Pampered pets breed a dog-eat-dog market
AS PET ownership rises in Singapore, so has the level of care provided by owners. Dogs and cats have gone beyond being man’s best friend – they are now “furkids” to be pampered, say their “pawrents”.
This comes as the demographics of pet owners evolve, with more newlyweds getting pets in lieu of having children of their own.
Crispian Leong, Pet Lovers Centre’s (PLC) head of marketing, adds that the “double income no kids” population is growing, and many older folks are also finding solace and companionship in pets.
Pet owners have also become more savvy and educated, pet businesses told The Business Times (BT). Gone are the days when owners just pick up a generic bag of food from the nearest pet shop.
“(Owners) know what kind of services they are getting, what kind of products they are buying. They do their research… and they definitely check what’s inside the food before they even feed it,” observes Glen Lee, co-founder of Hamster Hotel, a pet boarding place for hamsters.
The pandemic encouraged this trend, as people had more time to read up on how best to care for their animals, says Evans Sin, chief executive officer of local fresh pet food company PetCubes.
Uneven growth, business challenges
But not all parts of the industry are experiencing the same boom. Growth appears more subdued, though steady, for businesses with physical premises.
Pet grooming, for example, is not extremely profitable, says Desmond Chan, co-founder of pet salon BubblyPetz. The “force-free” salon grooms pets without using cages or rope restraints.
“There’s only a certain amount of pets we can groom in a certain amount of time,” Chan says, citing both space and manpower limitations. Still, demand for pet grooming services has been “pretty consistent”, he adds.
Meanwhile, although cats and dogs are a big market, businesses catering to small animals – such as rabbits, hamsters and guinea pigs – say the market is saturated.
“It is actually a risk if other players want to enter the (small animals market) now,” says Adrian Chua, co-founder of small animal pet boarding business The Fluffy Hut.
Chua’s calculations suggest that there is insufficient demand for another small animal pet boarder: “If we were to open one more unit, we would be subjected to more losses.”
Firms also flagged specific challenges relating to running pet businesses. For PetCubes, the lack of clearly-defined pet food regulations made it hard for the company to find suitable manufacturing facilities in Singapore when it was looking to expand.
Regulators may still have the impression that animal feed is still mainly for livestock and the production process is less stringent, but modern pet food companies such as PetCubes use human-grade ingredients and conduct more stringent food safety tests, says Sin.
Even though the company already ensures that its processes and safety standards comply with Singapore Food Agency guidelines for human food, existing regulations mean that it still cannot use government-owned manufacturing premises that are meant for human food.
Blurring supply chains
For businesses selling pet products, the rise of e-commerce has blurred the lines between manufacturers, distributors and retailers, causing the market to be increasingly fragmented.
It wasn’t always this way, players say.
“In the past, there was this ‘unspoken’ relationship between suppliers and retailers: suppliers would never sell B2C, and retailers would never do B2B,” says Terry Peh, founder and chief executive of Good Dog People.
This sets the pet industry apart from other retail categories such as baby and maternity products or electronics, he added.
Industry players say this relationship held true particularly when pet products were predominantly sold in physical stores.
“Everything is based on relationships,” says Kenneth Koh, chief executive of B2K and Kit Cat International. Retailers, for example, would show support for a distributor by displaying more of their products on the shelves.
However, this relationship has been tested by the rise of e-commerce, which changed how consumers shop for pet supplies.
Digitalisation in the industry was further accelerated during the Covid-19 pandemic when safe distancing measures and shutdowns made shopping offline more challenging.
This led consumers to not only stock up on essentials such as toilet paper and groceries, but also pet supplies.
Online pet store Kohepets, which started out targeting the high-end pet market in Singapore, experienced "huge growth” in the mass market segment during the pandemic as more consumers went online, said business director Brian Ng.
Social media and online marketplaces such as Amazon, Lazada, and Shopee have also made it easy for anyone to set up a business and market their products, lowering barriers to entry in the pet retail space.
Social media has made it easier for businesses to get eyeballs quickly, says Jonathan Goh, co-founder of boutique pet retailer Gentle Pet Store, which started off as an online-only store in 2016.
Conversely, some retailers have begun acting as “distributors” by going directly to overseas brands to bring in their products.
