AU INDUSTRY (SPECIALIZED) REPORT OD5128
Pets and Pet Supplies Retailers in Australia
Kitted out: Industry revenue growth has climbed in response to rising demand for
premium pet products
Arna Richardson | October 2020
IBISWorld.com +61-3-9655-3800 info@IBISWorld.com
Contents
About This Industry...........................................5
Industry Definition..........................................................5
Major Players................................................................. 5
Main Activities................................................................5
Supply Chain...................................................................6
Similar Industries........................................................... 6
Related International Industries....................................6
Industry at a Glance.......................................... 7
Executive Summary....................................................... 9
Industry Performance..................................... 10
Key External Drivers.....................................................10
Current Performance...................................................11
Industry Outlook............................................. 15
Outlook......................................................................... 15
Performance Outlook Data......................................... 17
Industry Life Cycle....................................................... 17
Products and Markets..................................... 19
Supply Chain................................................................ 19
Products and Services.................................................19
Demand Determinants................................................ 21
Major Markets..............................................................22
International Trade.......................................................23
Business Locations..................................................... 23
Competitive Landscape...................................26
Market Share Concentration....................................... 26
Key Success Factors................................................... 26
Cost Structure Benchmarks........................................ 26
Basis of Competition................................................... 29
Barriers to Entry........................................................... 30
Industry Globalization..................................................31
Major Companies............................................32
Major Players............................................................... 32
Other Players................................................................35
Operating Conditions...................................... 36
Capital Intensity........................................................... 36
Technology And Systems........................................... 37
Revenue Volatility........................................................ 39
Regulation & Policy......................................................40
Industry Assistance..................................................... 40
Key Statistics..................................................42
Industry Data................................................................42
Annual Change.............................................................42
Key Ratios.................................................................... 42
Additional Resources...................................... 43
Additional Resources.................................................. 43
Industry Jargon............................................................43
Glossary Terms............................................................43
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About IBISWorld
IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive
data and in-depth analysis help businesses of all types gain quick and actionable insights on industries around
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focused on making strategic business decisions that benefit you,your company and your clients. We offer
research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico,
as well as industries that are truly global in nature.
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Covid-19
Coronavirus
Impact Update
IBISWorld's analysts constantly monitor the industry impacts of current events in
real-time – here is an update of how this industry is likely to be impacted as a result
of the global COVID-19 pandemic:
• The outbreak of COVID-19 in March 2020 initially led Australian consumers to
stockpile pantry supplies, including pet food supplies and treats, causing a short-
term rise in demand for industry products. Increased demand also came from pet-
parents working from home who were able to spend more time with their animals,
purchasing new accessories and treats. Industry operators with animal adoption
programs run in conjunction with local animal shelters may have also benefitted
from an unprecedented spike in demand for animals for companionship purposes
during lockdown.
• Vulnerable or self-isolating customers less able to visit pet stores due to the
outbreak of COVID-19 may have turned to rival online retail channels for their pet's
needs, to the potential detriment of industry operators without complementary
ecommerce platforms. Even after lockdown and social distancing measures are
relaxed, these new consumer shopping habits may remain in play in 2020-21.
• In response, industry operators are likely to focus on the roll-out of digital
platforms over 2020-21 to capture changed shopping patterns and to take
advantage of higher pet ownership rates.
Note: The content in this report is currently being updated to reflect the trends
outlined above.
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About This Industry
Industry Definition Industry operators are retailers of pets and pet supplies. Products sold include pets,pet food and other pet supplies and accessories. The most common pets sold
include dogs, cats and fish. Online pet retailers are not included in the industry.
Major Players Greencross Pty Limited
PETstock Pty Ltd
Main Activities The primary activities of this industry:
Retailing processed and unprocessed pet food
Retailing durable pet products and accessories
Retailing animal healthcare products
Retailing pets
The major products and services in this industry:
Pet products and accessories
Pet food
Animal healthcare products
Pets
Pet services
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Supply Chain


SIMILAR INDUSTRIES
Prepared Animal and Bird
Feed Manufacturing in
Australia
Veterinary Services in
Australia
Supermarkets and Grocery
Stores in Australia
Veterinary Pharmaceutical
Manufacturing in Australia
RELATED INTERNATIONAL INDUSTRIES
Pet Stores in the US Garden Centres & Pet Shops
in the UK
Pet Stores in Canada
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Industry at a Glance
Key Statistics
$2.9bn
Revenue
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
3.4% 3.0%
$129.4m
Profit
Annual Growth Annual Growth
2016-2021 2016-2026
0.4%
4.4%
Profit Margin
Annual Growth Annual Growth
2016-2021 2016-2026
-0.7%
772
Businesses
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
-0.2% -0.3%
7,125
Employment
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
0.4% 1.2%
$291.8m
Wages
Annual Growth Annual Growth Annual Growth
2016-2021 2021-2026 2016-2026
1.1% 1.8%
Key External Drivers % = 2016-2021 Annual Growth
0.2%
Demand from prepared animal and bird feed
manufacturing
0.3%
Real household discretionary income
1.6%
Number of households
11.8%
Demand from online shopping
Industry Structure
POSITIVE IMPACT
Concentration
Low
Regulation
Light
Globalization
Low
MIXED IMPACT
Life Cycle
Mature
Revenue Volatility
Medium
Capital Intensity
Medium
Technology Change
Medium
NEGATIVE IMPACT
Industry Assistance
None
Barriers to Entry
Low
Competition
High
Key Trends
The rising humanisation of pets has contributed to increased
expenditure per pet
Players have widened their product ranges to benefit from
owners' willingness to spend on pets
Several firms have exited the industry over the past five years
due to rising online competition
Rising competition is forecast to become a significant
challenge for the industry
Pet wellbeing trends are projected to shape the industry's
product portfolio
Ongoing urbanisation is forecast to influence pet ownership
trends over the next five years
Expenditure on pets has risen over the past five years,
benefiting the industry
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Products & Services Segmentation
Pet products and
accessories
16.7%
Pet food
54.1%
Animal healthcare
products
15.2%
Pets
4.3%
Pet services
9.7%
Pets and Pet Supplies Retailers
Source: IBISWorld
Major Players % = share of industry revenue SWOT
STRENGTHS
High Profit vs. Sector Average
WEAKNESSES
High Customer Class Concentration
High Product/Service Concentration
High Capital Requirements
OPPORTUNITIES
High Revenue Growth (2016-2021)
High Revenue Growth (2021-2026)
High Performance Drivers
THREATS
Very Low Revenue Growth (2005-2021)
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Executive
Summary
Australia has one of the highest rates of pet ownership in the world,
with over 60% of Australian households owning a pet.
These pets form an integral part of their owners' lives, with many considering their
pets to be family members. As pets become increasingly humanised, households
are spending more money on them in the form of premium foods, dietary
supplements and vitamins, pet accessories and treats. This trend has translated
into higher expenditure per pet owned as households spend more on premium
products and services, such as vet-prescription dietary foods, gluten-free snacks
and automatic water dispenser units. Households are also adopting an increasingly
holistic approach to their pets' health and wellbeing.
The Pets and Pet Supplies Retailers industry is benefiting from these trends, with
operators expanding their range of products and services to capitalise on these
developments. Many consumers are now opting to make their pet-related
purchases in specialty pet stores as they seek out premium products. In addition, a
growing number of industry retailers are teaming up with animal shelters to offer
pet adoption services as opposed to selling pets from other sources. This trend
reflects the growing animal adoption movement. A surge in demand for pets from
animal shelters in the wake of the COVID-19 pandemic has benefited the industry,
as have initial stockpiling actions by pet owners. Industry revenue is expected to
increase at an annualised 3.4% over the five years through 2020-21, to $2.9 billion,
driven by favourable social trends. This trend includes anticipated growth of 3.9% in
the current year.
