The Inflation Squeeze

Industry

Written by:

Bio not available.

Why DSRs need to help veterinary practices think a little bit differently about their customers and new spending patterns.

We all feel it. If you buy gas, groceries, go out to dinner, check the price of your homeowner’s insurance, or buy a used car, you understand everything is more expensive. In addition, most people’s earnings are not keeping pace with inflation, squeezing discretionary income. The result is, as consumers, we are increasingly cautious.

It all makes sense because over the past two years, borrowing costs have more than doubled, home prices are up over 30% from pre-pandemic prices, student loan repayments have resumed for many, and we face political uncertainty here and around the world. Even though labor markets are steady, and we’re told that The Federal Reserve has achieved a “soft landing” avoiding a recession, many simply don’t believe it.

Inflation is creating challenges in our industry as well. This is still one of the best industries to work in, with 2023 U.S. expenditures coming in at $147 billion in sales per the recent APPA Expenditures Survey. That is expected to grow to $250 billion by 2030, but 2024 is projected to grow at only 2%, or less than the rate of inflation. It seems that same caution has baked itself into our business lives too.

Pet ownership has become more challenging. Recent data shows the cost of pet ownership is up 25% since 2020, and the cost of veterinary care continues to rise. Practice revenue is expected to be up 5% in 2024, while visits, transactions and patient visits are all down. So, it’s mainly driven by price increases, at a time when pet owners can least afford it. And the largest pet owning demographics, millennials and Gen Z, are under the most financial pressure, forcing them to look at options. Keeping them in or bringing them back to the practice is critical.

As DSRs, you can help. Get your customers thinking a little bit differently about their clients, especially with millennials and Gen Z. For these demographics, the market has moved, and it’s less about premium and more about value; so those are the option to stress. They should talk more about prevention, which ultimately keeps costs down, as do wellness plans, which they gravitate toward. And offer spectrum of care options, not just a gold standard of care, showing alignment and respect for customers, and their pets, in challenging financial times.

Reading between the lines

Veterinary practice revenue is expected to be up 5% in 2024, according to industry figures, but it’s mainly driven by price increases.

Visits, transactions and patient visits are all expected to be down.

Photo credit: istockphoto.com/ThinkNeo

>