Meanwhile, online marketplaces have made it easier for distributors and manufacturers to sell directly to potential buyers.
Many of these storefronts are on ShopeeMall or LazMall – which are also home to authorised brand distributors.
Even retailers have entered online marketplaces, despite the risk that this could eat into margins from existing web stores.
Some businesses believe that being present on these marketplaces provide more convenience to pet owners. Pet owners also have peace of mind as some of these platforms guarantee authentic products.
Goh observes that customers tend to use online marketplaces for single-product orders that fall short of pet shops’ minimum order threshold required for free shipping.
To avoid completely cannibalising sales from its web store, Gentle Pet Store does not list its entire catalogue on Shopee.
Singapore's pet population
Dogs, cats and small animals
2018
809,400
2019
820,900
2020
831,000
2021
838,000
2022
843,300
2023*
847,000
Overall sales value (S$M)
BTVisual: Joanna Lum, Hyrie Rahmat
Pet products
Dog and cat food products
Pet care
2018
2019
2020
2021
2022
2023*
205.3
144.6
157.4
167.6
217.6
191.1
171.8
127.0
105.9
148.1
98.7
139.5
26.7
27.8
30.0
31.5
32.7
34.3
Demand for pet products and services has been rising in Singapore, data from market research company Euromonitor shows.
The overall sales value of dog and cat food products is projected to grow to S$167.6 million in 2023 from S$98.7 million in 2018. For pet products, the sales value is expected to increase to S$34.3 million this year from S$26.7 million in 2018.
As for pet care, the overall sales value is tipped to grow to S$217.6 million in 2023 from S$139.5 million in 2018.
The types of goods and services available have also expanded: from “force-free” grooming salons – that do not restrain pets – and boutique pet hotels, to artisanal pet products sourced from South Korea or Australia.
Some businesses have begun offering new approaches to pet food, such as custom meal plans and freshly cooked options.
New players hop in
The growing demand has attracted new players to the market, hoping to get a slice of the pie.
One such business is Licked, which sells frozen "pawpsicles" for dogs. Founder Kelly Chua, who started the business in 2021, tells BT she is positive regarding the pet industry, believing demand will continue to grow and that it is an "extremely profitable" market to be in.
Customers were willing to buy her mini pawpsicles for S$5 a piece during a recent pop-up collaboration with the Museum of Ice Cream. She typically sells these for S$3.30 each.
“I initially told them, ‘I don’t think anybody will buy my ice-cream for S$5’… but actually, there were people who bought more than one,” says Chua.
Legacy players also report higher year-on-year sales and revenue in recent years, especially during the pandemic.
BubblyPetz’s salon at Joo Chiat Road, where pets are groomed without restraints or leashes. PHOTO: BUBBLYPETZ
A race to the bottom
Online marketplaces have also fuelled a price war, triggering a race to the bottom between businesses trying to appeal to price-sensitive buyers.
The competition has claimed some victims. Online pet retailer Perromart was known for its low prices – but owner 25 Holdings became insolvent in March this year, nine months after it merged with competitor MOBYSpetshop.com.
Malaysia-based online pet store Petico later bought Perromart’s assets for an undisclosed sum, in a deal excluding Perromart’s liabilities. It plans to retain the Perromart brand in the short term, it told BT.
The decline of Perromart has sparked mixed views on whether the pet industry has hit maturity. While some see it as a one-off event, Good Dog People’s Peh believes there could be more consolidation in the near future.
“A lot of signs are pointing towards consolidation. There are people coming into Singapore to lead the process and start conversations,” Peh adds.
A shift towards brand ownership
As supply chains blur, distributors and retailers are creating own-brand products in a bid to decrease reliance on third parties and diversify revenue streams.
“With partnerships (with suppliers), sometimes there’s a challenge of keeping it going on for as long as possible. There’s always competition to renew the contract,” says Gentle Pet Store’s Goh.
Goh and fellow co-founder Celine Lee thus decided to produce their own brand of pet accessories and treats to “have more say in how our business is being run”.
“If everything else fails, we have our own IP (intellectual property) to rely on,” he adds.
PLC, which also owns house brands like Burp! and Trustie, says selling its own brands and products allows for more control over quality.
