Top 3 wholesale clubs celebrate 25 years
Costco, Sam's club, BJ's look to reclaim DVD market share
By Jennifer Netherby -- Video Business, 5/26/2008
As they reach their 25th anniversary, the three major wholesale clubs are at a crossroads in home entertainment.
Costco, Sam's Club and BJ's have already established themselves as a crucial part of the home entertainment business, able to sell high-priced DVD box sets to their high-end customer base better than other retailers.
“What the clubs do better than just about any other class of trade is the concept of editorial merchandising,” says Simon Swart, 20th Century Fox Home Entertainment executive VP and general manager. “You know that if that product is in the club, it's one of the best offerings in that segment, whether it's a DVD collection, classics collection or a vacuum cleaner.”
But as mass merchants and other retailers have slashed prices on standard-definition DVD over the last few years, warehouse clubs have largely refused to follow the downward trend.
The result has been a drop in their DVD market share from 3.9% in the 12 months ended March 2006 to a 3.3% share for the year ended March 2008, according to the NPD Group.
As the clubs move into the Blu-ray market, they stand to gain back an even greater share of the home video market and at the same time help broaden the Blu-ray consumer base.
“The guys that do really well on HDTV are the guys that do really well on Blu-ray,” Swart says, pointing to the clubs' success in electronics.
“If you go back to when standard-definition proliferated, [the clubs] carried a higher market share than what they do today,” says Mike Takac, Warner Home Video senior VP of domestic sales. “They did a better job of converting the early adopter because their pricing was so much sharper in the marketplace.”
Marshall Forster, Sony Pictures Home Entertainment senior executive VP of North America, says the clubs have already established themselves as an important market for “innovative products such as gift sets and multi-packs. As club stores continue to establish themselves as destinations for electronics shoppers, we expect these stores to play an expanding role in the burgeoning Blu-ray market.”
