Pinching pennies? Not these proud pet parents

[October 29, 2008]  ROSEMONT (AP) -- Emilie Wilson's menagerie includes 15 ferrets, two dogs and four cats, including a hefty gray feline named Tonie Stewart who rides in style inside a pet stroller during family outings.

Wilson spent $300 on Christmas gifts for her brood last year and figures she'll exceed that sum this year. And despite the recession-like economy, the suburban Chicago woman has no plans to scale back pet presents anytime soon.

"I couldn't care less if there's anything under the tree for us, as long as there's something for Tonie," she said.

Retailers may be worrying about the possibility of the worst fourth quarter in generations, but those in the pet products industry are finding themselves in a veritable oasis among much of the gloom of American business. Companies that sell everything from organic dog treats to couture-inspired pet toys say business is up even as economic indicators show shoppers are pinching pennies during one of the worst downturns in decades.

"I think they're buying nice dog collars instead of remodeling their kitchen," said Fiona Tavernier, whose Lollypadoodle business near San Francisco sells wool stuffed dog toys and is going strong.

It may sound counterintuitive -- even to some in the pet industry who say they're surprised business is robust -- but experts say many pet owners are as dedicated to their animals as parents are to children. And that means they're willing to sacrifice on themselves before trimming back on their four-legged friends.

"You know, for some families, the pet comes first," said Carol Perkins, president and co-founder of Harry Barker, a Charleston, S.C.-based pet toy company whose sales are up 40 percent this year. "The dog goes to the vet first and the dog gets organic food. Maybe some people will cut back on a dog bed, but they'll still buy dog treats, toys and collars and leashes."

The American Pet Products Association estimates Americans will spend $43.4 billion this year on their pets -- a figure that includes everything from treats to training -- despite the dramatic slowdown in discretionary spending. That's 26 percent higher than what U.S. consumers spent in 2004, the group said.

Market researcher Euromonitor International, which tracks sales of pet food and accessories but excludes the cost of animals, grooming, training and other expenses, puts this year's animal expenditures at $23.9 billion.

But the group forecasts the segment's sales are still on pace to grow more than 13 percent by 2013.

"It's definitely more resilient than most categories tied to discretionary spending," said Morningstar analyst R.J. Hottovy. "It's one of the last categories (people) cut out of their budget."

Backing that up is a poll earlier this year in ShopSmart, a publication from Consumer Reports, which says female shoppers are more likely to buy cheaper brands of everything from medication to milk, but are digging in their heels when it comes to switching to less-expensive pet food and personal care items.

Some parts of the pet food industry, particularly gourmet and organic pet food, will likely be even more insulated than the sellers of pet carriers, clothing and outdoor gear.

That's because many pet owners, who upgraded their kibble after contaminated pet food killed or sickened thousands of animals last year are leery of switching back, a move that could cause digestive problems.

"Once people have their pets on a certain pet food, there's health risks to switching over to another," Hottovy said. "As soon as they've moved up to the premium brands, they're kind of locked in, so it's hard to trade down."

Still, there are signs that the most extravagant expenses -- such crystal bowls and custom-made pet beds -- may be sidelined amid growing economic uncertainty.

"Gone are the days when people would buy $100 collars and fake fur," said Claire Chew, of Venice, Calif., who founded Luxepets, a line of pet keepsakes.

American Pet Products Association spokeswoman Leah Nelson said the group doesn't release industry sales projections, but that it is "eyeing the future" with caution.

That's why Paige Ormand, the owner of the Doggy Style Pet Shop in Chicago's Wicker Park neighborhood, is ordering more products that are less expensive -- for example, $5 toys instead of $20 models.

But she's not removing expensive gifts from her store shelves, either.

"This industry is way more insulated than other businesses," she said. "But I wouldn't say it's recession proof."

[Associated Press; By ASHLEY M. HEHER]

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