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Walk into one of Petco's 450 stores in the United States, and you're likely to spot merchandising ideas borrowed from retailers worldwide. That's no accident. Larry Asselin, Petco's senior vp of merchandising and distribution, told DSN that he combs the globe for new merchandising ideas, in addition to keeping close tabs on U.S. competitors both big and small.

'When I was in Europe, there was a hardware store where I found a triangular fixture that neatly holds the brochures and doesn't take up very much space,' Asselin said. 'We're using those same fixtures right now in some of our prototype stores.'

The San Diego-based Petco chain has transformed itself into a national player during the past few years, in part through innovative merchandising. Petco has acquired a number of regional chains, including the 81-store PetCare of Chicago, which operated stores in nine Midwestern and Southern states. The acquisitions have created new challenges as Petco tries to assimilate the new stores into its chain, but they also have created new merchandising opportunities.

'We've had an interesting challenge because we've gone through a growth mode that comes from our own [new] store growth, acquisitions and a [store] prototype that went from 3,000 sq. ft. to 15,000sq. ft.,' Asselin said. 'As a result, we have a lot of different formats in our stores, and the challenge is to properly work the assortment so we can focus on the right product mix while covering all the bases for all the different kinds of stores that we're either opening or have acquired.'

Technology plays an important role in Asselin's merchandising vision for the future and in keeping a handle on inventories as the chain grows and becomes more complex.

'To the extent that we can take advantage of systems, handle the assortment review process, cut out the dead wood and emphasize the products that are selling, then there's tremendous opportunity.

'Technology is moving so quickly, and our ability to understand how to take advantage of that is really going to be our strength for the future,' Asselin said. 'We're certainly very involved with data warehousing and working to develop sophisticated systems.'

Asselin said that part of Petco's approach to merchandising technology involves putting an. entirely new POS system in all of the stores, with hand-held merchandising and inventory control devices, to tightly manage inventory levels.

'In our business, and I suppose this is true of many businesses, the real key to in-stock is having an accurate perpetual,' Asselin said. 'If you receive it properly and sell it properly then you have an excellent opportunity to assure that it gets replenished. When the perpetual is off, then the product doesn't flow.'

Working closely with vendors is also part of Petco's future, Asselin said.

'We strongly believe in category management,' he said. 'We are heavily involved with the Pegman space management program to really understand how the profitability of the various categories develop.

'We pay a great deal of attention to profit within the various categories. Look at the gross margin returns on investment and go through an editing process, where typically through the course of the year we'll review the entire store category by category,' Asselin added. 'With the acquisitions, this has been a real challenge.'

Asselin, who graduated from the University of Arkansas with a degree in marketing, joined Petco in 1991 after four years as vp and gram at Oshman's Sporting Goods.

But Asselin's outlook on merchandising was largely shaped by the 18 years (from 1969 to 1987) that he spent working for the Foley's Department Stores division of Federated Department Stores.

'The department store training and background is ideal,' Asselin said. 'The things that Federated taught in those days really prepares you for retail applications.'

The $20 billion pet products and supplies industry is very broad and fragmented. Grocery stores, superstores and discount stores compete with thousands of local and regional pet stores, as well as with Petco and its main rival PetsMart.

It was Asselin's experience in sporting goods retailing, a market segment that is as fragmented as pet supplies, that helped prepare him for his position at Petco.

'I was involved in the opening of Oshman's first two superstores,' Asselin said. 'From that I learned how strong a dominate assortment presentation could be.

'Our future stores will be around 15,000 sq. ft. [of selling space] and will certainly have a dominate assortment,' Asselin said. 'We have the flexibility with the type of assortment we put in to opportunistically look for real estate and where we can find sites that are conveniently located to the demographics.'

Petco's current prototypical format is in the 15,000-sq.-ft. to 17,000-sq.-ft. range with an assortment that includes approximately 11,000 active skus. The assortment will vary by the size and location of the store.

'This format gives us room to put our full assortment in and gives us room to add new elements as they come on line, but it's not so large that it's intimidating to the customer, and it doesn't have a warehousey kind of feel,' Asselin said. 'One of our strengths is that we've been able to locate our stores conveniently in neighborhoods, shopping centers next to Blockbuster Video, next to Barnes & Noble, next to a grocery store where people are shopping frequently as opposed to a destination where they have to drive a long way.'

# posted by Medical Information : 3:49 AM