May 17, 2008 - As commodity prices have risen across the U.S., pet retailers and manufacturers are finding ways to stay afloat and profitable.  PetSmart, one of the largest pet retailers, has increased the price of Hill's Science Diet dog food by $2 per bag, while manufacturers are creating smaller packages for several of their brands such as Pedigree and Purina.  For the most part, dog owners are brand loyal, because their dog can tell the difference in the foods they're being fed. 

Stores are cutting back on the number of new stores that are being opened.  Since gas prices have also risen, people are becoming more conscious about their spending and trying to save money by reducing the amount of driving necessary, and therefore are doing more shopping at certain stores - meaning, rather than going to a pet store to purchase dog food, people will just go to their local supermarket since they're already shopping there.

For a while, spending in the pet industry has remained unaffected by the state of the economy; however, the inflation of commodities could be the beginning of the pet industry becoming negatively impacted and we could see spending decline for certain pet products.

Source:  "Inflation Gnaws at Pet Food Companies", BusinessWeek - May 13, 2008