One of the industries that many investors are currently betting on is the pet industry.
1. The Pet Industry Is Recession-Proof
The pet industry seems to defy all odds during recessions and has been very little affected by economic crisis so far.
2. The Industry Is Predictable
Seasonal demand limits the cash-flow to a couple of weeks per year, which means you need to stack up on inventory based on an estimate of future demand. 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.
3. There Is No Need To Educate The Customer
One of the biggest expense for a new product is 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.
5. Good Margins
For retail businesses, you are looking to have an average margin anywhere north of 60 percent. While dog and cat food margins are mostly around fifty percent, the most popular items such as chewing toys and bones have 70 percent margins. Food for pets accounts for slightly more than a third of the entire market, with 23.04 billion spent in pet food annually. Designer collars, luxury clothes and other high-end accessories for dogs also have great margins, which helps to keep the average margin high.
6. Growing Market
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 66.75 billion in 2016 in the U.S. alone.
Dog owners spend an average of around $1,641 and cat owners approximately $1,125 per year. Less than two thirds of the costs are spent on vet visits, leaving the remaining two-thirds up to retailers and service businesses.