Intensifying competitive pressures, especially from online rivals, are likely to
constrain growth in industry revenue over the next five years. In response, industry
operators are anticipated to increasingly roll out category killer superstores or co-
locate with veterinary clinics or large format retail centres. Nevertheless, ongoing
pet humanisation and premiumisation trends are projected to drive industry
revenue growth, as is an anticipated rise in the number of single-person households
and the associated desire for pets for companionship purposes. Industry revenue is
forecast to increase at an annualised 3.0% over the five years through 2025-26, to
$3.4 billion.
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Industry Performance


Key External
Drivers
Demand from prepared animal and bird feed manufacturing
Developments in the upstream Prepared Animal and Bird Feed Manufacturing
industry affect industry retailers, as pet food constitutes a significant proportion of
industry revenue. One such development has been the growing premiumisation
trend, as Australian pet food manufacturers track human health trends with a
growing array of non-GMO, organic, grain-free and paleo pet food now on offer.
These premium products retail at higher prices, with associated higher margins.
Demand from prepared animal and bird feed manufacturing is expected to increase
in 2020-21.
Number of households
Nearly six million Australian households are estimated to own a pet. In addition,
changes in Australia's household composition are having a growing influence on the
industry. For example, rising numbers of single-person households are influencing
the number of pets kept for security or companionship. The number of Australian
households is expected to increase in 2020-21.
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Real household discretionary income
Trends in real household discretionary income can influence household expenditure
on a range of pet-care products, from necessities such as food and cat litter to
more discretionary items such as toys and accessories. However, a decline in
discretionary incomes over the past five years has not necessarily translated into a
fall in expenditure on pet-care products. This trend indicates that pet owners
consider expenditure on their pets to not necessarily be discretionary, thereby still
presenting industry operators with an opportunity to increase their sales. Real
household discretionary income is expected to fall in 2020-21.
Demand from online shopping
Competition from online retailers is intensifying due to more consumers opting to
purchase goods online, as online operators can typically offer lower prices for many
pet supplies and accessories. Therefore, greater demand for online shopping
represents a potential threat to industry operators. Social distancing measures
introduced in the wake of the COVID-19 pandemic contributed to a sizeable
increase in the number of pet owners shopping online in 2019-20. Demand from
online shopping is expected to increase in 2020-21.


Current
Performance
Over 60% of Australian households own at least one pet, with nearly
nine million dogs and cats kept as pets.
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A trend towards pet humanisation has encouraged households to increase their
expenditure on their pets over the past five years, purchasing goods such as
human-grade pet food, designer outfits, harnesses and toys. Health and wellness
trends have affected Australia's increasingly pampered pet population, with owners
taking a more holistic approach to their pets' health and wellbeing. Dietary
supplements and preventative healthcare medications are increasing family pets'
life expectancies and contributing to the rise in expenditure per pet.
The Pets and Pet Supplies Retailers industry has responded to these trends by
expanding its range of products and services to benefit from owners' willingness to
pamper their pets. As pet owners seek out premium foods, high-quality pet
accessories and specialist pet care advice, they are increasingly choosing specialty
pet care retailers that are leveraging trends favouring one-stop shopping
experiences. This has helped specialty pet care retailers gain ground in the wider
pet care sector. In the wake of the COVID-19 pandemic and its associated lockdown
and social distancing measures, industry operators have rolled out new zero
contact click and collect and home delivery options to retain their customer base.
Petbarn has recently teamed up with the ride-sharing platform Uber to offer same-
day delivery options. These developments have contributed to the industry's healthy
performance over the past five years. Industry revenue is expected to grow at an
annualised 3.4% over the five years through 2020-21, to $2.9 billion. This trend
includes an anticipated increase of 3.9% in the current year, as the recent rise in pet
ownership following the COVID-19 outbreak is expected to support strong demand
for pet care supplies. During the initial lockdown period, many house-bound
consumers purchased new toys or accessories for their pets as a result of spending
more time with them. Fears with regards to the potential spread of zoonotic
diseases saw other consumers increase their expenditure on healthcare products
to keep their pets healthy. Many of these developments are expected to remain in
play over 2020-21, supporting industry growth.
Industry profitability has fallen despite the industry's revenue growth over the past
five years, as competition for regular consumer attendance has increased. Rising
price competition from rival online pet stores offering regular discounts on a
growing array of pet care items has added to profit margin pressures. However,
greater consumer willingness to purchase premium pet products has somewhat
offset these pressures and supported margins.
Lifestyle choices
High-density urban living has continued to rise in popularity over
the past five years, constraining growth in pet numbers as
households have increasingly moved into smaller apartments.
This trend towards inner-urban living has led to a growing preference for smaller
pets, including small dogs, cats, fish and birds. Reptiles are also becoming popular
as pets, partly due to their small size and legislation that allows some types of
reptiles to be kept as pets without a licence. Pet humanisation trends and advances
in animal healthcare products that keep fleas and ticks at bay are influencing
lifestyle choices, with a growing number of pets now being kept mainly indoors.
This trend has meant that, despite urbanisation trends, the number of small dogs
kept as pets has risen.
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Households are increasingly acquiring pets from other sources, with public
backlash against puppy farms affecting purchases of live pets from pet stores. A
growing number of consumers are instead opting to acquire pets from more
socially conscious locations, such as animal shelters, with many pet stores now
offering adoption services in conjunction with local animal rescue organisations. At
the other end of the price spectrum, pet owners are also increasingly relying on
professional breeders as pet ownership has become more premium. Pet adoptions
have undergone an unprecedented spike following governments introducing
lockdown measures in March 2020, with stay-at-home households looking for
quarantine companionship.
Premiumisation
With human health concerns spilling over to the pet food market, pet
owners have increasingly worried about their pets' food.
This trend has driven demand growth for diet, organic and healthy pet food,
including grain-free and non-GMO food products. Upstream manufacturers have
fostered this trend by offering an increasing array of premium pet foods, such as
fortified foods and pet foods targeted at specific health conditions. Attempts to
segment the pet food market with products designed to cater for particular life
stages have also boosted pet food sales. These trends have driven industry revenue
growth over the past five years.
Pet owners' willingness to spend on pet-related accessories and services has also
boosted industry growth over the past five years. Owners have been increasingly
spoiling their pets, rewarding animals with treats such as special foods, toys,
accessories and grooming services. Dog and cat clothing have grown more popular,
including designer lines and seasonal costumes for Halloween and Christmas.
Elaborate cat accessories, such as water fountains and deluxe scratching posts,
have also gained popularity. In particular, empty-nest baby boomers and millennial
consumers are increasingly spoiling their pets. This indulgent spending is also
serving to drive industry revenue growth, as consumers are spending more money
per pet.
Consolidation trends
Despite healthy revenue growth, the industry has undergone
consolidation over the past five years, with several small-scale
operators exiting the industry.
Others have been acquired by the larger players keen to capitalise on the industry's
fragmented nature. Rising online competition has also contributed to the demise of
several industry operators. However, online retailers remain constrained by
consumers' uncertainty toward purchasing pet food online, with fewer than 10% of
pet owners regularly using the internet to purchase pet food.
