America is trading up

In their new book, Trading Up: The New American Luxury (Portfolio, 2003), Michael Silverstein and Neil Fiske found that today's consumer is willing to spend more, or trade up, for goods and services with higher perceived quality levels.

Bob Levoy

What accounts for this trend? As household income has risen over the past 30 years, Americans simply have more discretionary wealth available for premium goods and services. This has transformed the middle-market American of modest means into a "sophisticated and discerning consumer with high aspirations and substantial buying power and clout."

Of course, it's not news that pet owners are spending more to pamper their pets, too. Although the pet population has grown at a modest 1 percent to 2 percent annually over the past decade, spending on pets has grown at a much faster rate—about 8 percent compound annual growth.

Pets have become humanized in American society, and as a result they have become subject to the same benefits of trading up as human beings, the authors say. Affluent, sophisticated consumers want the best for their pets and seek to make the most of the emotional bond they share.

The authors predict that the pet care category will continue to grow in sales and profits faster than the pet population. As nonfamily and single households increase, it is likely that owners will devote even greater resources to their nonhuman companions, and pets will gain even greater stature as family members.

For veterinarians, this trading-up phenomenon means practices can rely on unsurpassed excellence, not price, to attract and retain clients. It calls for investment in new technology, facilities, specialization, staff training, and premium over-the-counter products.