A year after renovating their store as part of our Pet Store Make-over project, Mark and Caroline Janczak have realized many of their hopes for a brighter future. But now they find themselves regrouping to regain the momentum they built in 2000.

By Karen Long MacLeod

One of the best ways to entice customers and boost your business, according to experts, is by redesigning your store.

And that has been the experience of Mark and Caroline Janczak, owners of Critters Pet Shop in St. Charles, Ill.

Annual sales at Critters had been sliding for two years when the Janczaks decided it was time to modernize their full-line independent pet store and make it more customer-friendly.

So the Janczaks undertook an ambitious redesign project-with the help of two well-known industry consultants, one prominent distributor/wholesaler, 20 leading pet supply manufacturers (and their sales representatives), and the staff of PET AGE magazine. They had a budget of $60,500, including their own minimum $10,000 contribution, and received products with a wholesale value of more than $25,000.

We chronicled the entire redesign project in a year-long series of articles that concluded last July. Now that a year has passed, it's time to check back with the Janczaks to see what impact the renovation has had on their business.

In the Beginning

When we first visited Critters, the store looked dated. Its long aisles directed traffic straight to the back of the store. Its fish department, complete with wood paneling, was a throwback to the 1970s. Its beige-and-sky blue color scheme was out of fashion. It was dim and lacked distinctive signage. Even with petting cages in the aisles, its scattered livestock displays didn't motivate enough sales.

Furthermore, Critters' inventory was out of control, with too many items that just didn't sell.

Project consultants Simon Handelsman of Out of Hand Inc. (Newburyport, Mass.) and Mike McCahill of Retail Store Planning (Roseville, Calif.) said the store needed an interior redesign that would emphasize its existing strengths in the fish, dog and small-animal departments. Furthermore, the Janczaks needed to employ better merchandising techniques to use display space more effectively and to make customers excited about shopping there.

Accordingly, Mike proposed a bright, contemporary design based on a racetrack or "buy-way" with angled aisles that turned animal displays into focal points, and modern floor gondolas with lots of easy-to-change end caps.

At the same time, Simon helped the Janczaks refine their product mix and focus on changes that would have the biggest impact on their business.

Over the course of several months, the Janczaks implemented the plan by building a new fish room, a new "Puppy Park" and a "rain forest" for birds; installing new animal enclosures and new fixtures; rearranging and remerchandising departments; installing interior signage with colorful new graphics; and planning a three-week grand re-opening celebration.

Signs of Improvement

With the new design, new merchandising strategies and new promotion plans, the multi-faceted make-over represented the Janczaks' hopes for a brighter future.

And Critters' future does look brighter. The store had gross sales of $654,259 in 2000-a 10.3 percent improvement from gross sales of $593,081 in 1999, when most of the renovation took place, and an 8.6 percent improvement from gross sales of $602,456 in 1998, before the project began.

These figures coincide with the 10 percent increase Simon predicted for a project of this magnitude. (He said a truly successful renovation would increase sales by 20 percent.)

Furthermore, customer counts, indicated by the number of transactions, began to rebound. The store logged 33,373 transactions in 2000, compared with 32,614 in 1999 and 37,461 in 1998.

Critters continues to do two-thirds of its business in five departments: aquatic dry goods (19 percent of volume in 2000, versus 20 percent in 1998); puppies (17 percent, versus 9 percent); dog dry goods (12 percent, versus 11 percent); small-animal dry goods (11 percent, versus 11 percent); and dog food (8 percent, versus 9 percent). Livestock represented a bigger share of sales (32 percent of volume in 2000, versus 24 percent in 1998).

"The renovation had a dramatic effect on Critters' total business, especially in terms of their ability to turn products they had never turned before," said Charlie Lopp, their sales representative from Wilson Pet Supply (Hanover Park, Ill.), the sponsoring distributor for this project.

The Dog Department

One of the goals for Critters' make-over was to capitalize on its dog department by cross-promoting puppies with a deeper inventory of dog supplies and a greater selection of food. As a result of improving its selection and merchandising and raising prices, the store's dog department made big gains. Overall, the department had gross sales of $232,928 in 2000, versus $217,355 in 1999, and $184,240 in 1998. It represented 36 percent of gross sales in 2000, up from 31 percent in 1998.