While industry enterprise numbers have declined over the past five years,
establishment numbers have increased. Greencross, owner of the Petbarn and City
Farmers brands, has long-term goals for a retail network of 350 stores, alongside
300 vet clinics, a significant proportion of which will be co-located. The rise in
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establishment numbers has contributed to an increase in the industry's headcount,
with employment numbers growing over the past five years.
Historical Performance Data
Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m)
2012–13 1,780 352 1,821 800 6,493 N/A N/A 216 N/A
2013–14 1,917 377 1,859 791 6,608 N/A N/A 230 N/A
2014–15 2,153 389 1,896 782 6,873 N/A N/A 248 N/A
2015–16 2,484 446 1,913 780 6,986 N/A N/A 276 N/A
2016–17 2,518 441 1,930 781 6,995 N/A N/A 282 N/A
2017–18 2,555 450 1,971 771 7,284 N/A N/A 286 N/A
2018–19 2,642 479 2,001 784 7,421 N/A N/A 299 N/A
2019–20 2,830 477 1,975 779 7,233 N/A N/A 293 N/A
2020–21 2,941 483 1,953 772 7,125 N/A N/A 292 N/A
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Industry Outlook
Outlook Operating conditions for firms in the Pets and Pet Supplies Retailers
industry are anticipated to become more challenging over the next
five years.
While spending on pets is projected
to increase in line with ongoing
humanisation trends, competition is
also forecast to intensify as a
growing number of channels cater to
Australia's increasingly indulged
pets. For example, veterinary clinics
will likely seek to cement their
position as a destination for high-
quality pet food and healthcare
products. Having lost ground to
specialty pet retailers over the past
five years, supermarkets are
projected to fight back with
expanded mass-premium pet food
ranges and click-and-collect delivery
options. Competitive pressures are
also projected to intensify following
the recent entry of Amazon into the Australian pet-care market. Amazon launched
its Pet Supplies category in the Australian market in September 2018 and had over
100,000 products on offer as at October 2020, including pet foods, litter supplies,
toys, grooming products, pet beds, bird cages, reptile & amphibian supplies, and fish
tank supplies. Amazon is one of the dominant players in the online pet-care market
in the United States, generating over US$1.0 billion in pet food sales alone in 2018.
Due to increasing competition, many specialist pet retailers will likely struggle to
differentiate themselves from their competitors over the next five years.
Consequently, small specialist pet retailers are forecast to decline in prominence
over the period, with industry enterprise numbers continuing to fall. The remaining
players are anticipated to shift toward large-format retail centres and category killer
superstores as they seek to leverage economies of scale to fend off competition
from supermarkets. Many of these superstores are projected to employ greater
numbers of staff, including vets, groomers and staff with specialist animal
knowledge. This trend is forecast to contribute to an increase in both industry
employment and total wage payments over the next five years, despite a projected
fall in enterprise numbers. Other operators are forecast to co-locate with veterinary
clinics, thereby offering a convenient option for pet owners to purchase goods
before or after their veterinary appointment.
Ongoing pet wellbeing and premiumisation trends are forecast to provide some
opportunities for industry growth, as will associated pet care services such as
instore grooming, puppy schools and expert advice. Some operators will likely
pursue an omni-channel approach and incorporate ecommerce channels, complete
with subscription-based models, home deliveries and click-and-collect options. To
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this end, industry players will likely invest in new IT platforms, including digital
online booking platforms.
Industry revenue is forecast to grow at an annualised 3.0% over the five years
through 2025-26, to $3.4 billion. In addition, industry profit margins are projected to
rise over the next five years as larger-scale pet superstores benefit from economies
of scale and a greater reliance on both exclusive and private-label products.
However, continued price-based competition is anticipated to limit the rise in
industry profitability over the period.
Changing pet ownership trends
Pet ownership trends are forecast to continue gradually changing over the next five
years. Social factors will contribute to this shift, as single-occupant households
become more common due to higher divorce rates, the ageing population and
people marrying later in life. As pets can provide companionship to people living
alone, the percentage of households owning a pet is projected to increase.
Ongoing urbanisation is also forecast to shape future pet ownership trends over the
next five years. As Australians increasingly live in small units and high-rise
apartments, the number of pet fish, birds and cats is projected to increase as inner-
city dwellers seek low-maintenance pets that do not require a backyard. Consumers
are also anticipated to increasingly favour smaller dog breeds as owners seek to
downsize both their living space and pets. Furthermore, smaller breeds tend to live
longer.
Humanisation trends
Ongoing humanisation trends are anticipated to shape the wider
pet-care sector over the next five years.
Recently enacted animal welfare legislation in the ACT, which sets to recognise
animals as sentient beings that can feel and perceive the world, is indicative of
these trends. This new animal sentience law represents an Australian first.
A rise in pet ownership is anticipated to encourage greater overall investment in pet
food, accessories and pet-care services. Consumers' increased spending power is
forecast to partly fuel this trend. However, the growing humanisation of pets will
likely be the major reason for an increase in spending, as they are increasingly
being considered family members. Consequently, many pet owners are projected to
spend more on pet services to guarantee that their pets are provided with the best
care. This consumer behaviour is also anticipated to extend to higher margin
premium and specialty pet food. Gourmet pet foods designed to appeal to human
tastes are forecast to become more popular over the next five years, as are high
nutrition, science-based and fortified foods. In addition, pet healthcare products are
projected to be a key growth driver as pet owners increasingly adopt a holistic
attitude to their pets' health and wellbeing. In some instances, larger players may
seek to offer pet insurance. As a result, pet retailers are anticipated to benefit from
higher spending per pet owner over the next five years.
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Performance Outlook Data
Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m)
2021–22 3,017 499 1,969 770 7,260 N/A N/A 298 N/A
2022–23 3,143 518 1,993 768 7,395 N/A N/A 305 N/A
2023–24 3,248 535 2,011 767 7,469 N/A N/A 309 N/A
2024–25 3,328 544 2,013 764 7,479 N/A N/A 311 N/A
2025–26 3,408 561 2,021 761 7,579 N/A N/A 319 N/A
Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS
Pet humanisation and premiumisation trends are driving growth in an otherwise mature
market
The industry is characterised by falling enterprise numbers
Online competition is a growing threat to the industry


Over the past five years, the Pets and Pet Supplies Retailers industry has undergone
substantial consolidation as supermarkets have increased their presence in the
wider pet-care sector, causing many industry retailers to either downsize or exit the
industry. This has been reflected in falling enterprise numbers. Furthermore,
growing accessibility to a wider variety of pet care products and accessories online
has meant items that would regularly sell for higher profit margins are coming
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under pressure. In addition, product innovation has been slow, particularly as many
products are not specific to traditional bricks-and-mortar retailers. Technological
changes have also been slow and have primarily focused on improving operational
efficiencies.
These trends mean that the industry has entered a mature phase. Nonetheless, it is
still recording healthy growth as specialty pet retailers gain ground in the wider pet-
care sector. Many of the larger superstores have expanded their product and
service offering to capture the strong growth occurring in other areas of the wider
pet-care sector, including pet services and veterinary care. These strategies are
driving foot traffic, as is the provision of expert advice and exclusive, premium pet
food brands. The industry's saving grace has been the rise of the pet parent
phenomenon as doting pet owners increasingly grant their four-legged friends
family member status. To this end, they have been prepared to spend higher sums
to ensure their pets' health and wellbeing, including on premium products such as
fortified dog food or matching collar and coat outfits. These trends are expected to
continue over the next five years, helping to sustain industry growth in otherwise
increasingly challenging conditions. Over the 10 years through 2025-26, industry
value added is expected to grow at an annualised 2.3%. This suggests that the
industry is outperforming the wider economy, which is projected to exhibit
annualised growth in GDP of 1.8% over the same period. This suggests that the
industry is outperforming the wider economy.
