How Will AI Shape The Future of Petcare?

Issue #107

October 8th, 2024

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Pet Care 2034: The Role of AI and Human Touch in the Future of the Industry

By Shaina Denny, CEO at Dogdrop 

When predicting the next 10 years of the pet care industry, it’s helpful to first reflect on the past decade. We've witnessed transformative shifts in how we care for pets, and AI, along with other emerging technologies, is poised to accelerate these trends rapidly.

The rise of fresh dog food and higher-quality nutrition is one of the most notable developments over the last 10 years. Early pioneers like Just Food For Dogs, which launched in 2010, paved the way. However, it wasn’t until five years later that companies like The Farmer’s Dog and Ollie entered the space, which led to mass consumer adoption. These newer players benefited from the groundwork laid by early entrants, allowing them to scale faster in a still-developing market. Today, fresh dog food is a saturated but well-defined category, with clear market leaders shaping consumer expectations.

One striking parallel between human and pet health trends is how we’ve moved from a focus on nutrition to wellness and socialization, and now we're seeing the rise of mental stimulation as an emergent category. Pets, particularly dogs, require more than just exercise and food—they need environments that promote cognitive engagement, especially as pet parents become more attuned to the emotional and psychological needs of their pets. This shift reflects broader societal trends where mental well-being is considered just as important as physical health.

We tend to shift focus to new trends for two main reasons: either the previous trend becomes fully integrated and accepted as the new standard, or consumers begin to view it as a passing fad and move on to the next innovation.

Looking forward, AI will usher in two primary changes in the pet care industry:

1. Accelerated Speed to Market

AI will lower the barriers for companies—particularly startups—to enter the market. We’ll see an increase in technology-driven solutions, especially in the service and software sectors, where AI can rapidly streamline processes. This will be especially impactful for smaller businesses that lack the capital or human resources typically required to launch at scale. AI can help them quickly develop platforms for pet care management, health tracking, and behavioral analysis, disrupting traditional models that have been slow to adopt cutting-edge technology.

However, while AI will improve efficiencies and speed to market, I don't foresee these advancements translating to reduced costs for the end customer—the dog parent—anytime soon, if ever. Although AI holds the potential to reduce operational expenses, the influx of venture capital and ongoing consolidation in the pet care space will likely prevent these savings from reaching consumers. New entrants in the dog food and treat categories will slow down due to market saturation and the dominance of established leaders, while AI’s cost-saving potential will be absorbed into businesses, enhancing margins and fueling further growth rather than decreasing consumer prices.

Private equity (PE) firms and corporate consolidators are still building their pet care strategies, and over the next 5 to 10 years, we’ll continue to see heavy M&A activity. Many consolidators will be focused on proving their valuations and delivering returns to shareholders, which puts pressure on profitability and market expansion over cost reduction. The global pet care market, projected to grow at a compound annual growth rate (CAGR) of 6.1% from 2022 to 2030, remains a highly attractive target for PE and VC funds. Consequently, any savings generated through AI will likely be reinvested into scaling operations, acquisitions, or improving customer experience—not reducing the price of services.

2. Enhanced Service Offerings

AI’s greatest impact may lie in elevating the quality of pet care services. By automating back-office tasks, lead generation, and customer communications, pet care businesses will be able to focus more on the care itself. Imagine personalized health recommendations based on a pet’s unique needs, powered by machine learning algorithms, or dog daycare centers that leverage AI to monitor dogs' emotional states and interactions, ensuring better socialization experiences. AI will allow pet care providers to offer more tailored, data-driven care, raising customer expectations and standards across the industry.

The pet care service industry is diverse, ranging from large, established players like Petco and PetSmart to emerging franchisors such as Scenthound in grooming and Dogdrop in dog daycare. Alongside these big brands, tens of thousands of independent small-to-medium-sized business (SMB) owners operate across the country. Additionally, there’s a growing gig economy fueled by platforms like Wag! and Rover, where freelance pet care providers build their businesses leveraging these established infrastructures.

The service segment, in particular, is poised for massive growth, with the global pet care services market expected to grow by over 9% annually. As more pet parents demand convenience, personalization, and premium care, service providers will need to continuously innovate to meet these heightened expectations. AI-enabled tools will also allow pet parents to stay more connected to their pets’ daily routines, even when they’re not physically present. From remote feeding systems to interactive AI toys that stimulate pets, we’ll see a surge in products that blend convenience with cognitive stimulation.

Within those two primary changes, we will see a new subset of innovators, indie hackers. One of the most exciting opportunities AI brings is for indie hacker software companies. According to GrowthMentor, an indie hacker “builds and launches a business or product independently, without the support of a large organization or team” and typically requires being profitable immediately. With AI lowering the cost of entry for building highly specialized software, small 1-3 person teams can now create profitable software solutions in the pet care industry. This trend aligns with what we're seeing across the broader SaaS space, where lean, nimble teams are able to develop sophisticated products that previously required much larger teams and budgets.

For example, AI-powered platforms could be designed to manage pet health records, behavioral assessments, or even automated scheduling for daycare and boarding facilities. What’s significant here is that these small software companies don’t necessarily need to sell to larger corporates or consolidators—they have the option to remain independent and profitable or choose to scale at their own pace. This flexibility allows for a more dynamic and innovative ecosystem within pet care, as indie developers focus on solving niche problems and meeting specific customer needs (B2B, B2B2C, or B2C). As the industry continues to grow, these small teams can fill critical gaps, offering technology solutions that enhance both pet care services and the customer experience for pet parents. 

The Bigger Picture

The next decade will see technology become increasingly intertwined with how we nurture and care for our pets. AI and other emerging technologies will drive operational efficiencies and create more personalized experiences for pets, but the economic realities of consolidation and investment pressures will shape how these technologies evolve within the market.

Companies that embrace AI to enhance the quality of care and improve service delivery—rather than simply seeking short-term cost reductions—will emerge as the new leaders in the pet care space. However, the true winners in the industry will be those who balance technology with the personal, human moments of delight that pet parents crave. Ultimately, it’s the brands that can deliver both cutting-edge solutions and heartfelt, personalized (human) experiences that will come out on top.

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