At least two supermarket chains offer 49-cent rental rates on an everyday basis, but executives at SN's video roundtable were skeptical about the viability of these programs. "I don't see how they can make money. They might be using it as a traffic builder," said Jeff Olson, video coordinator at Copps Corp., Stevens Point, Wis. "What do you do after that if it doesn't work for you?" asked Tom Hembree, vice president of operations at K-VA-T Food Stores, Grundy, Va. While Clifford Feiock, video coordinator at Nash Finch Co., Minneapolis, also has questions about the program, he would be open to trying it -- in the right situation. "If the market demanded 49-cent rentals, we'd do it. But it's not something we want to step up and do tomorrow," he said. Here's what executives at SN's video roundtable had to say about 49-cent rentals:
hat plunge and you're into it, it's probably not such a big deal to keep it working for you. But it's a pretty scary thought to me. HEMBREE: What do you do after that if it doesn't work for you? OLSON: We had competed with Phar-Mor stores that did something similar to that. But they are gone now. SN: As we understand it, Phar-Mor didn't have good depth-of-copy on new releases. But Furr's and Brookshire do. OLSON: No, they didn't have real good depth of copy. They were at 49, 59 or 69 cents a day or three for $1.89, and then they had other specials. When I visited those stores, they just didn't have the traffic. Part of the problem was probably that they didn't have the breadth or depth of copy. They had limited selection, the customers seemed like they weren't satisfied. So I don't know how much of a traffic builder it was for them. FEIOCK: I think it's something I'd like to try someday in a competitive situation. I haven't found the right situation to do it in yet. But it would be interesting. OLSON: Another way you can do it is to offer reduced rental rates on select days of the week. That builds traffic on those days, without going full-blown into loss-leader pricing. WEDDINGTON: In a lot of the video trade publications, the letters that you see from video store owners are always complaining about supermarkets using these loss-leader tactics and devaluing the market. HEMBREE: But you know, we are notorious for that. We sell turkeys at half their cost. FEIOCK: We are losing money on Miracle Whip every day of the year. But I think if the market demanded 49-cent rentals, we'd do it. But it's not something we want to step up and do tomorrow.