Growing external competitive pressures are expected to constrain industry growth
over the next five years as a growing number of rival channels seek to cater to
Australia's increasingly indulged pets. Internet-based pet retailers are also expected
to gain further traction in the wider pet-care sector as they successfully cater to
millennial consumers, an increasingly important market segment. Supermarkets are
also expected to fight back, with their own range of premium pet foods, thereby
eroding one of the competitive differentiation points for specialty pet retailers.
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Products and Markets
Supply Chain KEY BUYING INDUSTRIES
1st Tier
Consumers in Australia
KEY SELLING INDUSTRIES
1st Tier
Prepared Animal and Bird Feed
Manufacturing in Australia
2nd Tier
Meat Processing in Australia
Grain Growing in Australia
Products and
Services


Owning a pet is a significant responsibility and owners can incur
substantial expenses.
Owners need to purchase food to ensure their pets are well fed and looked after.
Owners have also increasingly pampered their pets with accessories and premium
food offerings over the past five years. Pet food remains the largest source of
revenue for the Pets and Pet Supplies Retailers industry, and is expected to
generate over half of industry revenue in 2020-21. In contrast, pet purchases are
anticipated to account for less than 5.0% of industry revenue in the current year, as
purchasing a pet tends to be a one-off expense, rather than an ongoing cost.
Pet food
Pet food is the industry's largest product segment, as all owners
must purchase food to ensure their pets are well fed and looked
after.
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Most pet food sold is processed ready-to-eat kibble, canned food and packed
treats. Pet stores tend to sell specialist pet food, with a focus on healthy balanced
diets. Pet stores stock brands including Evo, Innova and Iams. Industry operators
are also offering a growing range of unprocessed food (raw meat or human food)
due to safety and health concerns about pre-manufactured pet food and the desire
to give pets human-grade food.
Premiumisation trends have driven product growth over the past five years as pet
owners have spent more on premium dog and cat food products, including fortified,
all-natural and organic pet food. Upstream manufacturers have made efforts to
segment the market with pet food targeted at different life stages, which has also
supported this segment. Despite these trends, this product segment has decreased
marginally as a share of industry revenue over the past five years, reflecting
stronger growth in pet services.
Pet products and accessories
In addition to food and veterinary services, owners typically need to
buy pet products and accessories.
These products include toys, leads, bowls, grooming items, carriers, homes, kitty
litter, scoopers and litter boxes. Households have spent more on pet products and
toys over the past five years as millennial consumers in particular have sought to
spoil their pets. Typical accessories include clothing, collars and harnesses,
although owners can also purchase designer clothing, water fountains and beds for
pets. Owners are also increasingly celebrating their pets' birthdays and giving pets
presents at Christmas. These trends have supported demand for pet products and
accessories over the past five years. Nonetheless, this segment has declined as a
share of industry revenue over the period as industry operators have faced
increased competition from external rivals. Competition has increased from
operators such as including online pet retailers and discount department stores like
Kmart, which is now stocking an ever increasing range of competitively priced pet
accessories.
Animal healthcare products
Animal healthcare products include various health and wellbeing
products, such as flea and worming treatments, dental and ear
health products, vitamins and supplements, stress and anxiety
treatments, and other dietary products including vet-prescription
diet food.
Rising obesity in cats and dogs is contributing to various health problems, including
diabetes and arthritis. This trend has led to a rise in the number of health products
on offer. Pet humanisation trends, rising pet longevity and the growing number of
pet owners taking a holistic approach to their pets' health have also boosted the
size of this product segment over the past five years. As pampered pets live longer
lives, their owners are increasingly prepared to pay for age-related healthcare
products. However, a growing number of pet owners are now acquiring their animal
healthcare products via a subscription service from a pure-play online pet retailer.
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This development has contributed to the animal healthcare products segment
declining as a share of revenue over the past five years.
Pet services
Pet services are the fastest growing product segment in the
industry, as large retail chains are rolling out an expanding array of
pet-related services as they seek to become one-stop shops for pet
owners.
These services include grooming salons and DIY dog washing facilities, ID tag
engraving facilities, aquarium water testing services and puppy schools. This
product segment has increased as a share of industry revenue over the past five
years.
Pets
Pets represent the industry's smallest product segment.
Buying a pet tends to be a one-off purchase, as opposed to an ongoing expense
associated with an animal's upkeep, health and wellbeing. The controversial nature
of live animal sales by pet stores also constrains sales made through this retail
channel as consumers increasingly opt for pets acquired from more socially
conscious locations, such as animal shelters, or from professional breeders. In
response to this trend, a growing number of pet stores are working in conjunction
with registered animal shelters and charity organisations to bring potential pet
owners and pets together. The proportion of industry revenue derived from pet
sales has fallen over the past five years.
Demand
Determinants
The main demand determinants are income, pet ownership and
trends, lifestyle choices, legislation regarding the ownership of pets
and attitudes towards pets.
The demand for pet food and supplies relies primarily on households owning pets.
Owning a pet, particularly a dog or a cat, can be expensive. During times of
economic booms and when discretionary income is high, households are more
likely to purchase or adopt a pet than during tougher economic times. Discretionary
income levels can also influence the pet food and accessory price points used with
retailers offering a range of products across price levels.
Attitudes towards pets are changing with owners becoming more knowledgeable
about animal welfare. Many are increasingly adopting a more holistic approach to
the health and welfare of their pet. This increases the demand for animal health
products and for healthy pet food, including the growing range of fortified foods
and pet foods targeted at different life stages. Pet humanisation trends which are
resulting in pets being granted the same status as family members are also
influencing demand patterns from the type of pet food demand through to the
purchase of Christmas presents and matching collars and outfits.
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Lifestyles affect the type of pet households have. For example, people that live in
high-rises and small apartments are less likely to own a dog. Similarly, urban
lifestyles can have a positive effect on ownership of smaller animals, such as fish
and cats. The type of pet owned directly affects the types of services and products
demanded by consumers.
Government regulations regarding pet ownership can affect demand. Prospective
owners are required to obtain a licence to own certain types of reptiles. This can
deter a pet purchase. Renting with a pet, as opposed to home owning, can also be
difficult in some states due to tenancy regulations and restrictions.
Major Markets
The largest markets for industry retailers are pet owners. The spending habits of
pet owners is heavily related to lifestyle choices, the level of disposable income and
the time available to spend with a pet.
Pet owners aged 18 to 49
This age cohort covers Generation X, Generation Y and millennial consumers, all of
which have a high propensity to own a pet. With many consumers in this market
segment viewing their pet as a 'fur-baby', this market segment has increased in
relative size as relevant pet owners opt to spend their discretionary incomes on
spoiling their pets. Thus, this market as a proportion of industry revenue has
increased over the past five years.
Pet owners aged 50 to 64
This age group is likely to own a household, which is a typical indicator of high
levels of pet ownership. Pet owners in this market are also likely to be earning the
highest level of income over their lifetime, which accounts for the high proportion of
revenue. The revenue contribution derived from this market segment however, has
fallen over the past five years reflecting stronger growth in other market segments.
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Pet owners aged 65 and over
Pet owners aged 65 and over account for 21.0% of industry revenue. The typical
owner in this market is retired, and so has more time to spend with their pet. As a
result, their spending habits are slightly higher. The revenue contribution of this
market segment has grown slightly over the past five years, due to the increasing
number of baby boomers moving into the age group.
