Grocers gab about DVD

SUPERMARKET CHANNEL GUIDE: VSDA’s Grocers Council members answer VB’s questions

By Cindy Spielvogel -- Video Business, 5/1/2006

Supermarkets are a unique channel, but in some ways, they aren’t much different than other retailers in the DVD business. Among the most recent additions to the Video Software Dealers Assn.’s committees is its Grocers Council.

Established in late 2004, the Council discusses such concerns as ratings enforcement, inventory shrinkage, data synchronization and sell-through expansion. The Council consists of five supermarket retailers whose companies have made a commitment to DVD, along with distributor Leslie Baker, Ingram Entertainment’s VP of sales for grocery and drug.

VB special sections editor Cindy Spielvogel posed questions to two of the retail members, one on the larger side and one smaller, both of whom rent and sell DVD: Chuck Porter, who oversees video, books and magazines as director of entertainment for 200-store Giant Eagle, the leading supermarket chain in the Pittsburgh region; and Bob Gettner, who is video buyer/coordinator and head of digital film processing and equipment for 20-store Nebraska-based B&R Stores. Also included are some comments from Mark Fisher, VSDA’s VP of membership and strategic initiatives and a former supermarket video executive.

The Council will hold its first Grocers Studio Summit on May 3 in Los Angeles.

VB: How do you merchandise and market DVD, and what kind of support would you like from the studios?

Porter: We would like the studios to continue to present us with creative catalog promotions.

Gettner: Most of our movies [for sale] are put near the video rental department, but we do creep out into the store sometimes to cross-promote or for a little better exposure. As far as studio support, this too has dwindled down to almost nothing unless you are a very large customer. The studios want the sales but offer nothing in return: no displays, posters are hard to come by and very little co-op to speak of.

VB: What’s the best way for studios and distributors to solicit you to carry their product?

Porter: The best way for studios and distributors to solicit us is by making monthly sales calls to our buyers.

Gettner: I am a big reader of info on movies. Screeners were really good when they used to be around. The studios have pretty much all but cut the screener program to nothing, so unless I actually go to the theater, it is a little tough. I would like to mention that New Line has a terrific program going. Basically, they send passes to their movies in theaters instead of screeners. I wish that all the studios would follow suit—little chance of piracy with this.

Fisher: Grocers work on high volume and low margins, in general. Attractive margins—net of shrink—are what counts. That being said, high-traffic grocery stores welcome 25,000 to 30,000 customers each week—an incredible billboard for DVD placement.

VB: What would you like to see happen that would improve grocers’ DVD business?

Fisher: Grocers all want to sell more product, and they want to be able to merchandise DVDs in a way that’s conducive to maximizing sales. However, shrink is a

huge concern. If industry participants can together minimize shrink exposure, then sales will naturally grow.

VB: What trends do you see in the supermarket DVD business?

Porter: I see more and more supermarket operators supporting the sell-through end of the business with permanent display space within the four walls of the store.

Gettner: I think those that have thrived will continue to do so. I also see that even those that have stayed with VHS as long as we have will have to finally exit this portion of the business due to the fact that the studios have pretty much eliminated this [format]. I am not saying this is a bad thing, since now we can concentrate on improving our DVD sections and cross-sections. I also believe that grocers will be slow to embrace any new formats. The technology sector changes so quickly that it is pretty difficult to keep up with it.

Fisher: Vending machines are finally becoming a credible vehicle to rent DVDs in grocery stores. Also, more grocers are trying to develop business models that allow them to expand in sell-through.

VB: Where do you stock DVD in your stores, and which areas of the store work best?

Porter: We merchandise DVDs in two ways. Rental is merchandised in a rental department with a separate entrance to the outside with new releases on the wall and catalog product in the center of the department. Sell-through product is merchandised both within the rental department as well as within the body of the supermarket.

Gettner: Most of our [sell-through new] DVDs are close to our video rental departments. However, we do put a large amount of pre-viewed product in front of checkstands and do very well with this.

VB: Are you carrying more or fewer DVD titles than you did a year ago, and why?

Porter: On the rental side of the business, we are carrying the same number of titles with increased copy depth to better satisfy consumer demand. On the sell-through side of the business, we are carrying more catalog product on a day-in, day-out basis, as we are adding permanent sell-through departments within the body of the store. We are also continuing to run promotional programs to drive traffic to our departments.

Gettner: We are carrying more DVD, but that is due to the lack of VHS now.

VB: Which categories of DVD work best for you: catalog, new release, budget-priced or high-end?

Porter: All.

Gettner: We mostly do new DVD, but we have done some studio promotions, and they have done really well. Our biggest success thus far, though, is pre-viewed DVD. Overall margin is about 30% vs. around 5% on a new release DVD.

VB: Which titles have done well for you recently?

Porter: The Super Bowl XL Champions DVD [Warner] performed terrifically. It helps that Pittsburgh won. Also Chronicles of Narnia, Chicken Little [both Buena Vista] and King Kong [Universal].

Gettner: Chronicles of Narnia did great—very surprised at how well it sold through. There was a cross-promotion with Fresh Express that helped to move them as well.