The Worst of Times; The Best of Times. Demand for dog boarding—as well as daycare, grooming, and training—was at an all-time low in April 2020 (see accompanying chart). Many facilities permanently closed while other owners lost a lot of sleep. Although the COVID puppies arrived by Christmastime, most of the world was still sheltered at home, so demand in January 2021 was still anemic. But what a difference six months make! Those energetic (and severely matted) Doodles had gone stir crazy and so had their pet parents by mid-June 2021 when the economy had opened up in earnest. And open up it did. As people scheduled grooms, they also went on vacations, enrolled their pups in daycare, and desperately sought training for these poorly socialized new family members. Demand shot to an all-time high the week of June 13, 2021; a roller coaster, indeed. Statisticians would call this June 2021 peak an “outlier.”
The Pretty Darned Good Times. To date, that level of demand has not been seen again. In fact, the following summer peak in 2022 was just 84% (week of June 26, 2022) of that all-time high in 2021. In 2023, it was even lower, at just 73% (weeks of June 18 and June 25, 2023) of peak demand. Statisticians would call this “reversion to the mean.” The rest of us would call it normalizing.
The Bad Time Returns. You might wonder about overall demand during the typical winter doldrums of January and February. Again, we will look at search volume, or interest, relative to the highest point on record (June 2021). Pre-COVID (January 2020), interest in “dog boarding” was 31 out of 100. It fell to its lowest recent level of 24 in January 2021. Interest increased in the following years, reaching 34 in 2022 and 39 in 2023. But we saw a dramatic decline this year (January 2024), with search interest for dog boarding plummeting to 25, just one point better than COVID’s worst level. By the way, January dog boarding searches languished around 25 from about 2010 through 2017. The industry started seeing much more demand in January 2018, in the high- to mid-30s. Therefore, the return to 25 is particularly concerning.
Dog Boarding Search Peaks
Week of 6/13/21: 100%
Week of 6/26/22: 84%
Week of 6/18/23: 73%
Week of 5/19/24: 48%
Note: for 2024, we have not yet met the mid-June peak time of the prior three years, but it looks like the downward trend will continue.
Similar trends are occurring in search volume for “Dog Daycare”, “Dog Training”, and “Dog Grooming.”
Dog Daycare Search Peaks
Week of 6/13/21: 100%
Week of 6/19/22: 86%
Week of 6/4/23: 71%
Week of 5/19/24: 62%
Note: daycare had an earlier peak of 73 the week of 1/8/23.
Dog Training Search Peaks
Week of 2/28/21: 100%
Week of 2/20/22: 77%
Week of 2/19/23: 74%
Week of 2/18/24: 62%
Note: 62 also occurred weeks of 3/24/24 and 5/26/24.
Dog Grooming Search Peaks
Week of 4/4/21: 100%
Week of 7/10/22: 81%
Week of 7/9/23: 77%
Week of 3/3/24: 67%
Note: for 2024, we have not yet met the early July peak time of the prior two years, but it looks like the downward trend will continue.
What Has Caused This? As we analyze data for our clients throughout the country, everyone grew during 2023, but the rate of growth slowed for many, and that is what we clearly see in the Google Trends data above. Simply put, there is less interest in boarding, training, daycare, and grooming than there was in recent years (but have no fear, this is still a growing industry!) Around the office, I call the 2021/2022 peaks the “sugar high” years – they felt great but were not destined to last. Our data suggest that two influences are likely culprits: inflation and reversion to the mean.
- Inflation. Although there are mixed economic signals with decidedly more positives than negatives, the stifling inflation of the last three years tends to be the “loudest” economic factor for consumers. At 7% in 2021, 6.5% in 2022, and 3.4% in 2023, inflation has been well above the target rate of 2% that we’re used to. So, consumers understandably are slower to spend on less-than-necessary services. We’ve also heard many reports that pet parents are doing more price shopping than before. Indeed, the modifiers “cheap” and “affordable” are showing up with increased frequency for “dog boarding” searches. Much of this has manifested in fewer pet nights, if not fewer clients, because of shortened stays.
- Reversion to the Mean. This is just the technical way of saying that things are getting back to normal, returning to the longer-term trend after the sugar-high years. The good news for our industry is that the long-term trend is up! So, there’s no need to panic; we just need to be smart while we deal with the adjustment.
