Grocers boost DVD sales, offer Blu-ray
Catalog, slow economy help build business
By Susanne Ault -- Video Business, 7/11/2008
JULY 11 | Grocers are bagging more DVDs for customers, as managers overcome threat concerns and benefit from a softening economy.
Although many grocers have been getting out of the DVD rental business, preferring to offer that service through kiosks such as Redbox, rising gas prices, low-priced catalog titles and security fixtures are helping grocers build a healthy sell-through DVD business.
“The average grocery shopper will come in once or more a week, and consumers are less concerned with saving a little money [on the DVD] by going to a mass merchant than they are concerned with rising gas costs,” said Bob Geistman, senior VP of sales and marketing at Ingram Entertainment. “They will purchase more of their products at grocery.”
Ingram currently serves as category manager, encompassing such responsibilities as creating DVD display plan-o-grams and replenishing products based on point-of-sale data, for approximately 4,500 retail locations, the majority of which are grocery. Just two years ago, Ingram managed less than half this number. Between 2006 and 2007, Ingram doubled the number of its category-managed grocery accounts.
Many of Ingram’s accounts, such as Giant Eagle, have carved out permanent fixtures and/or sections holding DVD titles. Selection varies widely, from 3,000 titles at certain Giant Eagle stores to less than 100 at some stores.
Geistman said grocers are succeeding with combined investment in protective fixtures and catalog titles.
“We can put in anti-sweep fixtures, where you can only take out one unit at a time, and that helps address the shrink issue,” said Geistman. “The lower prices [of catalog] have also mitigated some of the risk.”
Lower-priced older releases are less desirable to shoplifters than blockbuster new release titles. By focusing on healthy-margin catalog DVDs, grocers also escape the cut-throat discounting competition common with new releases.
Jeff Baker, executive VP and general manager of theatrical catalog at Warner Home Video, agrees that library DVDs are encouraging grocers to wade deeper into the disc business. Theatrical catalog in general is enjoying gains, with consumer spending up 2.6% year-to-date in 2008 over last year’s frame, he said. That performance trumps the overall DVD market, which Baker notes is slightly down year over year.
“Most retailers tend to see lower shrink levels with DVD at under $10, and even more so when prices are below $5,” said Baker. “More than 70% of the units sold in theatrical catalog year-to-date are under $10 retail.”
Baker also sees the rising gas prices and other economic uncertainty as helping boost catalog sales.
“We believe that the slowdown in the economy is actually benefiting the theatrical catalog segment, not just in grocery, as consumers seek out inexpensive forms of entertainment to purchase,” he said.
Grocers also are starting to offer Blu-ray Disc titles. In March, the Southwest division of Kroger began testing Blu-ray sales at 10 of its 250 stores, said Gary Huddleston, the company’s director of consumer affairs. Giant Eagle also has begun slotting Blu-ray titles in some of its outlets this year.
The Kroger stores are keeping the product safe by offering premium-priced titles near stores’ customer service sections with employees present.
“We didn’t want to have them locked up inside glass cases [where customers may not see them], but this ensures that there won’t be theft on the premises,” said Huddleston. “Also [Kroger] service can help explain to customers what Blu-ray is.”
Huddleston admits that Blu-ray sales are simply “OK,” but he expects improvement through the end of 2008.
“More customers need to have the equipment to be able to view Blu-ray movies,” said Huddleston. “We should anticipate that more people would have that by Christmas.”
