The Consolidation Of Pet Grooming & Boarding Is Imminent: Industry Growth, Trends, And Current Market Opportunities – Industry Updates & Analysis – Strategy

The Consolidation Of Pet Grooming & Boarding Is Imminent: Industry Growth, Trends, And Current Market Opportunities – Industry Updates & Analysis – Strategy

Overview

The pet grooming and boarding industry in the U.S. is
experiencing significant growth due to the increasing number of pet
owners seeking professional services for their beloved companions.
As pets are considered members of the family, owners are investing
more time and money into ensuring their pets are well-groomed and
properly cared for when they are away. With a highly fragmented
market structure and evolving consumer demands, this industry
presents a compelling opportunity for consolidation.

Market Size and Growth

The pet care industry has seen remarkable growth, with Americans
spending $147 billion on their pets in 2023, of which nearly $15
billion was allocated to grooming and boarding services. Pet owners
are increasingly willing to spend money on premium services that
offer convenience, personalized care, and a comfortable environment
for their pets. This substantial market size, combined with a lack
of dominant high market share competitors, coupled with consistent
growth rates, creates an attractive environment for consolidation
strategies.

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Source: IBISWorld | Pet Grooming & Boarding in the US,
August 2024

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Source: IBISWorld | Pet Grooming & Boarding in the US,
August 2024

The industry has seen consistent annual growth rates, reflecting
the increasing number of pet owners and their willingness to spend
on premium services. Key factors contributing to this growth
include the following.

  • Pet Ownership: As of 2023, 66% of U.S.
    households own a pet, recently dropping from a pandemic high of
    70%.

  • Humanization of Pets: Pets are increasingly
    seen as family members, leading to higher expectations for their
    care and comfort during boarding.

  • Urbanization and Travel Trends: With more
    people living in urban areas and traveling for work or leisure, the
    need for reliable pet boarding services has grown.

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Source: Statista

A Fragmented Landscape

The pet grooming and boarding sector is characterized by its
highly fragmented nature, presenting a prime opportunity for
consolidation. This fragmentation is largely due to low barriers to
entry, the localized nature of services, and diverse consumer
preferences. With over 160,000 establishments operating in the
industry, no single player holds more than 5% market share as of
2023.1

The industry can be segmented into various types of
facilities:

  • Traditional Kennels. Basic boarding services
    with individual kennels or runs, typically offering feeding,
    exercise, and basic care.

  • Luxury Pet Resorts. High-end facilities
    offering spacious accommodations, play areas, grooming, and even
    spa services for pets.

  • In-Home Boarding. A more personalized service
    where pets stay in a caretaker’s home, providing a home-like
    environment.

  • Veterinary Clinics. Many veterinary clinics
    offer boarding services, providing peace of mind for pet owners
    concerned about their pet’s health.

Additionally, the industry is marked by high turnover rates,
limited economies of scale for smaller operators, and varied
adoption of modern technologies. These factors contribute to
operational inefficiencies and inconsistent service quality across
the sector.

This fragmented landscape creates significant opportunities for
strategic consolidation, offering the potential for operational
efficiencies, brand building, and technology integration on a
larger scale. There is also significant potential to leverage
economies of scale, standardize operations, and create strong
regional or national brands in a largely unbranded market.

Factors Driving Consolidation
Opportunities

1. Economies of Scale

Consolidated operations can achieve significant cost savings
through:

  • Bulk Purchasing Power to negotiate better
    prices for supplies and access higher-quality products at lower
    costs. This improves service quality and margins across all
    locations.

  • Streamlined Marketing and Administrative
    Functions
    to centralize marketing efforts and back-office
    operations like accounting, HR, and IT support. This reduces
    overhead costs and improves operational efficiency.

  • Optimized Facility Utilization that balances
    capacity across multiple locations and shares specialized
    equipment, maximizing occupancy rates and resource efficiency.

  • Enhanced Bargaining Power to negotiate better
    terms with service providers, landlords, and insurance companies
    due to larger-scale operations.

2. Technology Integration

Many small, independent operators lack the capital to invest in
modern technologies that are crucial. Integrating technology into
the business can streamline operations, improve customer
experience, and increase efficiency.

  • Webcams and Live Streaming allow pet owners to
    check in on their pets remotely, providing peace of mind.

  • Mobile Apps that can be used for booking,
    communication, and real-time updates on pets’ activities and
    well-being.

  • Automated Feeding and Monitoring Systems that
    ensure pets receive consistent care, even in the absence of
    staff.

