COLUMBUS, Ohio -- Big Bear Stores here, in a test program, has opened its first video rental department that will be run in-house, rather than by a rack jobber. "The Hilliard Big Bear video department is a test," said Karen Bennett, spokeswoman. Bennett also confirmed the retailer will be running the department on its own. She would not comment further. Switching from a racked to an in-house program enables retailers to gain more control over their video programs and increase new release depth, said industry observers. Often, the economics of sharing revenue prevent rackers from going as deep on new releases as retailers think is needed to meet consumer demand, the observers added. Big Bear, a division of Penn Traffic, Syracuse, N.Y., has 77 stores and 40 video rental departments run by revenue-share rack jobber Family Movie Centers, Akron, Ohio. Its new department, which is located in a Hilliard, Ohio, store that opened last month, has about twice as many new releases as older Big Bear racked sections. About 20% of the store's 750-unit inventory was in new releases, compared with 10% at other stores.
Like other departments that focus heavily on new releases, the inventory is starting out relatively small, and will grow as more new titles are brought in, said a local source in the video industry.
"Big Bear realizes that this is a hits-driven business, especially in supermarkets. They carry a core inventory of family and children's entertainment catalog videos and then drive the business with movie and game hits," said the source. "Big Bear is an aggressive competitor and they've seen what Kroger can do in the video market," said the source. New releases were stocked relatively deeply for a smaller department in a new store. For example, on the day SN visited, the section had 15 copies of "Pulp Fiction," 12 copies of "Just Cause" and 10 copies each of "Major Payne," "Man of the House" and "Nobody's Fool." About 7% of the inventory was in video games. Aesthetically, the department features a spacious, up-to-date presentation, with gray racks trimmed in red, SN found in a store visit. Neon signs will soon be installed, said the source. "It's a nice, clean-looking department," the source said. "Senior management knows that video is a good
revenue stream, so they are making a commitment to decorate the departments a little sharper." Located in a 400-square-foot area in front of the main checkouts, the department does not use a live inventory system -- empty boxes are displayed on the racks while the actual tapes are kept behind the store's service counter. The retailer did not go with live inventory for two reasons, the source noted. One was a concern with shrink and the other was to maximize traffic flow in and out of the section. Departments run by Family Movie Centers average about 800 units of rental inventory, said Tim Greathouse, the rack-jobber's general manager. One Big Bear Plus combination store visited by SN had 1,800 rental tapes and games in stock. About 10% were new releases. Big Bear lowered its rental rate on new releases to $1.99 a night from $2.49 last month, Greathouse said.
"It's getting very competitive. Kroger has put in quite a few live rental systems and their prices are very competitive with Big Bear's," he said. Greathouse declined to comment on the retailer's test of an in-house rental department. Other rental rates are $1.99 a night for games and 99 cents a night for all other videos. The rates are the same in the racked departments and in the new Hilliard store. The new store did not carry a great deal of sell-through. A small amount of "Cinderella" was displayed on an endcap in the video section, priced at $16.95. Disney Halloween products were on another endcap, with "Hocus-Pocus," "Dark Crystal," "Nightmare Before Christmas" and "Frankenpooh" priced at $13.99, and shorter videos at $10.99. The store also carried "A Goofy Movie" priced at $17.95. The Big Bear Plus store at 3700 Fishinger Blvd. in Columbus had a wide selection of videos, music and electronics. Many of the current sell-through videos were displayed in manufacturers' display units near the music products.