the recurring revenue nature that hair growth drives (as well as a propensity to roll around in stinky stuff), and the sense of community that a local groomer engenders. Petco, PetSmart and other pet specialty players all offer services and smaller, high profile players such as Woof Gang Bakery (a franchisor) are growing rapidly.
Lastly, to bring the services’ continuum to a natural close, the pet death services space is also exhibiting rapid growth. While exact market size figures are difficult to extract, industry sales are estimated at more than $100 million. While that figure pales in comparison to the $20 billion+ human funeral industry (an average human funeral costs approximately $8,000), the segment is growing at an estimated rate of 10%+. It’s estimated that approximately 50% of funeral home directors in the U.S. also offer pet services, up roughly 15% over 2011. Those numbers are sufficient to draw the attention of both new entrants and institutional investors. And, as in the death services’ market for humans, scale matters. Notably, Ontario firm Gateway Services has embarked upon a consolidation strategy both in Canada and in the U.S., and The Pet Loss Center is similarly active in several states.
While caskets, turns, headstands, and other memorabilia (you can even turn remains into diamonds) are cheaper than their human equivalents, price points can nonetheless be significant. Cremation may run several hundred dollars (smaller pets cost less), burial plots cost $500-$1,000 (depending on location) with an additional annual maintenance fee of approximately $30-$50. Urns can cost from $6 for a paper varietal to $20 at Walmart, all the way up to $2000 for custom vessels, depending on substance and level of artisanship. Caskets run a similar spectrum from relatively cheap durable cardboard to expensive metals. There are even services that will scatter your furry friends’ ashes, with costs varying by location.
In summary, the pet services’ market is varied and growing….and for those of you who aren’t completely satisfied with hosting, grooming, etc,, we’d be remiss not mentioning an even more tailored service provided by Neuticles, a company specializing in artificial testicles for neutered pets, helping the beloved creatures maintain their confidence and dignity!