Their puppy business nearly doubled, with sales of $105,800 in 2000, versus $53,806 in 1998. The Janczaks attribute most of the increase to a wider selection of breeds and higher prices. They found that cocker puppies sell just as fast for $425 now as they did for $395 in 1998. And they recently sold a Brussels Griffon puppy for $1,100. "We wouldn't have tried that two years ago," Caroline said. "We wouldn't have been bold enough to offer unusual breeds, or to charge appropriately."

Dog supplies also improved, with sales of $74,893 in 2000, versus $67,991 in 1998. The department is bigger (more linear shelf space), in a more prominent location in the store, and is better merchandised on fixtures that make product easier to see. "It's a bigger part of the store. This was one of our goals, and ties in with our emphasis on puppies," Mark said.

On the other hand, dog food sales decreased to $52,235 in 2000, versus $62,443 in 1998. Despite the fact that they added more food racks and tweaked their product mix during the make-over, they lost a lot of business after The Iams Co. (Dayton, Ohio) broadened its distribution to include mass market outlets.

"Our Iams sales are half what they were in 1998," Mark said.

In a recent regrouping effort, the Janczaks cut the number of Iams SKUs they carry, and stopped carrying Nutro products-a line they added during the make-over project. "We're devoting less linear feet to pet food, and using the space we freed up for bulky items that do sell-animal bedding, cat litter and litter boxes," Mark said.

"If we hadn't brought in Pro Plan because of the remodel, the Iams losses would have hurt us a lot more," Caroline said. Their Pro Plan sales are still increasing, partly because they feed it to puppies in the store.

The Fish Department

Another important goal for the make-over was to re-energize the stagnating fish department. Since building the new fish room and revamping product displays, Critters has begun to see improvements in its fish department. Overall, the department had gross sales of $154,932 in 2000, versus $128,290 in 1999 and $158,105 in 1998.

Although the staff is changing end caps more regularly, they sometimes use end caps for regular product rather than promotonal merchandise with special sinage.

With their more attractive display tanks and their efforts to keep tanks stocked with a good variety of fish that customers say they want, they significantly boosted their aquatic livestock sales. The freshwater fish business improved 12 percent, with sales of $27,873 in 2000, versus $24,768 in 1998. By May 15 this year, Critters had done $12,999 in freshwater fish, versus $10,391 for the same period last year. On the other hand, their aquarium supply business declined, with sales of $115,454 in 2000, versus $122,412 in 1998. With less display space in the new floor plan, the Janczaks have reduced both their inventory and their selection in the aquatics department-especially in large aquariums. "We don't stock as many large aquariums as we did in 1998. We're still having trouble figuring out how to display large tanks and cages," Caroline said.

The Small-Animal Department

Yet another priority for the make-over was to give the small-animal department more display space in a prime location. After installing modern livestock displays and enlarging and reorganizing the dry-goods area, the Janczaks saw an improvement in Critters' small-animal business. Overall, the department had gross sales of $93,459 in 2000, versus $74,268 in 1999 and $88,117 in 1998.

Sales of small-animal supplies were $70,042 in 2000, versus $65,757 in 1998. Livestock sales were $23,417 in 2000, versus $22,360 in 1998.

The Bird and Reptile Departments

Even though the Janczaks spent a lot of effort and money building a rain forest to make the bird department a focal point, their bird business decreased, with sales of $35,839 in 2000, versus $44,385 in 1998.

"The rain forest hasn't paid for itself," Mark said. "However, sales should improve now that we've found a new supplier for large birds. Birds sell quickly, so it's obvious that there's a demand."

The Janczaks attributed lower bird cage sales to reductions in display space and inventory.

The reptile/amphibian department decreased, with sales of $21,283 in 2000, versus $26,319 in 1998. The Janczaks purposely de-emphasized this department due to low customer demand.

