BURBANK, Calif. -- Disney is aggressively expanding its direct-sell program to supermarkets and may sign up as many as two dozen major chains within a year, according to a distribution source who is familiar with the companies involved. Wegmans Food Markets, Rochester, N.Y., started buying direct in September from Buena Vista Home Video, Disney's video distribution and marketing division, the source said. Tops Markets, Buffalo, N.Y., may be the next chain to start buying direct from the studio, said the source. In recent weeks industry trade publications have reported on studios working out direct-buying agreements with their major accounts. The Disney-Wegmans deal was being openly discussed on the trade show floor at the East Coast Video Show in Atlantic City, Oct. 18 to 20.
"Disney is going to put as many supermarkets as possible into the direct-sell program," said the source. "It's their thrust for the next year.
"You are going to see at least one or two more supermarket chains a month going direct. In the course of the year, you will see 15 to 24 go direct, depending on how aggressive they are," said the source. Executives at Wegmans and the retailer's primary video supplier, Ingram Entertainment, La Vergne, Tenn., declined to comment. Buena Vista executives were at a sales meeting and unavailable for comment. In related news, Columbia Tristar Home Video, Burbank, Calif., has entered into a direct-sales agreement with Wal-Mart Stores, Bentonville, Ark. The program, which began with the repriced version of "Sleepless in Seattle," is a test, according to an official at Columbia Tristar. Buena Vista also began its direct program with the mass merchandisers, and eventually rolled
it out to wholesale clubs and other specialty retailers, like Toys 'R' Us and Suncoast Motion Picture Co. Many supermarket chains have expressed interest in buying direct, but H-E-B Grocery Co., San Antonio, was the only one to do so, starting in the summer of 1991. But H-E-B later went back to buying from Ingram Entertainment, to take advantage of the greater service levels and advertising support that wholesalers provide. Since that time, Buena Vista has built up and fine-tuned its direct sales machine, said industry observers. Recent personnel moves seem to confirm the company's intention to expand its account base. The company has hired Paul Pasquarelli as vice president of sales, with primary responsibility for key national accounts. Pasquarelli has extensive experience in video sales and distribution, including rack jobbing. He will be based on the East Coast and report to Dennis Maguire, vice president of sales and distribution. Two other Buena Vista executives also are headed for increased responsibilities, according to press reports. Ray Gagnon, who developed much of the supplier's mass merchant program, will be given a bigger role, which has yet to be announced by the company. Steve Cooper, Eastern regional sales manager, is headed for additional duties with national accounts. Buena Vista executives have said in the past that the company's primary goal for its direct-sales efforts was to get better exposure for its products at store level and to improve merchandising presentations. This is still the case, said the industry source. Buena Vista offers its direct-sales customers a 2% to 4% break on the cost that they would get from distributors and some market development funds, said the source. "In return, they want a better presentation of their overall product line," said the source. There are some big supermarket chains that the studio still won't deal with directly because they don't have a good track record of selling Disney products. With Buena Vista now going after supermarkets as direct customers, it won't be long until the other studios with major sell-through offerings follow. "Warner is gearing up to do it too, and if Warner does, then so will Fox and Paramount," said the source. The other studios have sold big sell-through titles direct to supermarkets in the past, "but they've been real selective. Now with Disney diving in head first, they are going to chart the course and everybody else is going to follow. It's been that way as long as I can remember," said the source. Besides supermarkets, Buena Vista also will now go after major drug chains, like Revco, Walgreens and Walker Drug, said the source. Many supermarkets and drug stores will still find it to their advantage to buy from traditional video distributors, the source said. Although they will have to pay more for the products, they will get more back in the way of advertising funds and other services. For example, the source pointed out, the studio will only ship to a central distribution center, while the distributor will drop ship to individual store locations.