MOLLIE STONE'S ENTERS DOG FIGHT

MILL VALLEY, Calif. -- Mollie Stone's is taking a more strategic approach to its pet business with a departmental reorganization that includes reduced margins and increased product variety.After years of devoting little attention to the pet aisle, the seven-store retailer decided it was time to compete more with category killers, mass merchandisers, club stores and other retailers strongly committed

MILL VALLEY, Calif. -- Mollie Stone's is taking a more strategic approach to its pet business with a departmental reorganization that includes reduced margins and increased product variety.

After years of devoting little attention to the pet aisle, the seven-store retailer decided it was time to compete more with category killers, mass merchandisers, club stores and other retailers strongly committed to pet.

"We've never focused on pet," David Bennett, company co-owner, told SN. "Instead, we've treated pet as a convenience, selling one or two cans of pet foods to consumers who happen to be in our stores for other reasons."

As part of its renewed interested in pet, Mollie Stone's has partnered with Nestle Purina PetCare, St. Louis, marketer of Alpo, Purina One, Purina Dog Chow and Purina Puppy Chow, among other brands. Nestle Purina is assisting the retailer with an in-depth category management review of its pet business.

"We're going to take a look at our merchandise and product movement, and update product variety," Bennett said.

The changes will be implemented in Mollie's San Bruno, Calif., store by January 2005 as part of a three-month test. Depending on the results, it may be rolled out to its other stores.

Nestle Purina will perform a stockkeeping unit rationalization to determine Mollie's current product assortment, and whether or not there are any gaps or opportunities, according to John Keen, Nestle Purina's West Coast team leader.

This rationalization will include an upgrade in product variety, plus a shift to more contemporary offerings. Mollie's already has started to receive offers from vendors on new products, Bennett said.

Once distribution is established, Nestle Purina will focus on store level, examining product placement on shelves -- whether dog treats should be placed next to canned food or wet, for example.

"We'll look for the best way to maximize Mollie Stone's consumer exposure to category adjacencies," said Keen.

A price analysis will come next. Nestle Purina will determine who Mollie's biggest category competitor is: another supermarket, club store or pet specialty store. It then will decide if Mollie's should reduce margins on select items so the retailer is priced more aggressively against its top competitor.

"We won't cut margins across the board, just on products that Mollie's may be most competitive with," Keen said.

Such a move is a good way to get higher basket rings, Bennett said.

"This will show our customers that we'll be competitively priced on national brands of pet food, so they don't have to make an extra stop at another retailer," Bennett said

To offset the margin reductions, Mollie's will expand its assortment -- and possibly increase margins -- of certain nonfood pet categories, such as toys and treats.

"Treats tend to be impulsive, so consumers aren't really looking for a hot price point on these," Keen said.

Mollie's new approach to the pet business is a shrewd one, considering the economic significance of pet-owning consumers. According to Keen, shoppers with pets typically have larger families, and higher incomes and levels of education -- all factors leading them to spend more in the store.

"Retailers can end up with a higher dollar ring every time these consumers come through their stores," Keen said.

"If shoppers start buying pet food in another place, such as Target, it won't take them long to realize that other stores also carry paper goods, baby products and other products."