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In the second part of our
year-long pet store make-over, we examine Critters Pet
Shop's strengths and weaknesses--and learn how the owners
can maximize their strengths through a store redesign.
By Karen Long MacLeod
A journey
of a thousand miles begins with a single step.
Earlier this year, the husband-and-wife
team of Mark and Caroline Janczak took that all-important
step by deciding to redesign their store, Critters Pet
Shop Inc. in St. Charles, Ill., to make it more modern,
more customer-friendly and more competitive in a changing
retail marketplace.
Although the full-line independent
store enjoyed double-digit annual sales increases through
most of the decade, its sales in the last two years
have been disappointing. The Janczaks realized it was
time to make some big changes.
When they volunteered to participate
in the PET AGE Pet Store Make-over project, Mark and
Caroline had lots of ambitious ideas for upgrading their
store. They weren't sure where to begin, or which changes
would help their business most.
But they were ready to take the
next important step: creating a strategic plan based
on an honest assessment of their strengths and weaknesses.
To help Mark and Caroline see their
business in a new light, we asked two well-known industry
consultants--Simon Handelsman of Out of Hand Inc. (Newburyport,
Mass.) and Mike McCahill of Retail Store Planning (Roseville,
Calif.)--to tour Critters with us. We asked them to
be brutally honest about what they saw.
If you've read any of their articles
or attended their seminars, you know Mike and Simon
aren't exactly shy about expressing their opinions!
Overall, they said, Critters is
an above-average store that does a great job with livestock.
It has lots of potential--and lots of room for improvement.
In a nutshell, it needs an interior redesign that emphasizes
its existing strengths and makes customers excited about
shopping there.
In this segment of our year-long
series about Critters' redesign, we'll discuss the store's
strengths and weaknesses, and learn how Mark and Caroline
can maximize their core competencies through the course
of this project.
Researching Your Market
Compiling market statistics
and demographics is a good starting point for anyone
developing a strategic plan. Business owners have to
know who their customers are--or will be--and what those
customers expect based on their experiences with other
stores in the area.
Demographics are tangible, measurable
facts that distinguish one group from another. They
encompass gender, age, education, occupation, income,
ethnic background, number of people per household and
children's ages.
Mark and Caroline have owned and
operated Critters since 1988, so they know their market
and their customers: Residents of St. Charles, a picturesque
community 45 miles west of downtown Chicago, are "successful
suburbanites," increasingly upscale, very family-oriented.
These statistics, all from the Chicago
Tribune, substantiate this description:
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Total population of St. Charles:
25,280 (1998 estimate)
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Population by race: 96.2 percent
white
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Median family income: $66,884
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Median home value: $183,309
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Median age: 36.5
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Median years of school completed:
14.3
Mark and Caroline have the advantage
of operating a business in a thriving community where
consumers have ample discretionary funds. But they need
to remember that the people who live in St. Charles
are not the kind of people who will settle for an ordinary
shopping experience.
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| Critters' fish room--complete
with wood framing and trim--lacks pizazz. Mark and
Caroline Janczak want to redo the whole room with
modern, low-maintenance display tanks. |
Evaluating Your Location
We might be tired of hearing
it, but we can't ignore the fact that a good location
helps a business as much as a poor location hurts it.
Critters is located in a 1970s-era
strip center on Main Street in one of St. Charles' three
main business districts. When we toured the store this
past spring, Simon and Mike were concerned that the
center lacked a major draw and that several storefronts
were empty.
However, in a visit at press time,
we discovered that all the storefronts are occupied
and that customer traffic is slightly better. Other
businesses in the center are a grooming shop (two doors
away), a Hallmark card/gift store, a locally owned pharmacy,
an Aldi discount grocery store, a gym with tanning facilities,
a one-hour photo store, a Play It Again Sports store,
a Christian book store, a vacuum store, a martial arts
studio, a quick-copy shop, a barber, a beauty salon,
a dry cleaner, a Chinese restaurant, a futon store and
a liquor store.
Also in the complex, in freestanding
buildings closer to the street, are the local post office,
a sports bar/restaurant and a bank.
Less than two miles away in beautiful
new shopping centers along the community's main growth
corridor are--you guessed it--PetsMart and Petco stores.
With this location, Critters draws
some walk-in business from people visiting neighboring
stores, but doesn't attract many window-shoppers. For
most customers, Critters is a destination stop. Mark
and Caroline need to maintain their visibility through
signage, advertising and promotions.
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Where Critters' Business Comes From
Aquatic dry goods..............................................20%
Dog dry
goods....................................................11%
Dog
food.............................................................11%
Small-animal dry goods.....................................11%
Puppies..................................................................9%
Bird dry
goods.......................................................6%
Aquatic
livestock...................................................5%
Cat
food.................................................................5%
Small
animals........................................................4%
Cat dry
goods........................................................3%
Live
foods...............................................................3%
Reptile/amphibian dry goods...............................3%
Birds........................................................................2%
Reptiles/amphibians.............................................2%
Kittens....................................................................2%
Other.......................................................................3% |
Looking at Your Store
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| Above: Mark and Caroline
Janczak still like this hand-painted mural, but
they will sacrifice it to make room for more wall
displays. |
| Below: Critters' small-animal
department is very strong. Mark and Caroline Janczak
plan to play it up with more display space in the
front of the store. |
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Because they live and breathe
their businesses every day, it's hard for most retailers
to be objective about the condition of their own stores.
"You get used to it," Simon said. "You don't see the
stains on the ceiling tiles. You don't see the fixtures
that are leaning. You don't see the chaos or the confusion
the way your customer sees it."
