While the bulk of fourth-quarter video sales are in the children's category, it is the lower-priced children's nontheatrical products that can be a bigger hit profitwise for supermarkets this holiday season.
"It is fairly profitable. If you put in some of the Walt Disney [feature] movies, you don't make much. But with some of the other lines you do," explained Randall King, nonfood buyer at Byrd Food Stores, Burlington, N.C. King said the chain can make up to 40% margins on nontheatrical children's video, which is sold primarily in the fourth quarter as in-and-out merchandise.
Recalling last year's fourth quarter, he added, "We put in some Christmas videos, and we had a pretty good sell-through on them." Byrd's price point limit for these videos is under $10. Scott Howard, president of Howard's Town & Country, Parsons, Kan., also noted that the children's titles are probably more profitable than the flashy features.
"The prices range on average from $7 or $8 to up to $15 or $16 on those type releases. They are lower in cost, but the return on investment is probably higher than on those major hit releases," said Howard.
He, too, said the fourth quarter is always the best time for video sales. "The studios target a lot of child-oriented releases for Christmas and we always do the highest percentage of our sell-through sales during that quarter."
This fourth quarter, children's nontheatrical videos promise to generate blockbuster sales as families look to entertain their favorite youngster with many of the new titles, along with some popular standards. Retailers polled by SN said they intend to have an ample supply of nontheatrical titles to merchandise.
Some new nontheatrical releases expected out this holiday season include an array of sing-a-long tapes by various studios, such as a new "Halloween Winnie the Pooh," "Street Sharks" and "Jim Hensen's Preschool Collection," all from Disney; as well as films like "Land Before Time II" from MCA, "Monster in My Pocket" from Kidmark, and two new items from Polygram's Richard Scary series: "The Best Birthday Present Ever" and "Sergeant Murphy's Day Off," among numerous others.
Consumers can also expect to see supermarket displays of steady movers including "Barney" from the Lyons Group, the "Mighty Morphin Power Rangers" and MCA's "Timmy the Tooth."
To capitalize on the gift-giving season, one retailer said there will be additional displays created for sell-through video, including children's nontheatrical titles.
Along with items displayed in the store's front-end video section, "we always have a holiday section in the store where we put the holiday candy and stocking stuffers, and we put videos there also," said Stephanie Fower, department manager at Macey's Stores, Sandy, Utah.
Additionally, Fower said, some videos will be merchandised in the stores' "Deal" wall, an area featuring select bargain items.
Looking ahead, Fower said she expects holiday sales to be very strong this year. In the past, "fourth-quarter sales accounted for about 35% of annual sales."
Dick Kelly, president of Cambridge Associates, Stamford, Conn., a consulting firm to the video and television industry, said, "we see children's nontheatrical video growing faster than any other segment in the industry."
During 1994, his firm estimated that consumer expenditures on children's nontheatrical videos, including sales and rentals in all outlets, reached $2 billion, an increase of about 10% over 1993.
"It continues to grow," Kelly stated.
Arin Wilson, a video industry analyst with Alexander & Associates, New York, said that last year the fourth quarter accounted for some 32% of all sell-through video sales nationwide.
"So, the fourth quarter is a very important time," Wilson said.
He said the sell-through industry, as a whole, grew 19.5% for the year ended June 1995, while the rental market continues to slump. Rental sales, said Wilson, fell 6.5% for the same period.
Speaking specifically of children's nontheatrical videos, Wilson said that what may be popular as a sell-through does not necessarily do well as a rental.
For instance, "Barney," which came in first in a top 20 children's sell-through list, did not even appear on the top 20 rental list, said Wilson.
Alexander & Associates prepares the lists every two weeks for clients, said Wilson, who declined to share the full lists with SN. However, he did say that the current top three sell-through videos are "Barney," "The Mighty Morphin Power Rangers" and the "Winnie-the-Pooh" series.
While supermarkets' share of video sales was only a fraction of the holiday market at 5.7% last year, said Wilson, there is potential for greater gains in the children's nontheatrical segment.
"Supermarkets have a lot of impulse purchasing, they tend to have the lower-priced videos where there is more impulse buying," he said.
Bill Bryant, assistant vice president of Ingram Entertainment, La Vergne, Tenn., said there has been significant growth in the availability of children's titles.
