Inflation Targets the Pet Industry
May 18, 2023
Although overall U.S. economic inflation shows signs of cooling in recent months, the pet care industry continues to suffer from a high consumer price index (CPI) – the standard statistic used to measure inflation rates. As a result, pet care businesses struggle to maintain a profit margin without pushing consumers away with rising prices on goods.
According to the Bureau of Labor Statistics, CPI rose more than two percentage points across key pet sectors since the new year: pet care products and services (up to 10.9%), veterinary services (10.3%), and pet food (15.2%). Price increases in the pet care industry are largely attributed to the rising costs of ingredients.
Andrea Binder, vice president of North America Pet Retail at NielsenIQ, stated, “The cost of chicken, the cost of beef, the cost of aluminum to make a wet cat food can…a lot of those commodity prices have been rising pretty dramatically throughout 2021 and 2022, which has caused manufacturers to increase their costs, and then therefore a lot of retailers follow suit.”
Inflation has cut into the discretionary incomes of individuals across the country, which is typically bad news for pets. At the end of 2022, a study by analysts at NielsenIQ indicated that 39% of consumers globally were in a worse financial position heading into 2023 and identified as “cautious spenders.”
Uncertain economic situations have led many pet owners to cut costs, resulting in record high levels of pet surrenders reported in 2022. However, pet owners who haven’t surrendered continue to spend on their pets’ wellbeing at a similar rate to pre-inflation – though analysts predict pet owners will opt for cheaper alternatives to their usual products if inflation continues.
Overall, analysts are optimistic that the price of pet care will deflate this year. The producer price index for pet food – the cost of ingredients and goods essential for production – dropped at the beginning of 2023, which should lower costs for consumers in the coming months.
The ZQUARED Advantage
Navigating inflation is difficult for all businesses. Working with experienced e-commerce consultancies, like ZQUARED, helps businesses maintain profit margins during turbulent economic times. ZQUARED has a long history working with pet care industry sellers and can ensure that listings are search-engine optimized, maintain a competitive minimum advertised pricing, and streamline warehouse operations to cut operational costs, all of which allows business owners to focus on creating quality pet products and meeting their consumers’ dynamic needs. To see how ZQUARED can help your brand going into the 2023 season email us at partners@zquared.com.