Navarre makes bigger play for retail

Starts VMI system with Best Buy, seeks others

By Susanne Ault -- Video Business, 5/12/2006

MAY 12 | Navarre will launch its first vendor managed inventory system for DVD by this August.

The company will start tracking inventory levels of its titles at Best Buy and hopes to sign other retailers.

DVD sources indicate that running VMI can cost around $500,000 a year. Major studios can manage that expense reasonably well, but it can prove harder to fit into indie budgets.

But to survive today’s maturing DVD market, Navarre needed to be able to offer VMI to big retail chains.

“Over the last year, [Best Buy] really drew a line in the sand, saying they want a VMI umbrella over their whole video category,” Navarre VP of sales and marketing Joyce Fleck said. “We have a solution that will meet the needs of Best Buy. This will give us the ability to forecast [inventory] by store and by SKU.”

Best Buy, and increasingly other retailers, expect all suppliers to play by their rules.

“They’ll start with majors first because of their size, but retailers are looking at this on a per category basis, and that is majors and the independents,” said Brian Burke, Navarre Distribution president. “There are significant costs to establishing VMI, but this is a big potential opportunity.”

Up until a year ago, Navarre was overseeing a VMI system for its CDs at Sam’s Club. The VMI pact between the two ended after Sam’s Club opted to change its product acquisition strategy. Navarre continues to supply DVDs and CDs to the discount retailer.

Indie distributors have struggled to stay competitive in a world where majors’ titles win first priority on shelves, with First Look (through its acquisition of some of Ventura Distribution) and Image Entertainment recently moving to add VMI systems.

Burke estimates that Navarre has gained new business from about a dozen labels that had previously used Ventura for distribution into some retail accounts but declined to be more specific.

Navarre currently distributes non-proprietary CDs, DVDs, computer software and such electronics merchandise as iPod accessories. At times, it services major studio product to certain stores, such as 20th Century Fox Home Entertainment’s April 25 release Tristan & Isolde.

Navarre also handles product for its label subsidiaries, including Funimation and BCI-Eclipse.

Office Depot, a Navarre customer for computer software, agreed to pick up the distributor’s DVD offerings over the last holiday season.

“The great thing about Navarre is that we have various categories that can complement each other—where if one is down, another is up,” Burke said. “Software continues to be very strong for us.”