General Business

There is a New Generation of Pet Owners But How are Millennials Different?

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Exploring the Hype Behind New Primary Pet Owners: How to Market & Sell to Millennials

A recent tectonic shift has roused curiosity as Millennials supersede the baby boomers as the primary pet owners in the U.S., according to an annual report published by the APPA (American Pet Products Association). The Millennial pet owners are 43 million strong and now comprise 35% of total pet ownership. The exciting announcement was made at the 2017 Global Pet Expo. The statement was an incendiary for questions as the industry prepares itself for the trajectory of millennial pet spending.

A millennial is classified as anyone born between the years 1982 and 2000—currently in the 18 to 34-year-old age group. The U.S. Census Bureau reports that 83.1 million individuals make up this generation, again exceeding boomers by 7.7 million.

Most boomers are headed for retirement. The Golden Generation is spending even more frugally as their 60th birthday approaches or the candles have already been blown out. Millennials contrast the previous generations spending and lifestyle habits in some capitalizing ways. Student loan repayment programs, technology, and societal changes have made the Millennial a different breed of consumer.

What Should Retailers Expect from the New Pet Owners?

Millennials—armed with smartphones—prefer the comfort of swiping and browsing to make their purchases on mobile with 60% of the Millennial population owning a smartphone. Because of this, they are also more likely to do consumer research on products and companies before making purchases. Technology also puts convenience at the forefront of Millennial shopping. Instead of using company websites, the new pet owners prefer crowd-sourced review sites like Yelp and other social media platforms to gain insights on new products. This means a retailer’s internet clout is vital to attract and retain customers. Using CRM software and inbound marketing techniques can save small businesses time and money by using digital advertising and marketing—go to your customers instead of having them come to you.

The Millennial shoppers have also been labeled irrational and experimental by trend analysts. Impulse buying is a standard for the age bracket. Younger consumers have a diverging definition on what is essential with a tendency to view what past generations have deemed as ‘non-essential’ or ‘luxury items’ as non-discretionary products. This reasoning is why coffee retailers have revolutionized the standard price for a cup of coffee.The same is true in the pet industry. Millennial pet owners value pet products and services that enhance their pet’s life and are willing to splurge on things that aren’t necessarily essential.

The generation spends three times more on apparel than any other generation and 64% eat out once a week or more. They are also 52% more likely to make impulsive or pampering purchases. The generation wants uniqueness. They want an experience that can be ‘shared’ over social media. Product purchasing is more about the experience than the actual act of shopping. The implications of this give smaller retail chains an advantage over big-box operations. This means upscale segments of the industry are superior to the MNC counterparts. Boutiques and specialty stores in walkable urban locations are ideal for this younger consumer crowd. A retailer that provides unique products, only sold at that location, has a higher chance of winning over the Millennial consumers that are willing to buy things to spoil their dogs.

Influence on the Pet Industry

Most Millennials view their four-legged pets no differently than they would view two-legged children. Pets are cheaper than human children and this sentiment is reflected in a Suntrust Mortgage Report stated that 42% of Millennials are climbing the property ladder to make room for their pets—over more typical incentives to sign a mortgage like children and marriage.

A Packaged Facts report showed that 82% of Millennials agree that being a pet owner is preparing for a family with 61% stating a ‘portable pet’ was ideal. This makes toy breeds like the French Bulldog, Maltese, and Miniature Poodle the optimal pet for a millennial. This is two-fold from the response of baby boomers. The actual growth in pet ownership is a result of more Millennials too. Consumer Survey data identify 1 in 3 of U.S. pet owners as Millennials, responsible for 43% of pet owner growth between 2007 and 2015.

Not only do Millennials have more pets but they want to give their pets lavish treatment. The same report showed that 76% will binge on products like expensive treats, BPA-free toys, organic food, hypoallergenic food American made & eco-friendly products, and custom beds for their pets. In general, Millennials are more health-conscious. They have higher standards when it comes to making purchases for their pets and are willing to pay more for higher quality products and services.

Diverging Demographics

Also seen in the U.S. Census, Millennials consist of a larger number of non-white individuals with reports of 44.2% comprised of a minority race or other ethnic groups. This number is projected to cumulatively increase between the years 2015 and 2020, compared with a 2% projected increase in non-Hispanics.

The number of pet owners aligns with the spike in population. Growth in pet ownership statistics is mostly coming from Latinos, Asians, and other minority racial groups. Although the majority of dog owners are currently non-Hispanic white, if trends continue as they have in the past five years, this is subject to change.

Men are also more likely to seek out companionship from pets. Surveys found that 71% of men, between the ages of 18 and 34, own dogs compared with the 62% of women.

Marketing to the Millennials

Next year, nation-wide spending power for the Millennials will reach $3.39 trillion. In 2016, over $66.75 billion was spent on pets—an almost 40% increase in spending since 2000, the cutoff point for the generation. This industry growth makes marketing to Millennials a valuable marketing approach.

What do these new pet owners want?

Millennials want to pamper their pets. Meaning high-quality foods with pronounceable ingredients, American-made & eco-friendly products, and services that are mimetic of human services have the highest demand.

The grooming sector has the most room for growth. The expansion of pet grooming salons equipped with spa treatments accounts for this market gap. Since Millennials are viewing their pets as humans, retailers and grooming salons need to design their marketing campaigns with this in mind. Showing customers that you will treat their pets like family—with love and professionalism—is a strong route.

Also, cater to the experience side of your brick-and-mortar features. (Having WiFi is essential!) The majority of Millennial engagement is through mobile, and one in ten pets have their own social media accounts. This means retailers need to find ways for customers to share their shopping experience in your shop. Encourage customers to take pictures of their recently groomed pets and give instructions on how to tag your shop. Set up a selfie-board for customers with a communal hashtag centered around your business.