International
Trade
Exports in this industry are Low and Steady
Imports in this industry are Low and Steady
The industry largely consists of services and retail sales, which do not typically
have international trade activities. As a result, international trade is accounted for at
the manufacturing level. The Prepared Animal and Bird Feed Manufacturing
industry has the most relevant trade data, since pet food makes up a large
proportion of the Pets and Pet Supplies Retailers industry revenue. The domestic
market is expected to account for the majority of demand and consumption of
prepared animal and bird feed.
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Business
Locations

Business Concentration in Australia
ACT
NSW
NT
QLD
SA
TAS
VIC
WA
0 20 40 60
Percentage of Industry establishments (%)
Pets and Pet Supplies Retailers in Australia
Source: IBISWorld

The industry's geographic spread is roughly in line with each states' share of pet
and human populations. Pet ownership rates vary by state. Data produced by the
Animal Health Alliance (Pet Ownership in Australia 2013) shows that South
Australia has the highest number of households owning a pet (over 70.0%), with
Western Australia having the lowest pet ownership rate (56.0%). In absolute terms,
however, New South Wales, Victoria and Queensland account for roughly 80.0% of
all pets owned. This suggests the pet population remains in line with the human
population, with the majority living along the eastern seaboard. The proportion of
industry enterprises located in these three states is also in line with their share of
the human and pet populations, with these three states accounting for roughly 80%
of all industry establishments.

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Competitive Landscape
Market Share
Concentration
Concentration in this industry is Low
The industry comprises both the larger pet
superstore chains like Petbarn/City
Farmers and PETstock, alongside an array
of small-scale independent pet stores. The
top two players in the industry account for
just under 40% of industry revenue.
Beyond these two players, enterprises are
mostly small. Other mid-tier chains include
the likes of Pets Domain and Best Friends
although they have less than 80 stores
combined. Overall, the industry is
characterised by its fragmented nature and
low level of market share concentration.
Key Success
Factors
IBISWorld identifies 250 Key Success Factors for a business. The most important for this
industry are:
Proximity to key markets: Pet care retailers that are located close to densely populated
communities can maximise downstream exposure and generate repeat and regular
business.
Experienced work force: Industry operators need to have experienced staff members, as
specialist knowledge about pets and pet products is often required. This factor is
particularly true for pet stores offering pet-care services such as dog grooming or puppy
schools.
Having a wide and expanding product range: Due to the diversity of pet ownership,
industry players need to stock a variety of products at a range of pricepoints to appeal to all
customers.
Access to high quality inputs: In line with premiumisation trends, the quality of products
on offer can provide a point of competitive differentiation, as pet owners have high
expectations and are increasingly buying premium-quality pet food and accessories for their
pets.
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Cost Structure
Benchmarks
Profit
Conflicting trends have influenced industry profit
margins over the past five years. Static pet
ownership numbers and competition from
online retailers and supermarkets have led
traditional retailers to increasingly compete on
price, which has pushed down profit margins.
However, pet humanisation trends and a greater
willingness to buy animal healthcare products
and pet-care services have enabled retailers to
sell higher volumes of premium high-margin pet
accessories and food. Nevertheless, profit has
declined as a share of industry revenue over the
past five years, and is expected to account for
4.4% of revenue in 2020-21.
Wages
As a retail industry, labour costs centre on
providing services to help distribute stock
throughout stores and to inform and persuade
consumers to purchase products. While total
wage payments have risen gradually over the
past five years, wages have fallen as a
proportion of industry revenue, as revenue
growth has outpaced growth in total wage
payments. Wages are expected to account for
9.9% of industry revenue in 2020-21.
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Purchases
Purchases are the industry's largest expense,
mainly due to the cost of purchasing pet food
for sale to customers. Other purchases include
pets, pet accessories, grooming products and
over-the-counter medications and healthcare
products. Due to the industry's structure,
purchase costs have risen in some business
segments over the past five years. For example,
pet food prices have increased significantly.
Animal food manufacturers have faced
significant difficulties over the period, such as
drought and volatile commodity prices, which
has led them to increase prices. Moves to stock
organic or fortified pet food and high-value
accessories have also contributed to purchase
costs rising as a share of industry revenue over
the past five years.
Rent
As traditional retail stores sell their items
through a bricks-and-mortar location, the
industry requires space to store and sell these
items. Despite subdued retail demand over the
past five years, retail property operators have
kept rental rates high. Nevertheless, rent costs
have decreased as a share of industry revenue
over the past five years as industry players have
moved away from small pet shops in high-traffic
pedestrian strips to larger warehouse stores in
comparatively cheaper retail parks.
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Other Costs
Industry firms incur a range of other costs,
including advertising expenditure, which has
increased over the past five years as pet
retailers have sought to encourage consumers
to increase their spend per pet. The industry's
depreciation costs are minimal, which is typical
for a retail industry. However, depreciation costs
have increased as a proportion of industry
revenue over the period as players have rolled
out new store formats and complementary
ecommerce platforms. Other costs also include
insurance and administration expenses.
Collectively, other costs have fallen as a
proportion of industry revenue over the past five
years, reflecting stronger growth in expense
items like purchases.
Basis of
Competition
Competition in this industry is High and Increasing
Pet retailers compete not only against each other, but also against a
variety of external competitors including supermarkets, discount
department stores, butchers, independent vets and vet chains, and
online pet stores.
Thus, the industry is characterised by a high level of competition which has
increased over the past five years, as external competitors have sought to expand
their share of the growing pet-care industry.
Internal competition
Pet retailers compete based on price, product quality and product
range.
Specialist pet stores tend to stock premium pet food brands which are often
deemed to be healthier or of a higher quality relative to those found in supermarket
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aisles. In some instances, pet stores will also stock their own range of private label
products which are used to build brand loyalty. Relative to external competitors,
specialist pets and pet supplies retailers also have access to a greater range of
products and compete based on their range of products. For example, many of the
pet superstores position themselves as a one-stop shop. A growing number of pet
retailers are now offering loyalty schemes to retain and grow their customer base.
External competition
Supermarkets are the largest distribution channel for pet food, and
thus represent the largest external threat to specialty pet stores.
Over the past five years, supermarkets have sought to extend their range of pet-care
products to include more premium food brands, tick and flea products and pet care
accessories from leads to toys.
Industry players are also facing growing external competition from online retailers,
as they also gain traction in the wider pet-care sector. While only a limited number
of consumers presently buy pet food online, a growing number are using the
internet to purchase healthcare products such as over-the-counter parasite
treatments and pet accessories. These developments are expected to continue as
consumers increasingly embrace online mediums. Amazon commenced the sale of
pet products in September 2018.
Veterinarian clinics also retail specialist pet food and animal healthcare products.
These clinics offer competition in the form of specialist knowledge and can
recommend products to a customer with a degree of authority that may be difficult
to match in a small independent pet store. Other retail channels that also sell pet-
care products include discount department stores like Big W and Kmart.
Barriers to Entry Barriers to entry in this industry are Low and Steady
Pets and pet supplies retailers have low
barriers to entry as they do not typically
have high set-up costs. However,
specialist pet food, for example, may be
costlier to stock and more difficult to
source, as it is not as common. While
this is not a significant barrier, it may
make new entrants think twice about
entering the niche market of healthy pet
food, which is a growing area.
