Supermarket DVDs go off the rack
SUPERMARKET & DRUG CHANNEL GUIDE: U.S. kiosk boom feeds on grocery shrinkage
By Danny King -- Video Business, 5/5/2008
MAY 5 | SUPERMARKET CHANNEL GUIDE: Stealing a DVD from a rack at the local 7-Eleven is easy. Stealing one from a Redbox kiosk is a different story.
Grocers and drug stores favor kiosks such as Redbox for deterring DVD theft.
That’s one reason more supermarkets are either shrinking their DVD selection or eliminating DVD racks altogether in favor of automated kiosks. The machines also take up far less floor space and could increase customer visits.
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“Many others would like to expand further but are held back by legitimate concerns regarding inventory shrink,” says Bersell. “If the inventory shrink problem were to be solved, we would anticipate more grocers expanding their sell-through assortments.”
What has been supermarkets’ loss, however, has been a boon to DVD rental kiosk operators such as Redbox and DVDPlay . U.S. kiosk sales are projected to triple to $800 million in 2010, while store rental revenue, estimated at $5.4 billion last year, will fall to $3.1 billion by 2010, according to Convergence Consulting Group.
Redbox, which tripled its kiosks last year, keeps about 55% of its 7,400 U.S. machines in supermarkets such as Supervalu and Stop & Shop. In February, the company said it would add kiosks in about 2,700 Wal-Marts. It also serves Walgreens drugstores. Redbox, owned almost entirely by McDonald’s and CoinStar, plans to approach 10,000 kiosks next year.
DVDPlay, which will more than double its U.S. kiosks to 3,200 this year, is even more committed to supermarkets, with about 90% of its machines in Safeway and Albertsons stores, among other grocers.
“I’m less enthusiastic about the big superstores like Wal-Mart or club stores like Costco,” DVDPlay CEO Chuck Berger says. “I don’t think the frequency of visits is there, and the giant parking lot is not as conducive as the smaller-format grocery stores.”
As for players in the nascent manufacturing-on-demand kiosk industry, the jury is still out. Consumer spending in the U.S. and Europe on MOD discs will explode to $1.1 billion in 2012 from just $33 million this year, according to a March report from research firm Screen Digest.
Whether much of that spending occurs with grocers remains to be seen. TitleMatch Entertainment Group, which plans to have several hundred U.S. MOD machines by the end of the year, is in talks with “a couple” of supermarket companies, CEO Bruce Newman says, citing repeat traffic as the main reason for his interest in the channel.
Top 20 Supermarket Sellers (Q1 2008)
|
Rank |
Title |
Label/Distributor |
|
1 |
Enchanted |
Disney |
|
2 |
I Am Legend |
Warner |
|
3 |
Bee Movie |
DreamWorks/Paramount |
|
4 |
101 Dalmatians |
Disney |
|
5 |
American Gangster |
Universal |
|
6 |
Game Plan |
Disney |
|
7 |
3:10 to Yuma |
Lionsgate |
|
8 |
No Country for Old Men |
Disney |
|
9 |
Snow Buddies |
Disney |
|
10 |
Resident Evil: Extinction |
Sony |
|
11 |
Saw IV |
Lionsgate |
|
12 |
Beowulf |
Paramount |
|
13 |
Good Luck Chuck |
Lionsgate |
|
14 |
No Reservations |
Warner |
|
15 |
Michael Clayton |
Warner |
|
16 |
Mr. Magorium’s Wonder Emporium |
Fox |
|
17 |
Family Guy Presents Blue Harvest |
Fox |
|
18 |
30 Days of Night |
Sony |
|
19 |
Harry Potter and the Order of the Phoenix |
Warner |
|
20 |
War |
Lionsgate |
Source: Rentrak’s Retail Essentials
Unit sales and revenue estimations are based on Q1 2008 aggregated POS data (supermarket bricks-and-mortar sales channel only).
