Independent supermarkets say the big fourth quarter won't be too big for them as they prepare to compete with the big boys in what promises to be a blockbuster year.
Operators told SN their selections will not be inferior to those of larger merchants. They claim they are able to carry enough copies of any title to satisfy customers' demands. In other words, small does not mean low-budget or low-volume.
To handle the fourth quarter's big releases and compete against video departments of larger stores, small retailers use such tactics as preselling videos used for rental.
Steve Gretzinger, video coordinator at the three-store Angeli's, Menominee, Mich., said, "'Jurassic Park' we're selling for $9.95 ahead of time. They'll get a free rental of it when the movie comes in and then after six weeks, they'll get their copy and it'll look like a new copy.
"It allows us to compete with everybody selling them for $13.95 or $14.95 because then we can be a little higher-priced [taking into consideration rental revenues] than they are. People can get the previously viewed cheaper," he continued.
Margins are high and consumers do not seem to be concerned about buying a used tape, said other executives.
"Where we try to get an edge is pushing our [previewed] sell-through," said Dennis Maxwell, director of video for Reasor's, Tahlequah, Okla. "People don't have a stigma attached to buying a used copy because they've bought so many from us."
Selling previewed copies is beneficial to retailers as well as customers -- the movie pays for itself and there is even a slight profit to be had, said Bill Liesenfeld, supervisor of nonfood at the four-store Sak-N-Sav chain, Houston.
He said he rents new releases for three or four weeks, then makes the previewed copies available for sell-through at $9.99. Sak-N-Sav has four video departments with 2,000 to 4,000 square feet of space.
Liesenfeld has found another edge by reselling new releases to wholesalers. "One of the reasons that we're able to bring in a lot of new releases is we resell the merchandise to wholesalers. At the end of five to six weekends, I'll sell it to the wholesaler for between $18 and $22, so we get to rent the movies during the peak season and we get probably a third of the price of the movie back."
Although a retailer's success may not be directly proportional to its size, it may be related to the store's knowledge about its customers. The retailer must know what they'll buy, how much they'll buy and what price points work well. Such knowledge make purchasing and merchandising decisions much easier.
"We are smaller, but you must understand that my budget only needs to be as large as having one 'Jurassic Park' for every customer that walks in who wants one," said Tom Strickland, vice president of the five-store Town & Country, Parsons, Kan. "Why do I need to buy a pallet-load if I'm only going to sell 10 cases?"
Teresa Spencer, manager of video and photo processing at Bag-N-Save, Dover, Ohio, said, "I don't try and gouge the customer. I make usually between 8% to
10% on sell-through, but I'm always just a little bit higher. It seems because we've got it for the customer when they need it, especially around the holidays, they'll come back to us. I don't have to be the lowest [in price]."
Bag-N-Save has one video department with approximately 8,000 titles, making it the largest video store in the area, according to Spencer. She said she plans to bring in about 15 copies of Jurassic Park for rental and at least 200 more for sell-through.
Small retailers are not able to buy in the vast quantities of large supermarket chains and mass merchandisers, but they do not see that as a problem.
"Let's assume that I'm buying from Ingram and I buy something Wal-Mart is buying from someone direct. It does not matter; they are only going to be some cents per copy cheaper than we are," said Strickland. "In the scheme of things, how much did I lose?"
Gary Andrews, video manager of the three-store Reeble's, Emporia, Kan., said anticipating new releases far in advance helps him stretch his dollars from month to month. "Usually, it will balance out. September is not going to be a very good month as far as new releases, so that'll help us balance out for October and Jurassic Park and all the other biggies," he said.
To make sure customers are not forced to travel to other stores to buy or rent the big hits, Andrews said it is important to have enough copies on hand. He said he will bring in 10 or 15 copies of the big titles for rental. For sell-through, he said ordering decisions depend on the number of copies customers pre-order.
The retailers contacted by SN credited the smooth operation of the video departments to their distributors, who help retailers carry out creative promotions, invent exciting displays and advise what titles are hot.