"We are seeing just a dramatic increase in the number of releases and sales resulting from those releases," he said.
Fower of Macey's agreed. She attributed much of her company's recent sales increases to the wider availability of products. She said Macey's stores now carry about 20 titles, vs. about five this time last year.
Bryant said retailers are having the most success with the animated direct-to-video films such as "The Return of Jafar," and the "Land Before Time II." A sequel, "The Land Before Time III," as reported, is expected out this year.
"The animated direct-to-video titles are doing really well. The studios have been pleased and so have the retailers," said Bryant, who oversees business for supermarkets and drug chains.
"We are expecting another banner year for the fourth quarter," he said.
Scott Howard of Howard's Town & Country also pointed to the success of the direct-to-video titles. "In the category of the made-for-video movies and cartoons, we have done pretty well. Still, the majority of sales and rentals are focused on the big titles."
He added, "Sometimes, we will pick up additional sales on tag-along items. For instance, after the 'Casper' movie came out, there was an increased resurgence in the old 'Caspar' cartoons from the 1960s. Also, with 'Pocahontas,' there were some sing-a-long items, and so on." To further boost supermarket sales of children's videos, Bryant said, many retailers have been developing "in-line video sections that focus on the higher margin catalog videos."
Bryant cited Wegmans Food Markets, Rochester, N.Y., and Schnuck Markets, St. Louis, as two examples of companies beefing up their children's sections. However, neither could be reached for comment by SN.
In the past, said Bryant, supermarkets have often passed on the secondary releases because of a lack of shelf space.
Shirley Decker, video buyer at Goff Food Stores, Haslett, Mich., said finding merchandising space has been a problem.
"There are a ton of fourth-quarter videos coming out to sell. That includes some of the big theatrical releases such as 'Batman,' and they all compete for space," she commented.
Meanwhile, the Coalition for Children's Quality Video, a Sante Fe, N.M., watchdog group that reviews children's videos, is in the preliminary stages of placing its "Kids First" program into Marsh Supermarkets, Indianapolis.
As part of the program, the coalition issues the retailer a roster of tapes it endorses, along with header cards, brochures and stickers to promote them.
Ranny Levy-Wales, president of the coalition, said it is also working with the Pennsylvania Education Association to possibly create a program in that state. In April it launched a program in 400 Sun Coast video stores nationwide.
"Some of the titles we've endorsed are hard to find," said Levy-Wales. "We put together the list, then we try to find a retailer to make the titles available.
"Our mission is to increase both visibility and availability of quality children's media."
Decker of Goff Food Stores said while rentals still dominate its business, if a children's title is likely to make a good sell-through item it will be merchandised that way.
And so far what has been offered has done well.
She said the company's sell-through sales were "up more than 300% for the fiscal year ended Sept. 30, 1994, and so far this year sales are up 200% over the comparable period a year earlier. That includes feature films and some children's nontheatrical titles.
"That is because the studios have released more. And, too, we are recognizing that they [consumers] are willing to buy these."
During the fourth quarter, she said, more sell-through will be offered. "That will include some new Disney items coming out. They will be great stocking stuffers. They do really well at the holidays."
A video department manager, who asked to remain anonymous, for Reeble's, Emporia, Kan., said its children's section "does well" but the only sell-through tape it currently offers is "Barney."
"For the fourth quarter, we do a little bit more, but not a significant number," she said. "We don't jump from selling one a week to 20 a week, or anything like that. It picks up a little during the holidays, starting right around Thanksgiving.
"The children's section is more cartoons, such as 'Dennis the Menace' and 'Teenage Mutant Ninja Turtles,' mostly titles that are 30-minute programs. We do have some longer than that but usually not longer than an hour."
But, she said, there are definitely more children's videos to choose from at the moment. And Reeble's is in the middle of switching suppliers and expects to have a wider variety available in the future.
Cindy Seale, general manager of video operations at Jitney Jungle Stores of America, Jackson, Miss., said the bulk of its video business is still in movie rentals, but more attention is starting to be given to children's sell-through.
She said there's been some hesitancy in the past to carry merchandise other than the major hit movies, due to a lack of promotions, which are important.