To bolster the fact that the long-term trend is up and we’re experiencing a small correction in demand, Morgan Stanley reports that, whereas spending on pets increased a meteoric 11% during the pandemic, pet spending is expected to continue to grow at a compound annual growth rate of 8% by 2030. That is truly fantastic growth. Further evidence is that the veterinary industry is scrambling to add as many as a third more veterinary schools in coming years to meet both long-term demand and the current shortage of vets.
Competition. Although not a cause of diminished demand for pet facility services, it’s important to talk about competition because it increases supply. This is the last thing you want when demand is waning (i.e., more facilities are supplying services that fewer people are seeking). Competition has picked up with 1) new entrants to the marketplace, 2) many facilities expanding either their existing footprint or building additional facilities, and 3) many competitors spending more on digital advertising than ever before to try to gain market share. Not surprisingly, that additional spending is directed toward Google Ads.
Many of the newest competitors jumped in because they saw dollar signs and didn’t realize just how hard this industry can be. Some of them won’t make it and will sell at a loss or break even. Indeed, one of our Texas clients just had one competitor shut down completely and another stop providing daycare. Two competitors, gone in a flash! Fortunately, our client is well-run and was there to gather up the spoils. Without naming names, we have also seen a significant uptick in ad spending for boarding by the large dog-walking service, the large pet supplies store, and a couple of the corporate corporate-owned facilities (with a similar pattern for daycare, grooming, and training, where applicable). They are all trying to concentrate market share while they can.
Here are two examples of 1) year-over-year competition increases and 2) month-over-month increases.
Philadelphia Dog Training Example: Year-Over-Year Increase in Competitors
Virginia Dog Boarding Example: Month-Over-Month Increase in Competitors
The Strong Will Survive. And Thrive! Everyone who has been in business for a while understands that conditions cycle up and down, and there are opportunities in both halves of the cycle. You just need to be efficient and smart.
1. First and foremost, run the business for profitability and excellent operational efficiency – always! Be very careful about carrying extra staff, your largest expense.
2. Be efficient with your marketing spend. Engage only in strategies and tactics that demonstrably work and are measurable. Without question, the most effective and efficient approach today is using pay-per-click advertising, primarily with Google. In most cases, so-called “branding” opportunities like billboards, magazines, TV, and radio are neither measurable nor worth it. Even organic social media, if you are paying an outside firm, is often not worth it. The key with social media is to manage the posting and engagement in-house and let a digital marketing company handle the advertising.
3. Be aggressive and focus on gaining market share. You have many advantages over the apps and big boxes; capitalize on them!
4. Upgrade your client base, if possible, with a heavier focus on clients with more disposable income.
5. Engage in defensive advertising to maintain your existing market share. Our data show that some of your existing clients are still searching “dog boarding near me” even though they’ve been to you before with satisfaction. The moment they make such a search, you are at risk of losing them forever. It is wise, therefore, to not focus only on the vaunted new client; some of your existing clients are actually “new” if you have retained them while they are casually searching.
6. We are able to see how many phone calls from web leads are answered/unanswered, their duration, which campaigns they derived from, and which keywords were searched. It is painful to see/hear how many calls are not answered or messages are not returned, even among some of our most well-run facilities. That needs to change. We have entered a period in which every lead is gold. You pay a lot of money and we invest a lot of energy in these leads; make sure that is not wasted!
7. As much as it’s important to diligently work each and every lead, so too is it important to increase incremental revenue (which is largely profit) with existing clients. You already know this, but sometimes it’s helpful to be reminded!
8. Finally, pause and reflect on the facts to realize that although the post-COVID sugar-high years are over, this is still an excellent industry with good profit margins. Do you know your return on investment for your marketing spending? If not, please reach out to us. We have built an ROI calculator specifically for pet care, informed by actual data from our scores of clients in this industry. We’ll be happy to walk you through it.
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Duane Carey is the founder and lead strategist at IMPACT Marketing & Public Relations, a digital marketing firm that specializes in pet care. With a science background and an MBA in finance, Duane brings a decidedly no-nonsense, bottom-line, and data-driven perspective to marketing for IMPACT’s 50+ pet-care clients throughout the U.S. For an analysis of your digital marketing approach, you can reach him at DCarey@ImpactMarketing.net
