Catalina Taps Into New Retail Niche

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Catalina Marketing Corp., St. Petersburg, FL, has expanded its targeted check-out coupon business beyond the supermarket and hypermarket segments and into pet-supply stores. The company recently agreed to install its system of computerized coupon printers in PetsMart's 455 stores beginning in August.

The move marks the first agreement with a specialty retail chain for the Catalina Marketing Network check-out coupon operations, giving the company a new base of manufacturer clients to tap into and opening the door for the possible expansion into other specialty stores.

Catalina markets a system that dispenses coupons at the retail check-out based on scanner information.

In the PetsMart agreement, in addition to product coupons the company expects to dispense coupons for PetsMart's own services, which include on-site veterinary and grooming facilities.

"For a larger category like dogs, we can find people who are buying a lower-priced dog food and try to trade them up to a higher-priced dog food; we can find people who are buying dog food but not buying treats and tell them to give their pet a special treat," said David Diamond, executive vice president and chief vision officer. "Or we can find people who are buying dog brushes and tell them that PetsMart has a grooming center on premises to give the dog a special look."

Many of the pet-food manufacturers, such as Ralston Purina, already are clients of Catalina and are expected to expand their targeted-couponing efforts into PetsMart, Diamond said.

"We are very bullish on the basic building-block categories of dog food, cat food, dog treats, cat treats and cat litter," he said. "There is a significant amount of demand for those categories."

Analyst Troy Mastin of Raymond James & Associates, St. Petersburg, FL, said he thought the PetsMart partnership could be a fairly smooth transition for Catalina.

"I think that PetsMart in particular is a good fit, partly because the pet categories are especially strong for them in supermarkets," he said.

Catalina hopes to pick up additional clients in certain niche areas, such as makers of high-end pet foods and other specialty products. Diamond said Catalina will work with PetsMart to tap into that client base.

"We feel that Catalina will help us provide added value for our customers as well as create a stronger relationship with our manufacturer partners," said Phil Murphy, senior vice president of merchandising at PetsMart.

Mastin of Raymond James said he thought that if Catalina produces some solid results through PetsMart, it might also give the company more leverage as it attempts to market its coupon-dispensing services to other retailers.

"I think it lends them some credibility, if they are successful in PetsMart, as they go after chains like Kmart," he said.

The Catalina Marketing Network includes computerized coupon printers in more than 11,800 supermarkets throughout the country.

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