The high level of competition that
characterises the industry may also deter potential new entrants. The industry's four
largest players operate just under 430 retail stores between them and command a
significant degree of customer and brand loyalty. Thus, building brand recognition
and developing a loyal customer base can be a significant entry barrier in some
instances. In addition, potential entrants may also have to compete against the
entrenched position of supermarkets as the largest distribution channel for pet-care
Barriers to entry checklist
Competition High
Concentration Low
Life Cycle Stage Mature
Technology Change Medium
Regulation & Policy Light
Industry Assistance None
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products within the wider pet-care sector. The need for a clicks-and-mortar
presence to compete against online pet-care operators like Pet Circle who are also
gaining traction in the wider pet-care sector may deter potential entrants.
Industry
Globalization
Globalization in this industry Low and Increasing
Activities carried out by the industry are at the retail level, and as a result,
companies do not partake in trade activities. Many of the industry's operators are
local independent pet stores operating within a small geographic market. In
addition, even the industry's larger players are domestically-owned. These variables
suggest a low level of globalisation. Nonetheless, this degree of globalisation is
gradually increasing as the likes of Greencross Limited and PETstock rollout their
operations within the nearby New Zealand market. Greencross currently has 44 pet
retail stores in operation in New Zealand under the Animates brand name, alongside
16 Animates Vetcare clinics. In 2018-19 (latest data available) its New Zealand
operations accounted for 12.1% of total company revenue. Rival pet retail company
PETstock launched its New Zealand operations in 2016 and to date has 12 stores in
operation. Industry globalisation has also increased following the purchase of
major player Greencross by US private equity group TPG Capital in February 2019.
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Major Companies


Major Players GREENCROSS PTY LIMITED
Market Share: 25.3%
Greencross Limited became Australia's largest
integrated pet care company following the
$338.0 million merger with Mammoth Pet
Holdings in November 2013. This merger was
followed by the $205.0 million acquisition of
WA-based pet care retailer City Farmers in
July 2014. Greencross itself was acquired by
US private equity firm TPG Capital for $675.0
million in February 2019. Prior to its purchase,
Greencross was Australia's only listed pet
services provider. In 2016, the company had
rejected a $770.0 million takeover offer by private equity companies TPG Capital
and Carlyle Group. TPG Capital had previously owned a stake in Petbarn.
Greencross operates the Greencross Vets network of 149 veterinary practices, and
260 retail outlets under the Petbarn and City Farmer brands in Australia and the
Animates brand in New Zealand. The company has expanded significantly
compared with the 78 vet clinics and 95 retail stores it operated in 2011-12. The
group operates under an integrated pet-care model encompassing veterinary
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services, physical and online pet stores and non-medical companion animal
services.
Prior to its merger with Greencross, Mammoth Pet Holdings was the largest
specialised player in the Pets and Pet Supplies Retailers industry, employing 879
people. In 2006, Mammoth purchased Petbarn Pty Ltd, which had 10 stores at the
time. Petbarn is now the largest specialised pet food and supplies chain in
Australia, operating approximately 187 stores. Several of the City Farmers stores
located on the east coast have been rebranded as Petbarn stores. Currently, 29 City
Farmers stores are in operation on the west coast. At the time of its purchase, the
business had 42 stores and generated roughly $100 million in sales. Shoppers
located on the west coast can now shop online at Petbarn and collect from their
local City Farmers store. Greencross currently has 44 Animates stores in New
Zealand, which are not included in the industry.
Financial performance
Petbarn's sales have increased strongly over the past ten years, reflecting rapid
growth in store numbers as it has entered new geographic markets. The company
entered the Victorian market in 2009-10, South Australia and Tasmania in the
following year, and Western Australia in 2012-13. In 2016-17, the company opened
10 new retail stores (net of closure) in Australia, with a further six Australian stores
opening in 2017-18.
In 2018-19 (latest data available), Greencross generated $948.2 million in revenue,
up from $370.4 million in 2013-14. Overall, Greencross' industry-specific revenue is
expected to rise at an annualised 10.2% over the five years through 2020-21, to
$745.0 million. This represents a significant outperformance of the wider industry
over the same period. This revenue growth can be attributed to the company's
significant expansion over the past five years, with both organic growth and
acquisitions underlying its outperformance of the wider industry. While the
company has expanded its footprint each year, its current focus is on organic
growth. The group's companion animal service business is also driving growth as it
leverages its position as an integrated pet-care company, with the group seeking to
retrofit vet and grooming services into its existing retail stores. Greencross' strategy
is to become an omni-channel pet-care company.
Greencross Limited - industry segment performance
Year Revenue Growth
($m) (% change)
2012-13* 215.0 N/C
2013-14* 265.0 23.3
2014-15 412.1 55.5
2015-16 458.1 11.2
2016-17 505.2 10.3
2017-18 532.3 5.4
2018-19* 624.7 17.4
2019-20* 683.1 9.3
2020-21* 745.0 9.1
Source: Annual Report and IBISWorld
Note: *Estimate
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PETSTOCK PTY LTD
Market Share: 14.3%
First established as the Ballarat Produce and
Merchandise store, PETstock is an Australian
family-owned and -operated pet store
company with a one-stop-shop business
offering. Established in 2002 as a franchise
operation, the company quickly expanded and
was listed in the top 20 fastest growing
franchises in 2013. As at October 2020, the
PETstock network consisted of 171 corporate
and franchised stores in Australia. The
company also operates 51 co-located vet
practices as part of its PETstock VET business offering, which it commenced in
2007. PETstock entered the New Zealand market in June 2015, and currently has 12
retail stores in New Zealand.
In addition to pet foods and products, PETstock outlets provide a range of value-
added services, including pet wash and grooming treatments, dog training courses
and in-house veterinary surgeons. These services have supported the company's
strong growth over the past five years. In April 2016, the company signed a
partnership deal with Sydney pet-sitting start-up Mad Paws. This partnership was
followed by the announcement in November 2017 that the company would be
working towards a joint centre alliance with Apiam Animal Health, whereby several
new FurLife veterinary clinics would be co-located with PETstock retail outlets in
several locations throughout regional and rural Australia. These clinics will include a
24-hour veterinary emergency and referral centre.
Financial performance
PETstock has recorded strong growth over the past five years, with revenue
exceeding the $300.0 million mark in 2018-19, up from $108.5 million in 2013-14.
The company's revenue is expected to rise at an annualised 18.2% over the five
years through 2020-21, to $421.3 million. This result represents an outperformance
of the wider industry over the same period. PETstock's profitability has also trended
upwards over the past five years.
PETstock Pty Ltd - financial performance
Year* Revenue Growth EBIT
($m) (% change) ($m)
2010-11 43.4 17.0 5.8
2011-12 63.3 45.9 6.9
2012-13 82.3 30.0 6.9
2013-14 108.5 31.8 6.3
2014-15 142.0 30.9 7.1
2015-16 182.3 28.3 10.0
2016-17 224.6 23.2 10.9
2017-18 259.3 15.4 10.8
2018-19 309.5 19.4 20.4
2019-20** 380.0 22.8 N/A
2020-21** 421.3 10.9 N/A
Source: Annual Report and IBISWorld
Note: *Year end July **Estimate
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Other Players Besides the two major players, the Pets and Pet Supplies Retailers industry ismostly characterised by small retailers and a few smaller chains. Due to this
structure, competition is often highly localised.