Critters is clean, but it's dim,
and it lacks distinctive departments and signage. Its
floor plan is based on long, dull aisles. Its fish department,
complete with wood paneling, is a throwback to the 1970s.
Its beige-and-sky blue color scheme is out of fashion.
Even with petting cages in the aisles, its livestock
displays don't motivate enough sales. The store no longer
looks contemporary, and it certainly suffers by comparison
with nearby superstores.
"Basically, it's a 'gray'
store, even though there's a painted mural of fish on
the wall," Simon said. "That mural is [almost] 10 years
old, and anything that's 10 years old is too old in
retailing. The main thing is there's no sense of fun."
Talk about being brutally honest!
"But, remember, [Critters]
is a pretty good store," Simon said. "It's doing more
than $500,000 a year, and it's good in all departments.
I would say it's in the upper one-third of all pet stores
I've seen."
Analyzing Your Sales
All retailers compile sales statistics,
but not all retailers take time to understand what the
numbers mean. To develop a clear understanding of which
departments are performing well and what's really selling,
retailers must analyze their sales, department by department
and product by product.
Fortunately, Critters uses an up-to-date
computer system to track sales in detail. In just a
few minutes, Mark can print a report that breaks down
sales by department (in dollars and in percent of overall
sales), by type of payment (cash, check, credit card)
and by salesperson. He also can generate a report that
details the quantity sold each month of each item in
the store.
Using these kinds of sales reports,
it's easy to see that Critters does two-thirds of its
business in five departments: aquatic dry goods (20
percent); dog dry goods (11 per cent); dog food
(11 percent); small-animal dry goods (11 percent); and
puppies (9 percent). Livestock represents more than
one quarter of the store's sales volume.
It's also easy to see that Critters'
inventory is out of control, with too many items that
just don't sell. Sales reports show countless SKUs in
inventory that sell only once or twice in a six-month
period. Not only do such items tie up cash without contributing
to the bottom line, they take up valuable shelf space
that could be used to double-face items that sell two
or three times a week.
So far, Mark and Caroline have been
ambivalent about cutting the losers from their inventory.
They are afraid of losing the occasional customer who
comes in looking for an item they dropped.
"They need to learn to go
after the blue chips rather than the ankle-biters,"
Mike said.
"I honestly think they'll
do more sales by having a good presentation of stuff
that sells instead of an adequate presentation of stuff
most people don't care about," Simon said.
Emphasizing Your Strengths
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| Critters' does a great
job with puppies and kittens. Mark and Caroline
Janczak will upgrade the "love room" to make it
more user-friendly. |
Now that Mark and Caroline
have clearly identified fish, dogs and small animals
as their strengths, their next step is to work with
our consultants to leverage each of these strengths
into future successes.
Although the fish department is
Critters' star, it has lost some of its luster in the
last couple of years--since PetsMart and Petco, with
their slick acrylic displays, came to town. Our consultants
believe it's time to re-energize the fish department
by installing more attractive, low-maintenance display
tanks and by dramatically remerchandising the aquatic
supply section. They also want to make sure the fish
prices are competitive.
With plumbing, equipment and construction
costs, it won't be cheap to redo the fish room. In fact,
the Janczaks estimated it might take anywhere from one-third
to one-half of the $60,500 project budget. This represents
a pivotal decision for Mark and Caroline.
Dog and cat food represent another
big chunk of Critters' business. The store already carries
four major brands in a rack setup that occupies most
of one wall. Our consultants believe it's time to tweak
the product mix by replacing underperforming brands
with lines that offer better name recognition and more
promotional opportunities. They also want to enlarge
these departments by adding racks, and making the racks
look more uniform.
Critters' small-animal department
is very strong. It contributes 11 percent to overall
sales, compared with 5 percent or less for most pet
stores, according to Simon. To capitalize on this strength,
our consultants suggest Mark and Caroline give this
department more display space in a prime location in
the front of the store.
Critters also does an excellent
job with puppies. Its puppy enclosures are maintained
in almost-new condition, and its employees provide a
high level of care. However, thanks to a city ordinance
limiting the number of dogs any pet shop can carry at
one time, the only way to expand this department is
by increasing the turn on puppies. Our consultants'
only suggestion is to make the "love room," where customers
interact with puppies, more user-friendly.
The dog supply department is Critters'
second-largest department, but the strategy for building
this business is proving slightly problematic. Mark
and Caroline still are considering a variety of options,
including a dramatic remerchandising plan and deeper
inventories of certain products.
How will Mike incorporate these
ideas into a floor plan that is both functional and
exciting? Will Mark and Caroline finally dump the losers
in their inventory? And what compromises will they make
as they start assigning dollar figures to the items
on their ambitious wish list?
Next month, we'll see evolving versions
of the floor plan as well as the final blueprints. In
our November issue, we'll deal with contractors and
begin construction. PA
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Gathering Demographic Information
It's pretty easy to
gather basic market statistics and demographic
information. In fact, we spent about 30 minutes
on the Internet and found enough statistics to
fill half a ream of paper (that's only a slight
exaggeration).
Here are a few Internet sites
worth visiting:
If you don't have access to
the Internet, you can get statistics by visiting
the reference department in your local library
or by making a few phone calls to sources such
as chambers of commerce, business development
centers, real estate boards, individual real estate
agents, local newspapers and so on.
--Karen Long MacLeod |
Karen Long MacLeod is editor in chief of PET AGE.
Source: Critters Pet Shop, 1998 sales figures.
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