View from the C-Suite: Why ‘pet parents’ send their kids to doggy daycare

With plans to add several locations next year, Dogtopia is wagging its tail at owners' willingness to invest in pet care.

Dogtopia

There’s a place called Dogtopia, where pet parents’ fur babies attend doggy daycare, are boarded and receive spa-level treatments – which, in the canine world, consists of everything from baths to ear cleanings and nail trims.

The Dogtopia brand name (a portmanteau of the words “dog” and “utopia”) underscores the U.S. pet services company’s commitment to what Canadian CEO Kim Hamm (pictured below) calls “daycare 2.0.”: clean, modern facilities where dogs are in “open play” for eight to ten hours per day, with increased safety standards and greater transparency for worrisome “parents,” bringing a new level of sophistication to the fragmented market of pet care services.

Kim HammTreating pets as children is enough to make some owners and many non-owners’ eyes roll. But Dogtopia has been wagging its tail at the growing market opportunity: pet care is a now a $7 billion industry in Canada, and there’s no sign that it will abate any time soon. It’s likely the reason Roots has partnered with Canada Pooch on a line of dog sweaters and why Apollo Peak has offered non-alcoholic “Zinfantail,” “Chardognay” and “Malbark” wine for dogs for the last few years.

Established in 2002, Dogtopia now has 120 North American locations, making it the category leader. It’s biggest competitor, U.S.-based Camp Bow Wow, has a minimal Canadian presence (a single location in Dartmouth, N.S.) and has focused primarily on the boarding model.

In Canada, the Dogtopia franchise has 14 locations spanning Coquitlam, B.C., to Halifax (as of about a month ago), and it plans to add another 15 locations over the next two years in places like Kitchener, Barrie, Regina and the GTA.

Much of its marketing is based on franchise sales and development, so while it has a “three-pronged” marketing approach consisting of digital, social and guerilla tactics, CEO Hamm says the company’s recent focus has been on redesigning its website, growing its presence at Canadian Franchise Association expos and hiring PR firm Fishman Canada to generate awareness of the brand and the concept of doggy daycare.

Dogtopia has also had success connecting with local communities through its foundation, Fetch It Forward, which funds programs for service dogs for veterans and first responders, youth literacy and employment initiatives for adults with autism.

Under Hamm’s tenure as VP of U.S. operations, the brand grew from 28 to 104 locations. She was appointed Canadian CEO in July, and recently spoke to strategy about what’s behind consumers’ growing puppy love.

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Why do consumers value the services that you offer? 

In some ways, we’re really not reinventing the wheel. We do a lot of things similar to the childcare model, because this is people’s fur babies, so we have the level of transparency, the web cameras in the playroom, the mobile app so they can check in on their dogs; we send them pictures throughout the day, and updates of who they played with; they go home with a report card. These are all things that further enhance the relationship that we have with our pet parents and foster trust as well. Our pet parents – again, just in my vocabulary, they’re not our clients, they’re not our customers, they’re our pet parents – value the value-add features that we can provide being part of an international brand.

What are your growth plans for the Canadian market? 

We see Canada as a fantastic market. The trend in both the U.S. and Canada is the humanization factor of the dog, particularly [within] our core demographic and target [of] female millennials. They are treating dogs as their starter children or foregoing human children and just sticking with furry children, so that’s created an opportunity and need to have trusted support. When you have that kind of connection with your dog, you want to know that your dog is in good care and to trust the people who are looking over your baby.

The same trends around the growth of the pet care sector and the paradigm shift in how we view dogs is definitely as evident in Canada [as it is in the U.S.]. It’s a $7 billion industry in Canada, and we’re seeing the exact same trends. Canada is a little bit behind on the adoption curve, as far as just the benefits and the knowledge of what dog day care is. So that’s where we see a real opportunity for our brand.

What’s driving millennials to view and treat dogs differently than they did before? 

I honestly think that, in today’s digital era, people are lonely. You’ve got millennial [women] who maybe aren’t in relationships and who are wanting to have human – not furry – children but don’t or can’t, so they start nurturing these dogs as their own.

When it comes to spending habits, boomers – who are a secondary market for us – have the discretionary income to be able to bring their dog to daycare. Millennials aren’t quite as established in their careers, but they’re outspending the boomers and any of the other market segment that we have. And they’re making lifestyle decisions based on whether their dog can be a part of their day-to-day life, [such as] where they work [and] vacation, [whether] they choose to rent [or] own a home. They’re making a lot of these foundational decisions based on how the dog can integrate into their life. So I think it’s a combination of the lifestyle that we live, as well as some inherent loneliness at the same time.

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Has the size of the dog-owner market grown?  

We’ve seen about a 10% increase in the last five years, that’s the latest stat that I have. What we have found about this industry, and this applies to both the U.S. and Canada, is that it has been very resilient and recession proof. Even dating back to 2008, the sector was growing anywhere from 5% to 10% per year. People [were] scaling back on some of their other discretionary spending, material possessions, vehicles, homes, even vacations, but they were continuing to invest in the care of their dog.

You’re a Canadian native who returned to Canada after a four-year stint as VP of US operations. What differences have you noticed in the way Canadians and Americans interact with the category or your brand? 

The concept [of dog care] is fairly universal, where if you’re somebody who loves your dog, that knows no boundaries as far as language or country or any cultural nuances. This business is for people who think of their dog as family. Canada is a little bit behind on the adoption curve and general knowledge of what the concept is and daycare in particular. A lot of people understand the search terms of boarding or grooming – daycare is relatively new. I grew up in small-town Manitoba… on a farm, [where] there were 200 people; the dogs were allowed inside on maybe a cold, minus-30 night, and that was about it. So for people in rural markets to understand the concept of what we do, and Canada, not having the population density, there’s a bit of a slower adoption curve. But everything else around the patterns, mindsets, behaviour of how people care and invest in their dog is transferring north of the border and is very evident in Canada.

Do you see an opportunity to expand into branded pet products or retail merchandise? 

We’re always looking. We certainly want to be that one-stop shop from a centralized standpoint, where there’s a convenience factor there for pet parents. Where we want to be a little bit careful is that you can’t be the trusted authority in everything. And we know that we do daycare very well, and we want to continue to really excel in that area.

We’re looking at other retail items down the road and ecommerce, but where I think we’re going to continue to differentiate is just being that brick-and-mortar trusted authority care of your dog. It’s tough for us to compete at this stage with some of the big box retailers, even when it comes to things like purchasing power. So for us, retail and merchandising is just a small component of our lobby right now. And again that’s more of a convenience play as far as value add for pet parents that are coming in. And I think once we have additional scale and locations across Canada and the U.S., we’ll start to explore some of those other strategic revenue channels.

This interview is part of a series for Strategy C-Suite, a weekly email briefing on how Canada’s brand leaders are responding to market challenges and acting on new opportunities. Sign-up for the newsletter here to receive the latest stories directly to your inbox every Tuesday.

The interview has been edited for length and clarity.