Pet Services Are Big for Small Businesses

CHICAGO (TheStreet) -- If dogs are man's best friend, then it's only right that they get the V.I.P treatment. After all, you're not going to skimp on your closest pal's quality of life, are you?

It's that kind of thinking that has spurred steady growth in the pet industry. According to a recent survey by the American Pet Products Association, 62% of American households own at least one pet. Last year $48 billion was spent on pets, a figure that includes food, veterinarian visits, toys, grooming supplies, doggie day care and other services.

While large chain stores such as PetSmart (Stock Quote: PETM) dominate pet food sales, the growing pet services sector is largely a small-business stronghold. Big-box retailers such as Petco have expanded into grooming services and training classes, but many pet-focused businesses thrive because of their more personal, individualized customer service. And there's only going to be more demand.

In part, increased spending on pet services relates to medical care; the American Pet Products Association estimates that pet owners will spend $12 billion on veterinary care this year, compared with $8 billion five years ago. Vets are offering more specialized medical treatments and owners are willing to pay for it out of pocket. Not long ago, a cancer diagnosis meant a dog or cat was put down; now they can be treated with radiation and chemotherapy.

But even when you separate out medical costs, demand for other services is on the rise. American pet owners are spending more than ever on training, grooming, boarding and pet-sitting, although exact numbers are difficult to pinpoint. According to market research firm Packaged Facts, spending on non-vet services grew an average of 5% a year between 2006 and last year, reaching $6.1 billion. The American Pet Products Association estimates that $3.5 billion was spent on nonmedical services last year, but also expects continued growth in the sector.