BEST FRIENDS PETS HOLDINGS PTY LIMITED
Market Share: 5.0%
Established in 2007, Best Friends operates 30 Best Friends Pet Care centres located
along the Australian east coast. As with its main rivals, Best Friends supply a range
of pet supplies along with dog grooming services, vet pet clinics and puppy pre-
schools. As part of the growing pet adoption movement, it has teamed up with local
shelters. Relying on the big box pet retail model, its stores average 1,2000 sqm in
size. In July 2012 private equity company The Growth Fund acquired a substantial
shareholding in the company to help facilitate its expansion.
In January 2019 Best Friends acquired the My Pet Warehouse business from The
Trustee for Heon Holdings Unit. Established in June 2009, My Pet Warehouse has
11 pet stores located in Melbourne, Sydney and Brisbane along with one factory
outlet in Perth and a warehouse in Altona which is used for click and collect
purposes. In addition, it operates an online store offering a range of pet supplies,
pet food, accessories and veterinary and prescription animal health products.
Several of its physical stores operate as distribution-equipped stores to support its
online operations, which offer same-day delivery options.
PETS DOMAIN
Market Share: 3.0%
Currently operating 35 mega stores located in Victoria, New South Wales,
Queensland and South Australia, Pets Domain has recently grown in size with the
rollout of new stores via a franchise model. Pets Domain sells a range of feed lines
for small animals, birds, poultry and horses produced by its sister company Natures
Best. It has recently launched an online platform. It also offers a loyalty program.
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Operating Conditions


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Capital Intensity The level of capital intensity is Medium
The Pets and Pet Supplies Retailers industry is
moderately capital-intensive. Most of the
industry's revenue derives from retail sales, so
the industry requires a significant number of
salespeople and employees to organise stock
distribution. Consequently, the industry is
labour-intensive. For every dollar spent on
capital in the current year, an estimated $4.71
is spent on wages.
Capital requirements in this industry include
display and space requirements and cash
processing systems. Thus, capital investment
is focused on fixtures, fittings, display
shelving, cash registers and POS systems.
Computer scanning has also become a
required item to assist with item processing.
Several of the larger players have rolled out
new store formats and invested in
complementary ecommerce platforms to drive
foot traffic over the past five years. This
investment has seen depreciation costs
increase slightly as a proportion of industry
revenue and has contributed to the industry's
moderate capital intensity.
Technology And
Systems
Potential Disruptive Innovation: Factors Driving Threat of Change
Level Factor Disruption Description
Moderate Ease of Entry Potential
A qualitative measure of barriers to entry.
Fewer barriers to entry increases the
likelihood that new entrants can disrupt
incumbents by putting new technologies
to use.
Moderate Rate of Entry Potential
Annualized growth in the number of
enterprises in the industry, ranked against
all other industries. A greater intensity of
companies entering an industry increases
the pool of potential disruptors.
Moderate MarketConcentration Potential
A ranked measure of the largest core
market for the industry. Concentrated core
markets present a low-end market or new
market entry point for disruptive
technologies to capture market share.
Very Low Rate ofInnovation Very Unlikely
A ranked measure for the number of
patents assigned to an industry. A faster
rate of new patent additions to the
industry increases the likelihood of a
disruptive innovation occurring.
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Level Factor Disruption Description
Very Low InnovationConcentration Very Unlikely
A measure for the mix of patent classes
assigned to the industry. A greater
concentration of patents in one area
increases the likelihood of technological
disruption of incumbent operators.
The industry is experiencing a low level of both the rate of new patents and the
concentration of patents in the industry. This creates an environment where the
threat of new technologies driving disruption is low.
Both the ease of entry and the rate of entry in the industry are moderate. While
these factors do not significantly add to the threat of disruptive potential, they do
not detract from it either.
Disruptive technologies are changing the operating landscape of the
Pets and Pet Supplies Retailers industry.
For example, ecommerce platforms are disrupting traditional specialised bricks-
and-mortar stores as consumers continue to conduct an ever-increasing proportion
of their shopping online. In response, industry operators are adopting new digital
technologies to create tailored, personalised customer experiences for their
customer base through their own complementary ecommerce platforms. These
platforms typically incorporate data-driven personalisation and auto-replenishment
programs. Major player Greencross is currently focusing on integrating digital
technologies into its existing offering, including digital assets and data analytics,
and increasing customer engagement with highly personalised offers through
various channels.
Pet humanisation trends are also serving to disrupt the industry as pet owners
demand an ever-increasing array of premium pet food and pet-care items for their
pets, including human-style pet food, memory foam mattresses and seasonal
outfits and costumes. These trends are changing the industry's product profile as
operators increasingly cater to demand for premium pet products.
The level of technology change is Medium
The level of technology and systems change is moderate.
As with other sectors of the retail industry, many operators have invested in
computer scanning cash registers, computerised point-of-sale equipment and
automated inventory systems. These technologies provide retailers with greater
operating efficiencies and inventory control.
In addition, social media platforms are being gradually harnessed to influence
household discretionary expenditure patterns. For example, Petbarn (owned by
Greencross Limited) uses Facebook, Twitter and a website complete with a blog.
Many of these social media platforms target millennial consumers who have a
greater propensity to pamper their pets.
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Over the past five years, the industry has faced rising competition from online pet
food and supplies retailers, many of which have successfully gained market share
in the wider pet-care sector by harnessing consumer desires for convenience. This
has contributed to a growing reliance on subscription-based models with set
reoccurring shipments that see consumers receive a pre-set quantity of food, litter
or healthcare products delivered to their home each month. In response, several of
the industry's larger players are investing in their own ecommerce platforms as they
transition to clicks-and-mortar operations. In some instances, pet retailers have
rolled out click-and-collect options, leveraging their store networks to drive foot
traffic. For example, in February 2017 Greencross launched a click-and collect
service, with the service representing 40% of online sales within the first six months
of its launch with Petbarn now offering a 60-minute click-and-collect service.
Nonetheless, this source of external competition is likely to challenge the industry
over the next five years, especially in view of the recent arrival of Amazon into
Australia.
Other operators have teamed up with other online pet-care service providers to
harness the burgeoning pet-care services sector. For example, Petbarn consumers
can access sitting, walking, pet taxi services and other various pet care services
online through Petcloud. Similarly, PETstock operates a partnership with Sydney pet
sitting start-up Mad Paws, which has been described as an Airbnb-style service for
pets.
Revenue Volatility The level of volatility is Medium
Note: Revenue growth and decline reflective of 5-year annualized trend. Y-axis is in
logarithmic scale. Y-axis crosses at long-run GDP. X-axis crosses at high volatility
threshold.
The Pets and Pet Supplies Retailers industry displays a moderate
level of volatility.
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A considerable proportion of industry revenue is derived from the sale of non-
discretionary pet-care items such as food and healthcare products. With pets
increasingly being viewed as four-legged family members, many pet owners are
prepared to spoil their pets with premium-grade food, treats and toys even during
economic downturns. Nonetheless, industry volatility levels have increased over the
past five years as year-on-year changes in revenue growth have been influenced by
increasing external competitive pressures which are serving to change the
industry's operating environment. The outbreak of COVID-19 in 2019-20 has acted
as another external shock to the industry, leading to a temporary spike in demand
for both pet supplies as Australian households initially sought to shore up pantry
supplies and for pets themselves as some housebound consumers looked to
animals for companionship during lockdown.
Regulation &
Policy
The level of regulation is Light and is Steady
The level of industry regulation is low and steady.
The industry is governed by legislation regarding shop trading hours and public
holidays, or when retailers are allowed to be open. This is not expected to change
markedly over the next five years.
