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    Matthew Boyle

    Economic problems take bite out of spending by pet owners

    Liz Harper’s dog once dined on bowls of Mars Inc.’s Royal Canin, tailored to the Boxer breed and packed with the heart-healthy amino acid L-carnitine. She’d wash it down with Bowser Beer, a dog drink brewed from malt barley and salt-free chicken stock. Today, Billie Holiday has to settle for kibble from the local Target store.

    “It’s probably worse than toxic waste, but she loves it,’’ said Harper, a 36-year-old attorney from Pelham, N.Y. “It’s cheap and way easier to buy than anything else. She’s a dog - she eats out of the garbage can and drinks out of the sewer. She doesn’t need organic dog food.’’

    Harper is among a growing number of pet owners who are seeking bargains and shunning more opulent items such as $600 Swarovski crystal dog collars, according to researchers Packaged Facts and Mintel. The $87 billion pet-product market, once deemed recession-proof, is starting to show cracks as owners struggle to make ends meet.

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    Nearly 4 out of 10 US pet owners in a September Packaged Facts survey said they’re spending less on pet products, up from 27 percent in February 2010. Three-quarters of them are looking for deals, particularly on nonfood items like toys. The United States is the world’s largest pet product market, according to Euromonitor International.

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    That has led pet retailers such as PetSmart Inc. to offer promotions to keep customers from defecting to Target, Walmart Stores Inc., or specialty websites like www.wag.com. Discounts caused PetSmart’s profit margins to narrow last quarter for the first time in two years, said David Strasser, an analyst at Janney Montgomery Scott LLC.

    A spokeswoman for PetSmart declined to comment on its discounting practices.

    Petco Animal Supplies Inc., PetSmart’s main competitor, now offers to give $5 back to owners for every $100 they spend under its Pals Rewards loyalty program.

    Some pet food producers have borrowed tactics from human food makers like Kraft Foods Inc., reducing pack sizes to minimize the impact of rising ingredient costs, according to Mintel. Prices for dog and cat food have increased nearly 10 percent since 2006, Linthicum said. Americans’ disposable income has fallen for five months.

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    Pet services are also doling out deals. Leo Sanders, who owns a boarding business in Corning, N.Y., offers a free day of day care for clients buying a full week. “Our industry is not recession-proof - we’re recession flexible,’’ Sanders said. “People will still spend, but instead of frivolous spending on squeakers and rawhide bones, now they are reading labels and making sure it’s a quality product. And they’re asking for discounts more.’’

    Tighter budgets have had a sobering effect on pricey pet apparel, said Joan Volpe, at the Center for Professional Studies at New York’s Fashion Institute of Technology. “There has been a turn to practicality,’’ she said.

    Matthew Boyle writes for Bloomberg News.