The more involvement the better.

Trend analysts also suggest thinking outside of the box. Throw events, like dog birthday parties, adoption days, or posing with seasonal figures like Santa Claus to promote your small business. Shop owners also need to look outward into the community to see what their customers are interested in. Having bi-lingual signage, or getting feedback by surveying customers on the types of products they would like to see in stores, can help welcome customers who would otherwise be uninterested. This individualized method does what big-box operations cannot. Being attuned to the community surrounding your pet shop give small businesses an advantage.

Splash and Dash Groomerie & Boutique is leading the pack to provide pet owners with the healthiest and most sought-after options available for all generations’ pets to live long and happy lives.

 

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Understanding the Basics of Small Business Financing

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Evaluate Your Small Business Financing Options With These Five Options

Getting started down the road of owning your small business takes a little risk and a lot of passion. Unfortunately, lenders don’t consider willingness to take a risk and passion as criteria for financing. Small business financing is the traditional pathway for companies to get started or even keep the lights on until profits start rolling in. Even well-established businesses will find themselves in need of working capital to scale their business upward.

Knowing your options is the best place to start when considering small business financing. As with many endeavors, there is a mass of ground to cover before signing the paperwork. Depending on your situation, the nature of your business, and how much money you need, will affect which financing route you’ll want to choose. Only 20% of small business owners actually qualify for a bank loan. Bank loans generally have the best interests rates and terms but are not always a viable option.

This article will break down the alternatives. Here are the top five easiest and strategic small business financing options.

1. Invoice Financing & Online Vending

For small business owners whose cash flow is contingent on customers paying their outstanding invoices should consider invoice financing. This is also a good option for business owners with uncertain credit. Essentially, these outstanding invoices are used as collateral to a lending service provider. Once your customer’s bills are settled you can pay back the lender.

Receiving a short term loan is a debt financing option for those in need of a quick cash supply. Term parameters are between 3 and 18 months with interests rates around 14%. Many choose this route because applying is quick and funds could be issued within days. In 2015, the U.S. Treasury expected that more than 70% of small business would take advantage of online vending.

Many online lenders supply both short term loans and invoice financing. Applying is simple, funds disburse quickly, and data can be integrated into your company’s accounting software.

Online Lenders:

  • LendingTree
  • Prosper
  • Avant
  • Upstart
  • Earnest

2. SBA Loans & Grants

The small business administration is a segment of the government in place to assist small businesses to get loans they typically wouldn’t qualify for. The way it works is the SBA incentivizes lenders to loan money to small businesses. The SBA will guarantee the majority of the loan based on their standards. If a business defaults, the lender doesn’t lose as much. This makes it less risky for lenders. Interest rates are usually between 6 and 13% with terms up to 25 years. The most popular loan program is the 7(a) loan.

The SBA also offers grants to businesses with scientific and research focuses. Federal grant eligibility must meet federal research-and-development goals with potential for commercialization. Branches of the SBA are in place to stimulate economic growth in these areas.

3. Angel Investors & Venture Capitalists

Startups in the process of transitioning ideas to a business plan can utilize small business financing through an angel investor. This process involves pitching your business plan to a potential investor. If the investors are agreeable they will front you the money for ownership equity or convertible debt. Angel investors are often affluent and wealthy individuals willing to risk their own money to launch early-stage businesses.

Venture capital is a similar form of small business financing. An angel investor uses their own money for investment whereas venture capitalists work for firms. This means that venture capitalists can supply larger investment amounts but the capacity of risk will be scrutinized more comprehensively.

4. Business Credit Cards & Lines of Credit

A business credit card is helpful for immediate small purchases. Qualifying is less scrutinizing, special deals on 0% introductory APRs are typical, and high credit limits are enticing reasons to use a business credit card as a method of small business financing. Purchases can automate into accounting software. This makes it easy to separate personal finances from your small business. Credit cards also have bonus rewards and cash back savings. These will add up.

Of course, there are drawbacks. Relying too heavily on credit cards can provoke late payments and overdraft penalties. This will hinder your credit score ever further. Interests rates are around 10 to 22% so if you qualify for a better rate on a loan you might consider this route to finance the bulk of your small business.

Lines of credit work similarly to credit cards. Small business owners are allocated a pool of funds that can be withdrawn from when needed in a revolving line of credit. Interest is only paid on money that is used. Once the lender is paid back, the pool is filled to the original amount. Small business owners with strong credit scores, proven business longevity, and high annual revenue qualify for this opportunity in small business financing.

5. Merchant Cash Advances and 401(k) Loans

A merchant cash advance is a quick but expensive solution in the long-term. Small business owners are advanced a lump sum loan. This is paid back through a percentage of daily credit card sales. Many go this route because there is no penalty when you have slow weeks in profit. Seasonal business can use this when profits are marginal. There is also less paperwork and you can receive funding in a few days. The difficulty with merchant cash advances is that high rates can impact your profits. APRs can be anywhere from 15 to 80%. Consider this option for the short term.

For small business owners ready for the next challenge, using tax-deferred retirement savings as seed money can get things moving. Setting this up involves incorporating and using a 401(k) as a shareholder of the business. All current retirement assets are collected into an account. There is no interest paid but the risk is high since business failure means losing entire life savings. Many entrepreneurs use this funding to buy a franchise, purchase equipment, or construct their storefront.

The Bottom Line

At the heart of entrepreneurialism are risk and potential. Using small business financing is a collaboration of the two. Whether just getting off the ground, waiting on customer invoices, or bouncing back from unforeseen circumstances, using debt financing can keep your business moving forward. The old expression you ‘have to spend money to make money’ rings true.

 

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