However, parts of the industry may be affected by moves to ban the sale of pets in
pet shops. After a series of delays and a Parliamentary inquiry, Victoria has enacted
the Domestic Animals Amendment (Puppy Farms and Pet Shops) Act 2017. As
from 1 July 2018, pet shops may only sell dogs or cats supplied by registered
animal shelters, pounds or enrolled foster carers. The Act will also see approved
commercial dog breeders limited to a maximum number of 50 fertile female dogs
as from 10 April 2020 in an effort to end puppy farming. This act could inspire other
states to follow suit with similar legislation.
In November 2018, the Federal Government passed the Modern Slavery Act 2018.
The act, which came into force on 1 January 2019, is a new reporting requirement
for larger Australian businesses. Companies that generate an annual consolidated
revenue of at least $100.0 million will have to report on how they act to mitigate the
risks of modern slavery in their operations and supply chains. The first reports will
relate to 2018-19, with most reports being released in 2020. The New South Wales
Government is also considering its own state-based version of the report, which
would make businesses with consolidated annual revenue of at least $50.0 million
have to report. The NSW Modern Slavery Act 2018 was due to come into force on 1
July 2019, but was delayed for further consultation on the day it was set to be
implemented.
In the case of pets and pet supplies retailers, this would mean ensuring that pet
food and pet care items sold are not produced using slave labour. However, few
industry operators generate revenue of more than $100.0 million. Therefore, the
Modern Slavery Act is not expected to have a significant impact on the industry.
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Industry
Assistance
The level of industry assistance is None and is Steady
The industry receives no specific assistance from the government.
However, there are industry associations with the sole aim of representing their
members. For example, the Pet Industry Association of Australia represents a range
of businesses, including pet-care providers, pet supplies companies, groomers and
boarding companies.
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Key Statistics
Industry Data
Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m)
2012–13 1,780 352 1,821 800 6,493 N/A N/A 216 N/A
2013–14 1,917 377 1,859 791 6,608 N/A N/A 230 N/A
2014–15 2,153 389 1,896 782 6,873 N/A N/A 248 N/A
2015–16 2,484 446 1,913 780 6,986 N/A N/A 276 N/A
2016–17 2,518 441 1,930 781 6,995 N/A N/A 282 N/A
2017–18 2,555 450 1,971 771 7,284 N/A N/A 286 N/A
2018–19 2,642 479 2,001 784 7,421 N/A N/A 299 N/A
2019–20 2,830 477 1,975 779 7,233 N/A N/A 293 N/A
2020–21 2,941 483 1,953 772 7,125 N/A N/A 292 N/A
2021–22 3,017 499 1,969 770 7,260 N/A N/A 298 N/A
2022–23 3,143 518 1,993 768 7,395 N/A N/A 305 N/A
2023–24 3,248 535 2,011 767 7,469 N/A N/A 309 N/A
2024–25 3,328 544 2,013 764 7,479 N/A N/A 311 N/A
2025–26 3,408 561 2,021 761 7,579 N/A N/A 319 N/A
Annual Change
Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic
Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2012–13 6.45 7.55 -1 -3 0 N/A N/A 11.0 N/A
2013–14 7.66 7.10 2 -1 2 N/A N/A 6.72 N/A
2014–15 12.3 3.18 2 -1 4 N/A N/A 7.60 N/A
2015–16 15.4 14.8 1 -0 2 N/A N/A 11.4 N/A
2016–17 1.36 -1.22 1 0 0 N/A N/A 2.28 N/A
2017–18 1.47 2.06 2 -1 4 N/A N/A 1.48 N/A
2018–19 3.40 6.49 2 2 2 N/A N/A 4.33 N/A
2019–20 7.09 -0.42 -1 -1 -3 N/A N/A -1.85 N/A
2020–21 3.93 1.25 -1 -1 -1 N/A N/A -0.45 N/A
2021–22 2.57 3.20 1 -0 2 N/A N/A 2.26 N/A
2022–23 4.18 3.87 1 -0 2 N/A N/A 2.27 N/A
2023–24 3.31 3.28 1 -0 1 N/A N/A 1.27 N/A
2024–25 2.47 1.77 0 -0 0 N/A N/A 0.71 N/A
2025–26 2.40 3.01 0 -0 1 N/A N/A 2.40 N/A
Key Ratios
Year IVA/Revenue Imports/Demand Exports/Revenue Revenue per
Employee
Wages/Revenue Employees per
estab.
Average Wage
(%) (%) (%) ($'000) (%)
2012–13 19.8 N/A N/A 274 12.1 3.57 33,190
2013–14 19.7 N/A N/A 290 12.0 3.55 34,806
2014–15 18.1 N/A N/A 313 11.5 3.63 36,010
2015–16 18.0 N/A N/A 356 11.1 3.65 39,465
2016–17 17.5 N/A N/A 360 11.2 3.62 40,315
2017–18 17.6 N/A N/A 351 11.2 3.70 39,292
2018–19 18.1 N/A N/A 356 11.3 3.71 40,237
2019–20 16.9 N/A N/A 391 10.4 3.66 40,523
2020–21 16.4 N/A N/A 413 9.92 3.65 40,954
2021–22 16.5 N/A N/A 416 9.89 3.69 41,102
2022–23 16.5 N/A N/A 425 9.71 3.71 41,271
2023–24 16.5 N/A N/A 435 9.52 3.71 41,384
2024–25 16.4 N/A N/A 445 9.35 3.72 41,623
2025–26 16.5 N/A N/A 450 9.36 3.75 42,064
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Additional Resources
Additional
Resources
Pet Food Industry Association of Australia
http://www.pfiaa.com.au
RSPCA
http://www.rspca.org.au
Pet Industry Association
http://www.piaa.net.au
Animals Australia
http://www.animalsaustralia.org.au
Industry Jargon HUMANISATION
Imbuing pets with human characteristics and thus treating pets in a similar manner to
humans.
KIBBLE
Coarsely ground meal or grain for animal feed.
POINT OF SALE (POS) SYSTEMS
These systems use customised hardware and software to process items to accurately
charge consumers for products.
Glossary Terms BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of depreciation to wages as a proxy for capital
intensity. High capital intensity is more than $0.333 of capital to $1 of labour; medium is
$0.125 to $0.333 of capital to $1 of labour; low is less than $0.125 of capital for every $1 of
labour.
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CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation
using the current year (i.e. year published) as the base year. This removes the impact of
changes in the purchasing power of the dollar, leaving only the 'real' growth or decline in
industry metrics. The inflation adjustments in IBISWorld’s reports are made using the
Australian Bureau of Statistics' implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within Australia, regardless of their country of
origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise
consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single
physical location where business is conducted or where services or industrial operations are
performed. Multiple establishments under common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by Australian companies to customers
abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in
Australia.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is
considered high if the top players account for more than 70% of industry revenue. Medium
is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside the firm (such as commission
income, repair and service income, and rent, leasing and hiring income); and capital work
done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed
tangible assets are excluded.
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INDUSTRY VALUE ADDED (IVA)
The market value of goods and services produced by the industry minus the cost of goods
and services used in production. IVA is also described as the industry's contribution to GDP,
or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to
domestic demand. For exports/revenue: low is less than 5%; medium is 5% to 20%; and high
is more than 20%. Imports/domestic demand: low is less than 5%; medium is 5% to 35%;
and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an
industry's life cycle by considering its growth rate (measured by IVA) compared with GDP;
the growth rate of the number of establishments; the amount of change the industry's
products are undergoing; the rate of technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are
mostly set up by self-employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s
profitability. It is calculated as revenue minus expenses, excluding interest and tax.
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of
the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to
±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
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