Economic downturn and the pet business

Crisis? What crisis? That’s the question many in the pet supplies sector are currently asking themselves as they point to steadily growing sales. Even the American Pet Products Association (APPA) is confident, expecting a sector-wide increase in sales of 3.6 per cent this year. Although the pet supplies business certainly might not have been hit as hard as other branches of the economy by the financial downturn, there are nevertheless warning signs that must be taken seriously. The almost daily reports of companies going to the wall, of declining sales figures at firms that were previously used to success and of billions being lost by big banks are leaving consumers with little appetite for consumer spending. If the jobless total should rise further, the consumer reticence that is already evident in many countries could also increase. Even the pet supplies sector is not immune to this. This trend could impact above all on the luxury accessories segment, which has grown substantially in the last few years. At the Global Pet Expo in Orlando, APPA president Bob Vetere speculated that the recession might persuade many people who had bought fashionable, upmarket accessories up to now to switch to the Wal-Mart variants of these products. And he’s probably right. Discounters and mass merchandisers could benefit from the crisis. Europe’s leading pet product chain Fressnapf, which has positioned itself as a speciality discounter, has announced an increase of 15.1 per cent in sales for the last year. And the leading global supermarket chain Wal-Mart increased its sales in fiscal 2008/2009, which came to an end in January, by 7.2 per cent compared with the previous year. One thing should be certain: in the coming months the price will rank higher with consumers as a purchasing criterion. The pet supplies trade should resist the temptation to sell its products at a loss, however. It should try instead to strengthen the link with its customers further and inspire their loyalty through more service. The good times will return sooner or later – and anyone dropping their prices through the floor now will not be able to bump them back up so quickly when the situation improves. Yours Ralf Majer-Abele
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