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Roundtable: The Pet Industry

Posted: June 21, 2013 2:00 a.m.
Updated: June 21, 2013 2:00 a.m.

Steven Appelbaum, president of Animal Behavioral College, and Bonny Butler, owner of Dogs Etc. discuss the pet industry for Roundtable.

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People think of their pets as members of the family. That thinking has, in part, driven growth in the industry, and today it is a multi-billion dollar business segment. Another factor spurring growth and costs includes advancements in medical treatments for animals.

The SCV Business Journal sat down with local experts from various businesses in the industry and asked them to describe the changes the industry has seen in the past couple decades.

We spoke with Dr. Jaimie Ronchetto, Owner, Cinema Veterinary Centre; Bonny Butler, Owner, Dogs Etc.; and Steven Appelbaum, Founder and President, Animal Behavioral College for a Roundtable discussion.

Please briefly describe your business.

STEVEN APPELBAUM: Animal Behavioral College is a vocational school started in 1998. We have three main programs: dog training, professional grooming and veterinary assistant. Currently, we are going through accreditation. After next two years, we will look at adding a veterinary tech program. It’s all pet business related; it’s been a very good business for us.

BONNY BUTLER: I started my business, Dogs, Etc., in 1987, and I’ve at the same location since I started. I originally went into business a partner who was a dog trainer, and a couple years later she went her separate way. I continued with the pet grooming business, and I realized that the service business was better financially than retail. For the past 15 years, I’ve been grooming dogs with five other groomers.

JAIMIE RONCHETTO: I’m the owner of Cinema Veterinary Centre. We just opened in September 2012. I see dogs, cats and pocket pets. We can do any kind of medicine or surgery with those pets. We also have a board certified surgeon come in if needed.

What kind of growth has the pet care industry seen in the past two decades?

BUTLER: After 25 years, the pet business is really a very growing business. Not only are there more (petowners) per capita, but those people are getting more than one animal. So there is no question that the industry will grow. There are so many tributaries of the industry — veterinary, dog training, grooming, supplies — it goes on and on.

APPELBAUM: I don’t think people realize how big the pet industry is. I like to share a statistic with people because it always gets an eye raised: the pet business — meaning all the veterinary, retail and services — in the United States is bigger than the toy business.

The toy business generated about $20 billion last year. The pet business generated about $59 billion last year. And it’s estimated to do $62 billion this year. In contrast, the pet business generated about $17 billion from 1993-94. The numbers are truly staggering.

We’ve launched two vocational programs: the veterinary assistant program in 2008 and the grooming program in 2010. Both have seen tremendous growth. Even through these have been a very difficult five or six years, the pet business has continued to grow. And I think there are a lot of reasons.

People are getting more animals. In the United States, there are 70 million dogs and 90 million cats, not including pocket pets. And there is tremendous room for growth. There are a lot of people that want to get into this business. It’s not always easy, though I think that’s true for any business, but it is absolutely possible for someone to get into this business right now.

RONCHETTO: It’s not just the number of animals that people have but their views of their pets that accounts for all the growth. They’re not just pets that live outside. They’re family members, they’re furry children. With that, they want the best care possible for every aspect of that pet’s life. People want house calls. It’s about catering to them for a lot more than food and water and the basic necessities. Specialties and niches account fir a lot of the growth.

So we’re not just taking care of our pets, we’re spoiling them as much as we do our children?

RONCHETTO: If human owners are vegetarians, then their dog is going to be vegetarian. There are anti-depressants for dogs. Pet owners can go to a behaviorist that acts much like a doggy psychologist. With grooming, they have nail polishes.

BUTLER: The pet care industry has many categories. There’s daycare, for large breeds and small breeds, geriatrics, playtime and exercise. Then there’s dog training, with dog whisperers, potty training, trick training and guard-dog services. There are boarding services, with rescues, day spas, pet sitting and pet-walking. There are so many categories, and there are people and companies that cover each small part of these sectors. It’s endless.

Has the diversity of the industry caused many niche businesses to spring up?

APPELBAUM: Some of it is baby boomers, but not all of it. You have a large generation that’s now beyond childbearing years. We’ve all read about the empty nesters, and there’s certainly some validity to that, but it transcends that generation.

