New Movie Gallery chief focuses within
Store feel takes priority over strategic changes
By Danny King -- Video Business, 7/3/2008
JULY 3 | Charged with the daunting task of bringing back Movie Gallery from bankruptcy, new CEO C.J. “Gabe” Gabriel Jr. is looking to start with the simple tasks before moving on to the more complicated ones.
Gabriel
“I’m a ‘clean and bright’ fan,” said Gabriel, who worked for supermarket chain Albertson’s and Pepsi Cola North America before taking over the No. 2 movie-rental chain in May. “We’ll be sweeping through, getting the windows clean and making sure we have a well-lit, well-stocked store. We will be doing a lot of that.”
Movie Gallery, which exited bankruptcy in May, plans to complete such tasks as a starting point in trying to regrow its store base, by boosting its Blu-ray Disc inventory and games sales while supplementing rental revenue with DVD sales.
Such moves would capitalize on a booming videogame market and a Blu-ray segment where sales are expected to more than triple this year to $1 billion. The Entertainment Merchants Assn. said last week that Blu-ray revenue would surge to about $9.5 billion in 2012, overtaking sales of standard-definition discs. Meanwhile, total U.S. games sales through the end of April surged 31% from a year earlier, according to NPD Group.
“Blu-ray is going to be a very big initiative for us,” said Gabriel. “We would also like to increase our sell-through pretty significantly, and we’re pretty bullish on games.”
Movie Gallery emerged from Chapter 11 on May 20 with about 3,300 stores in the U.S. and Canada under Movie Gallery, Hollywood Video and Game Crazy brands. The company, which filed Chapter 11 in October and has closed more than 1,000 stores since September, encountered financial problems as it took on debt to acquire Hollywood Entertainment while facing increased competition between Blockbuster and Netflix over mail-order rentals.
Movie Gallery, along with its chain-store competition, faces further challenges from both a growing propensity by U.S. customers to download movies and surging sales among movie-rental kiosk operators such as Redbox.
Such upheaval in the video-rental store industry was typified by Blockbuster’s bid for No. 2 U.S. electronics retailer Circuit City earlier this year as part of an effort to unify entertainment content with the components used to play it. Blockbuster withdrew the bid July 1 in a move Gabriel said was “a bit” surprising.
Still, Movie Gallery will take a wait-and-see approach on initiatives such as kiosks and electronics components while it focuses on customer support and better inventory, said Gabriel.
“It’s a little too early for us” for kiosks, he said. “There are a lot of fads that will come and go. We want to make sure that when we lock in on something, it’s a likely winner.”