  • Data-driven decision-making can also help
    facilities optimize operations and personalize services. For
    example, tracking pet preferences, health data, and behavior
    patterns can enable more tailored care and improve customer
    satisfaction.

  • Customer engagement strategies are also
    essential to fostering loyalty and enhancing service visibility.
    Engaging pet owners through various channels, such as social media
    platforms, email newsletters, and loyalty programs can help drive
    differentiation.

3. Service Diversification

Pet boarding facilities can also diversify their offerings to
include additional services.

  • Daycare provides daily care and socialization
    for pets whose owners work long hours.

  • Training focused on behavior and obedience as
    part of the boarding package.

  • Pet Transportation such as pick-up and
    drop-off services to increase convenience for pet owners.

  • Senior Pet specialization that accommodates
    and cares for older pets with specific health needs.

  • Exotic Pet boarding for less common pets, such
    as birds, reptiles, and small mammals.

  • Luxury Market options that expand high-end
    services to attract affluent pet owners willing to pay a premium
    for exclusive care.

4. Geographic Expansion

Consolidation facilitates rapid geographic expansion, allowing
businesses to:

  • Enter New Markets Quickly and acquire
    established businesses in target markets, bypassing the slow
    process of building a customer base from scratch. This allows for
    rapid expansion into prime locations.

  • Establish a Recognizable Brand Across Multiple
    Regions
    to create a unified brand identity and implement
    consistent service standards across a wide geographic area. This
    builds brand recognition and customer trust on a larger scale.

  • Cater to Customers Who Travel Frequently by
    offering consistent services and loyalty programs across multiple
    locations, appealing to pet owners who travel. This encourages
    repeat business and customer loyalty.

  • Optimize Market Coverage by strategically
    acquiring or establishing locations to create a comprehensive
    network in each region. This allows for balanced coverage across
    urban, suburban, and rural areas.

  • Leverage Regional Synergies and share
    resources across nearby locations while developing partnerships
    with regional complementary businesses. This improves operational
    efficiency and can expand service offerings.

5. Quality Control and Standardization

As pet owners become more health-conscious, they seek boarding
facilities that prioritize their pets’ well-being. Larger,
consolidated operations can implement these trends and standardize
the care across their boarding facilities.

  • Nutritional Options with customized meal plans
    and premium pet food offerings.

  • Exercise and Play Programs that provide
    structured activities and socialization opportunities to keep pets
    active and mentally stimulated.

  • Veterinary Care that is on-site or on-call to
    address any health concerns during the boarding period.

Challenges

Despite the growing demand for pet grooming and boarding
services, the industry faces several key challenges. One of the
main challenges is the high level of competition in the
market
, with a large number of grooming salons and
boarding facilities vying for customers. This can make it difficult
for new businesses to establish themselves and attract a loyal
customer base.

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Source: IBISWorld | Pet Grooming & Boarding in the US,
August 2024

Another challenge is the shortage of skilled groomers and pet
care professionals in the industry. Grooming and boarding
facilities require trained staff who are knowledgeable about pet
care, grooming techniques, and animal behavior. As the demand for
these services continues to grow, the industry is facing a shortage
of qualified professionals, making it challenging for businesses to
maintain quality standards and meet customer expectations.

The pet boarding industry is also subject to
regulations which can vary significantly by
region. Compliance with local health and safety standards, zoning
laws, and animal welfare regulations can be complex and costly for
facility operators.

Despite the challenges, the pet grooming and boarding industry
in the U.S. offers numerous opportunities for growth and innovation
as well as opportunities for well-executed consolidation strategies
to create significant value by addressing industry-wide issues.

Conclusion

The pet grooming and boarding industry in the United States
presents a compelling opportunity for consolidation. The fragmented
nature of the market, coupled with increasing demand and evolving
consumer expectations, creates an ideal environment for strategic
acquisitions and mergers. By leveraging economies of scale,
integrating technology, and standardizing operations, consolidated
entities can capture a significant share of this growing market
while improving service quality and operational efficiency.

The pet boarding industry is poised for continued growth, driven
by increasing pet ownership and the evolving expectations of pet
owners. Facilities that adapt to emerging trends, invest in
technology and staff training, and focus on delivering exceptional
care will be well-positioned to thrive in this competitive market.
By addressing challenges and seizing opportunities, the industry
can continue to meet the needs of pet owners and their beloved
companions, while continuing to prosper.

Footnote

1.IBISWorld Pet Grooming & Boarding in the US, August
2024.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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