They may not consider their pets exactly the same as their children, but they certainly look at their pets as part of the family. It’s certainly become more exaggerated now than ever before.

What led to the changing attitudes? Was it business ideas driving consumer behavior, or the other way around?

APPELBAUM: It’s a combination. Until about 1980, most stores small independent stores with that “how much is that doggie in the window” feel. Petco started in 1965, but for the first two decades of the business’ existence, it was a relatively small San Diego-based chain. It only saw significant expansion in the 1980s, and PetSmart was the same.

Retailers tend to react to what they see as market trends as much as they try to drive them, as well.

It’s probably a lot of things. There’s certainly more discretionary income than what existed 40 years ago. People will spend more for their pets now than they ever had before.

Has Santa Clarita fared better than the national industry?

RONCHETTO: Before I opened Cinema Veterinary Centre, I was an associate at other clinics out here. We definitely felt an impact with the economy, and there was definitely a shift. But people still want to take care of those pets, so they’re going to do whatever is necessary. They may want to put things off. But, as far as preventive and wellness care, that need remained. So it’s also creating and providing job growth

APPELBAUM: Animal Behavioral College has students in all 50 states. One of the reasons we came to Santa Clarita was because of the economy. In speaking with people throughout Santa Clarita and the Greater Los Angeles area, people are not inclined to put off essential care, though they might hesitate with some preventative care.

I knew I was in the right business when I was at a vaccination clinic at a park, and there was a line, in the rain, of about 300 people. And as I stood there, it occurred to me that 90 percent of these people would never stand in the rain to get inoculations for themselves, but they would do that for their pets. It’s a funny thing, but people will go out of their way for their pets.

BUTLER: My type of services is much more luxury-oriented, instead of necessary services, like needing shots. When PetSmart first moved in, I got a little nervous because the superstores do put out a lot of small businesses. So I really dug my heels in and said, ‘I’m going to be my own superstore and give the best service I can possibly give.’ So the standards of the service speak. When someone is spending that luxurious income, they need to get what they pay for. That really was the key.

Do you see businesses picking up now?

BUTLER: I have not seen a lot of the recession to tell you the truth. I know there have been some businesses that have popped up in the Santa Clarita Valley over the last 10, 15 years that didn’t make it. I was surprised. I don’t know if it was the service because the product was there.

RONCHETTO: Things are definitely picking up a lot more. In veterinary medicine, it helps that people are learning about pet insurance. So even through the recession, if people had pet insurance, they’d still be much more willing to go for that needed service. They were still able to have services covered. That’s something relatively new.

Is it a cyclical effect? And how has pet care become so much more expensive over the last 20 years?

RONCHETTO: It is cyclical. If they have it already, then they are much more inclined to go ahead with a needed service. As far as the cost of medical care, we’ve had huge advancements in the last 20 years in all of our diagnostics and treatments. Things are becoming much more specialized. Any kind of care that a human can have, as far as specialty care, can now be found on the veterinary end of things, too.

BUTLER: There’s a cure for every malady a dog or cat may have.

RONCHETTO: Practically. If not a cure, there’s still a treatment. We want our pets to be as comfortable as possible, so there are oncologists, cardiologists, neurologists.

Steven, do you have placement numbers for the vet assistant program?

APPELBAUM: We certainly track our graduates. With that program, there’s a component that requires a student to work in the hospital for about 90 hours. And more often than not, they establish a relationship with the hospital. As a result of that, more often than not, they wind up getting hired by that hospital.

Job outlook for veterinary care and lab assistants is supposed to grow 14 percent over the next 10 years, according to the Bureau of Labor. Animal trainers actually have a 23 percent projection for growth.

For a lot of years, the message from animal trainers was to spay and neuter — and that’s certainly valid. Now the message is spay, neuter and train the dog because they’re seeing that a well-trained dog is less likely to end up in a shelter. However, there are more cats that wind up in the shelter every year. There’s a commonly held belief that cats can’t be trained, but they certainly can.