“Doing so also gives us better margins whereby we pass on those savings to our customers, leading to better customer experiences in terms of value,” Leong said.
Similarly, pet food distributor B2K manufactures its own range of pet hygiene and food products under brands Absolut Holistic and Kit Cat International.
Growing these brands will be the distributor’s “main focus” in the near future, says Koh, who believes that “sooner or later”, Singapore’s pet product market will become mainly B2C, much like China.
By focusing on brand creation, however, distributors risk getting dropped by existing suppliers, who may worry that there is a conflict of interest, cautions Silversky founder Esmond Low: “They will look for somebody who is going to be dedicated to selling their products.”
That said, Silversky itself has branched out with its own pet treat brand Food for the Good, to build an additional revenue stream.
“But we are selective. We still want to represent international brands and produce brands which fill the gaps where the margin of brand distribution does not allow,” he added.
Lucrative industry?
So is Singapore’s pet industry lucrative? It depends.
“It is profitable, but it depends on how far they want to go and whether S$1,000, S$5,000, S$10,000 or S$20,000 is sufficient enough profit,” says Low.
“If a company is happy with providing niche or artisanal products or services, then that’s fine. But I don’t think there’s scalability in that,” he adds. “It’s not sustainable because even if you have big margins, you still don’t have the volume to be profitable in the long run.”
And while the industry has been “extremely resilient”, not taking a significant hit from Covid-19 and various financial crises, business conditions have taken a turn for the worse this year due to rising logistics, warehousing and labour costs, says Low.
But profits do not seem to be the main motivator for some firms. While investors have been knocking, encouraged by trends abroad, firms have turned them away, preferring to focus on innovation.
Some also believe a genuine passion for animals is the key to longevity.
“I’ve seen a lot of people try and enter, and it’s really, really hard. You have to have the experience and know-how, and… care for pets in order for you to succeed,” says Hamster Hotel’s Lee.
AVS stats (To rename)
Licensed commercial pet boarding facilities
Licensed pet shops in Singapore
2019
2020
2021
2022
Aug 2023
5*
47
56
267
5*
5*
300
339
362
366
* Commercial pet boarding facilities on farmland only. Licensing regime was extended to facilities outside farmlands on Apr 1, 2022.
** Under the previous PADT scheme
Gentle Pet Store’s retail store located at Somme Road. The boutique pet store curates high-quality pet products for owners. PHOTO: GENTLE PET STORE
Pet food business Licked, which sells “pawpsicles” for dogs, is positive regarding the pet industry. PHOTOS: COCOATHEMINIPOODLE ON INSTAGRAM; LICKED
Niche services have recently emerged for small animals, but businesses say the market is saturated. PHOTOS: HAMSTER HOTEL; THE FLUFFY HUT
So for a period of time, it was quite difficult to find space, especially if we wanted to lease a bigger premise.
- Evans Sin, PetCubes CEO
The chain of distribution among pet retailers has blurred over the years. PHOTOS: KOHEPETS; SILVERSKY
Co-founders of Gentle Pet Store Celine Lee (left) and Jonathan Goh (right) PHOTO: GENTLE PET STORE
Some businesses have turned to creating their own brand of food and products to decrease reliance on third parties. PHOTOS: GENTLE PET STORE; SILVERSKY
Manufacturer
Distributor
Retailer
Consumer
“
“
Manufacturer
Distributor
Retailer
Consumer
* Projected
* Projected
THEN
NOW
Singapore's pet population
Dogs, cats and small animals
2018
809,400
2019
820,900
2020
831,000
2021
838,000
2022
843,300
2023*
847,000
* Projected
More service providers
Licensed commercial pet boarding facilities
Licensed pet shops in Singapore
2019
5*
267
2020
5*
300
2021
5*
339
2022
47
362
Aug 2023
56
366
* Commercial pet boarding facilities on farmland only. Licensing regime was extended to facilities outside farmlands on Apr 1, 2022.
2019
2020
2021
2022
*2023
Manufacturer
Distributor
Retailer
Consumer
Manufacturer
Distributor
Retailer
Consumer
AVS-registered businesses which provide pet boarding and training inch up
Source: NParks
Source: Euromonitor
Source: Euromonitor
Source: NParks
Source: Euromonitor
* Projected
Source: Euromonitor