2H 2020 Deal Hound – Pet M&A Report

Amid a year that disrupted everything, pet owners and the pet industry appear to be shaking off the habits of “old dogs” and learning “new tricks.” The effects of the COVID-19 pandemic appear to be finally pouring gasoline on the smoldering spark of e-commerce in the pet services space, everywhere from delivery to marketing, challenging pet owners known to be brand- and store-loyal. Unexpected opportunities are emerging in an unfamiliar environment of lockdowns, working from home, automated subscription delivery programs, and what’s possible in same-day large-item delivery. If recent years have leaned into the trend of “humanization of pets” – consumer demands for human-like products for pets – then 2020 may just be the dawn of the “digitization of pets.” It was perhaps only a matter of time for e-commerce to catch up to pets, but COVID made that time now. Coupled with a new reluctance to venture out to shop amid concerns of contagion comes new COVID-inspired demand for more products. At the start of 2020, the biggest drag on the pet services and supply sector was seen as a decline in pet ownership. Younger generations weren’t adopting pets at the rate of older generations, and the number of pets in the U.S. had been expected to decline for years. That changed with months of isolation, working from home, and reduced opportunities to socialize both at work and on the town. “Pandemic pets” became the next big thing. Shelter Animals Count, which manages a database of some 500 pet rescue shelters, reports adoptions jumped 15% in 2020. Shelters in the Washington, D.C., area have reported demand so high they began running out of available pets…