Design Disappointments

On the whole, Mark and Caroline are satisfied with their store's redesign. However, customer traffic doesn't flow the way the experts thought it would. "A lot of people don't move to the right in the pattern that Mike described. A lot of them go through the center," Mark said. That means end caps to the right-many in the aquarium products department-get less exposure than they'd like.

Also, the floor-to-ceiling kiosk in the center of the store poses its share of problems. "It's hard to merchandise so it looks nice, and it blocks the view between the cash register in the front and the fish room in the back. If we're in the fish room, we can't monitor the front of the store," Mark said.

A Slow First Quarter

Despite having achieved most of their sales goals for 2000, Mark and Caroline were concerned that 2001 got off to such a slow start. Sales totaled $219,771 through mid-May, versus $233,920 for the same period in 2000, $198,012 for 1999 and $228,793 for 1998.

"We had high hopes for 2001, since all the construction was over," Mark said. "Last year and into the beginning of this year, we were buying and stocking like normal. We had a good Christmas, and business was decent right after Christmas. Then it was like a faucet turned off. People just stopped coming in. The first three months of the year took us by surprise. April was even with 2000, and May is looking better."

"If we hadn't remodeled, I think we would be out of business now," Caroline said. "Before we remodeled, we were struggling, and the economy was still good. We couldn't have competed, looking like we did, now that the economy is slower."

The Janczaks blame slower-than-expected business on lower Iams sales and the poor economy.

However, they may be misplacing that blame.

"The national average for dog food sales in independent stores is off 25 percent from the year before," said Ken Scott, sales manager for Wilson Pet Supply (Hanover Park, Ill.), the sponsoring distributor for the make-over project. "If Mark's business is down about the same amount, he really shouldn't be that discouraged."

Furthermore, Ken said, "Independents are doing fairly well now-aside from pet food sales. Most of the other categories are growing."

No Time to Coast

Actually, Critters' situation may not be as bleak as Mark and Caroline think. Ken predicted that the store could gross more than $700,000 this year-if the Janczaks act now to rebuild inventory and to implement aggressive advertising and promotion programs.

Like any retail business, Critters needs inventory to drive its numbers. In 2000, when its inventories were consistently high, the store averaged $56,000 in sales per month. Now that the Janczaks have allowed inventories to fall, the store is averaging $51,000 in sales per month-the same as in 1999, when inventory levels were their lowest and construction chaos was its worst.

"In terms of inventory, we aren't back to square one (before the remodel), but we're getting close," Ken said. "When inventory was at its peak in 2000, sales were up 10 percent. That's significant. It shows what a full inventory can do."

"Inventory is something they can fix easily," Ken said. "That's the cheapest part of their business. Mark needs to be at the same level he was at during the remodel, leading up to the grand opening. It would take $10,000 to $15,000."

"When they have product and it is well merchandised, it moves," Charlie said.

In addition, Ken and Charlie agreed, Critters needs powerful advertisements and exciting promotions to bring more customers into the store.

However, Mark has cut back on advertising by eliminating one of the two zones in which the store's cable TV ads run, eliminating ads in the weekly regional paper, and reducing the frequency of ads in the daily regional paper. "It's the quickest, easiest thing to cut. I don't know if that is hurting us," Mark said.

Instead, the Janczaks are putting more energy into direct mailings to existing customers. "So far, it's still trial and error as to what works, even when we target customers carefully," Mark said.

"Last year at this time, Mark had a whole schedule of weekly promotions with reps coming out," Ken said. "Does he have a similar schedule for promotions for this year? You can't coast. You have to keep pushing."

As of mid-May, however, Mark and Caroline had scheduled a dog wash but had not yet planned any special events with manufacturers' representatives or distributors.

What's in store for Critters? Will Mark and Caroline regain the momentum they built in 2000 by rebuilding their inventory and taking an aggressive approach to promotions? Can they boost sales 7 percent this year to hit a sales target of $700,000?

In the future, we will revisit the Janczaks to see how their business is faring. PA

Karen Long MacLeod is editor in chief of PET AGE.

Critters' Sales, by Category