You can't read or listen to a news report these days without coming across information on the US credit crisis. Financial institutions are closing their doors; those that remain in business are laying off thousands of employees nationwide.
Experts are debating what impact this financial meltdown will have on other markets. To find out if it is affecting the petfood sector, my market research firm asked pet owners if credit problems are impacting their purchasing decisions. Here's what we learned.
Link between housing and petfood?
Of particular interest and concern is the potential affect of the subprime mortgage crisis on other market sectors. Of the 268 pet owners who responded to our survey, 54% indicated they live in housing markets with average growth per annum, i.e., 3% to 5% per year. Another 21% live in booming housing markets, 21% live in flat markets and 4% in declining markets.
We asked all the respondents if the current mortgage situation is affecting the amounts of goods and services they provide for their pets. The results were:
- 50% reported no significant impact;
- 39% reported no change;
- 11% reported a significant change.
Where a significant impact was evident, the consumers reported that changes in their behavior will be mainly influenced by the types of retailers they shop. In addition, these pet owners are becoming more price-sensitive to the products and services they currently purchase.
Brand and retail switching
These data suggest that though minimal, there seems to be some impact on consumer spending and brand consciousness from a retail perspective. Of our survey sample, 42% reported shopping at specialty retailers and 19% at mass and grocery retailers. If this credit crunch continues to spiral, as seems evident with new mortgage lenders reporting fiscal adjustments, pet retailers may experience an uptick in brand and retail switching as consumers seek more deals and fewer premium offerings.