Retailers prepare for shelf space crunch in Q4
Also increase promotions to battle competition
By Susanne Ault -- Video Business, 8/31/2007
AUG. 31 | To brace for the tidal wave of fourth-quarter titles, retailers are bolstering shelves through efficient stocking schemes and aggressive consumer exclusives.
Retailers face a Q4 glut of product, such as Spider-Man 3, which streets in six different configurations.
With the majority of the summer blockbusters not coming out until the last three months of the year, as well as more catalog and day-and-date high-def releases than during last year’s launch, retailers are realizing product will have to be moved in and out swiftly to maximize sales.
Even outlets with small sell-through operations, such as Massachusetts’ rentailer Video Zone, are anticipating returning unsold inventory quicker than normal to grease product flow. Management at Hastings Entertainment and Redmond, Wash., DVD Now stores are likely to display fewer facings of A-list titles, as new high-profile movies will be streeting each week October through December.
“We are going to be keeping a closer eye on merchandise, where we can’t hold onto things as long as we have in the past,” said Todd Zaganiacz, owner of Video Zone and president of the National Entertainment Buying Group. “When you are looking at a fourth quarter with such a glut of product, if we’re not selling something in two weeks time, we’ll be returning it right away. Normally, we might hold sell-through titles for 30 days.”
Hastings is managing the crunch by going lighter with its displays of single-disc standard-def title configurations. The fully loaded sets tend to be more of a hit with the chain’s customers.
“We might have had room for five facings of a single disc, and now we’ll go to three facings” within Hastings' prime new release wall, said Mason Goodfellow, Hastings video category manager. Also, overflow copies will wind up in less-trafficked sections with spines showing. “From last year and the year before, we are seeing increased numbers of titles [during the holidays]. That affects how long they can stay up.”
Spider-Man 3 alone will swing into stores in six different SKUs, including two Blu-ray Disc options.
Regarding that release, “we’ll carry all six but favor the popular formats, where single and special editions will be about half and half and the rest less so,” said Chris Anstey, senior product manager at Virgin Megastores.
Not only must retailers do battle with their shelves, but they’re ready to battle with each other during this highly competitive fourth quarter.
In one of the earliest fourth-quarter marketing campaigns, Trans World shot off a customer e-mail in mid-August offering free gifts to the first 500 people who pre-ordered Dec. 4 release Pirates of the Caribbean: At World’s End. The entertainment specialist is angling to quickly distinguish itself from mass merchants, who do the lion’s share of DVD sell-through business.
“With the big new titles, how do you make sure it’s important in consumers’ eyes?” asks Jim Litwak, Trans World president and chief operating officer. “A big new release might be a flavor of the week to a mass store, but it’s important for us to [underscore] the title for an extended period.”
Newbury Comics is preparing to present its largest number of exclusive DVD tie-ins, normally the domain of electronics and mass chains. Newbury expects to roll out about a dozen such deals, up from just a few during fourth-quarter 2006.
“It can be another reason to choose our store to make that purchase,” Newbury buyer Ian Leshin said. “The value-add is something they can only get at Newbury Comics. You might pay $17.99 for something that costs $19.95 here, but maybe with the value-add, $19.95 is now a really good deal.”
Best Buy is sprucing itself up with flashier signage within its hot release DVD and CD walls. The chain is currently testing the new merchandising design in several of its stores.
“It’s mostly to capture the excitement of new release Tuesday, and you want the entertainment to be entertaining for people,” Best Buy spokesman Brian Lucas said. “Everything we do is aimed at differentiating ourselves.”
Despite all the fourth-quarter sweat, no retailer is complaining. Most are anticipating an overall sales jackpot, with one chain source believing revenue could be up as much as 10% over last year’s period.