BUTLER: There have been grooming businesses that opened because the business owners love dogs. I’m horrified by that because it really is an art. Groomers think it is so much fun, so they open a business. But owners need to invest a lot into knowing exactly what they’re doing.

APPELBAUM: Training is kind of like playing the piano. Anybody can learn to play the piano. Only a select few can do it really well. That’s something you can’t teach. There’s a certain talent you need to have for animal training. I’ve seen some phenomenal trainers that can’t stay in business. You need to know how to run a business. People are getting into business now with a greater understanding that it needs to be run as a business.

Jaimie, how are you avoiding that pitfall?

RONCHETTO: Less than 1 percent of vet hospitals fail. That’s generally because it’s a needed business. When I started, I had consultants that help startup practices. I really had a good groundwork and felt prepared. I don’t think that’s the case for every doctor that goes into business for themselves.

What kind of financial investment is required to start up a practice?

RONCHETTO: It’s a huge financial obligation. It’s basically the same as buying a house. You have a huge loan, but if you go about things the smart way, it’s certainly scary but doable.

What drives the expense?

RONCHETTO: A huge part of it is the equipment, and the lease for the space. And owning your equipment is a huge cost.

What type of skilled jobs are most in demand in your profession?

RONCHETTO: Pretty much any specialty you’ll find in veterinary medicine is in demand. Right now, they have a need for mixed animal medicine. There are not a lot of students graduating that want to work with large animals, and there are actually vets lacking in those areas.

RONCHETTO: We don’t have any specialists in this valley. It would be really great to have a specialty hospital in Santa Clarita. At some point, if our valley continues to grow as it has been, there will eventually be a need for a local specialty hospital.

Almost everybody out here is in small animal, exotics and some pocket pets. There are some doctors out here who see birds.

BUTLER: I’m always in need of a good groomer. I graduated from the New York School of Dog Grooming back in 1978. I don’t know of any local schools here. The only one that I know of is one in the (San Fernando Valley) that’s a four-week course. Now, there’s not much you can learn in four weeks. And there’s no accreditation for being a dog groomer. They’re trying to get some lobbying for pet-groomers to have a license like they do for hair stylists.

You learn on the job. You have to have a mentor. You have to be in the trenches. It’s absolutely difficult to recruit. Unless you’re ready to mentor someone who’s really ready to learn, you’re not going to find someone like a graduate of a dog grooming school.

APPELBAUM: Accreditation is something that has very little to do with grooming. I mean we’re going through the accreditation process right now, and yes, certainly, they’re looking at the curriculum, but really what they’re looking for is more at finances: whether the departments within the school integrate properly, what we’re telling the students, whether our contracts are in compliance with their regulations. They are all important things, but they are not going to give us more material that we have to add to the grooming program.

Graduates aren’t looking to jump into starting their own business right away. Get experience first.

BUTLER: Once you learn and build up your business, you can buy a house. Groomers make excellent money. If you’re a good groomer, you’ll find the place to plant your feet, and you can be there until you can own a home.

APPELBAUM: It’s actually one of the more popular programs that we offer. It’s particularly popular with us with military families. We have a program through the Department of Defense that gives $4,000 grants to military spouses, which they can then use for certificates programs. We try to push them away from dog training and vet service and toward grooming because it’s most employable after graduation. It’s an economic boom.

Does your school offer a connection with employers?

APPELBAUM: Yes, but it’s an indirect thing. There’s a growing perception, given the phenomenally high costs of higher education, that students may come out of college with a degree but little employability. There’s another choice.

BUTLER: There are endless avenues and venues for educated professionals in this field.

In retail and services, how do independent store prices compare to corporate stores?

BUTLER: We are probably about the same as the big box stores.

APPELBAUM: There’s business out there for everyone. When these bog box stores came out here, everyone thought they were going to kill the small businesses based on price. But for a lot of people, it’s more based on experience and quality of service than price.

There’s a difference in people who know their local market and can act on it. The big chains are never going to completely dominate and take over the small businesses.

The pet business is unique. It is able to survive because they it is so nimble. There are limitations to what the large business model allows.

BUTLER: This is a community full of families and pets. It’s a community of young people, too.

It’s an industry that is often overlooked, but when you look at it, it’s a very big industry.

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