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NONFOODS: Dogged pursuit

One would think that the checkout is an unlikely place for pet products, especially premium items. But this is definitely not the case at Warwick, R.I.-based Dave's Marketplace. Just six months after installing pet treats on special displays above the candy racks at each checkout of its seven stores, the products jumped to No. 11 and No. 12 in turns -- out of approximately 100 front end SKUs.

The products in question, manufactured by Lebanon, N.J.-based Chomp, Inc., include Sniffers Dog Candy, and Yip Yap and Pit'r Pat dog and cat breath mints. The Sniffers are packaged to look like bags of candy, and the breath mints come in square tins that look like those that hold breath mints for humans. Indeed, these products even look like they should be at the checkout.

The Chomp items didn't start out at the front end, though; they had to earn their place. "When we first brought in the Chomp products, we started with the shippers to test the products in the stores and see how it was going to work," says Dave's Marketplace grocery merchandiser Kenny Banalewicz. "We put a few of the Yip Yaps shippers into a couple of our faster-moving, higher-volume stores. They did very well."

This prompted Banalewicz to explore other opportunities. "That's when we discovered that Chomp had rack extensions, which sit right on top of the front end candy racks," he continues. "By doing that, it didn't entail taking up any additional sales floor; it's the same amount of sales space as we were using before, but now we were just going up higher. We treat it as a front end impulse item."

And a successful impulse item it is. Currently Meijer has these displays affixed to the front end of every checkout in its 163 stores, and Giant Eagle is testing them at several locations (see the Sept. 15, 2004 Progressive Grocer, page 68).

Market reaction

Installing pet candy at the front end is only one example of how Dave's has responded to the increasing number of players in the pet products market by becoming increasingly specialized in the products it sells -- and how it sells them.

"Like the trend that's been happening in the marketplace, our pet category has fallen off in the last few years as other retailers have been getting involved, and that's one of the reasons we're running programs like the one with Chomp," notes Banalewicz. "We're trying to offset the loss in the category by going into the specialty end. So instead of just seeing these types of products in a Petco or another specialty pet food store, our customer doesn't have to make the extra trip there to get them. They've been in those stores and have already tried them, so now they know they can just come every week as they're doing their regular grocery shopping."

Banalewicz's goal is to sell hard-to-find, high-quality specialty pet items. "We're always looking for something that's interesting to a customer," he says. "Unique items: That's our niche. We want the customer to walk into our store and see something different. They can walk into a Stop & Shop any day and see the same old stuff. We want them to know that when they walk into a Dave's Marketplace that they're going to see a unique item, a high-quality item. That's the way we operate our stores. We try to upscale whenever we can and get the best-quality product, and this extends right down to pet foods. If we can sell something that's a high-quality item, they'll come back for it."

The person who finds these items is Rick Silvia, Dave's grocery buyer. He scouts trade events and magazines constantly, always on the lookout for a product that will catch the shopper's eye. "We all subscribe to specialty food magazines to try to stay up to date on the current trends," he says. "We're always looking for something that's on the edge, that's just coming out into the market. We like to be the first ones out there with it."

Sometimes a product finds them, as was the case with Tailwaggers biscuits. The biscuits are produced by a company of the same name, a small operation in Smithfield, R.I. The owner, Georgine Powers, happens to be a regular customer of Dave's Smithfield store. During one shopping trip she asked to speak to a buyer and explained what she had. The rest is history. "We tried it and took it on," says Silvia.

Tailwaggers' core product is an eight-ounce biscuit packed with all-natural ingredients such as wheat flour, orange juice, oatmeal, wheat germ, peanut butter, honey, and eggs. At $4.99 each, the biscuits are a high-ring item for a dog treat, but that doesn't stop shoppers from plucking them off the shelves. Part of the product's success is a simple strategy Banalewicz developed of educating his shoppers at the shelf by placing a Tailwaggers brochure next to the product.

"We place a brochure next to [Powers'] products that tells about her company, her products, and the ingredients in them," he explains. "By giving shoppers this information, they learn about its quality. They see that it's all natural; it's made from ingredients we can eat. So before they pay that money, they can learn about it. It makes them feel comfortable about spending the money."

What also helps is Dave's money-back guarantee. "We always let our customers know that if they want to take a chance on an item, we'll do right by them if they're not satisfied, and give them a refund, no questions asked," notes Banalewicz. "We want our customers to come into our store and [let us] take care of their needs, so we let them know that they can shop with faith in us."

It's a strategy that helps the retailer sell even larger-ticket items, such as Tailwaggers' K-9 birthday cakes, which are created in the shape of a dog bone.

Staples, too

That's not to say that the mainstay items are ignored at Dave's. Every store dedicates one side of an entire aisle to all sizes of dog foods, cat foods, cat litters, and the like. All brand names are carried, although the trend is toward the more premium items of each. "We do have all the staples -- the Purina products, the Pedigree products, Iams, for example, but then we'll also carry brands like Newman's Own organic dog and cat food, which we cut in about eight months ago," observes Banalewicz.

"The Newman's Own products come in a variety of bags and cans," he continues. "As it's an organic item and a well-known name, customers have a comfort level in paying more for it. They don't really question it when it comes to an organic item. If they want organic, they know the Newman's Own name, and they know that the company gives x amount of dollars to charity, so they're more willing to pay for it. It's almost a feel-good type of thing."

And when one of the national brands comes out with a unique item, Dave's jumps on it as soon as its distributor gets it in stock. "We carry Procter & Gamble's Iams, for example," says Banalewicz. "They're coming out with a new product, gravy you pour on top of dry dog food, packaged in a squeeze bottle like sauces and dressings we use. Our warehouse hasn't even gotten it yet, but as soon as it does, that will be in our stores, as well."

And when he gets these unique items in, he heavily promotes them. "We definitely did when it came to the Yip Yaps," says Banalewicz. "We put them in an ad a couple of times, and one of the times was around the holidays as a stocking stuffer. That just took off. What we also do, especially around the holidays, is push a lot of shippers. We put shippers in our front end, near our express registers. Everybody loves their animals. If you're going out at $1.99, or two for $3 if you're on promotion, they pick it up."

The only pet items Dave's doesn't carry are general merchandise items such as toys and leashes. "We want to focus on what we do well, and that's specialty foods," notes Banalewicz. "We don't try to delve into areas where we don't do well. We all know what happens if you try to wear too many hats."

By switching its strategy toward upscale specialty products, Dave's has grown the average margin of its pet category sales greatly since two years ago, with many of its premium products in the 30 percent to 40 percent range.

"We see the way the market goes and the way people shop, and you try to be ahead of the curve if you can, and get the product that the people are looking for into the store," says Banalewicz. "That's what we try to do as a company, and we have a much better margin on our pet products now than we did a few years ago. It has definitely helped us recoup what some of our past losses were within the marketplace."
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